Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Gas versus groceries

11.03.2011
U of A professor says food retailers need to step up game in battle for consumer's buck

A University of Alberta researcher says grocery retailers need to take heed that a jump at the pumps will be a blow to their bottom line. Alberta School of Business professor Yu Ma notes that if stores want to survive, they'll have to change their tactics in the face of rising gas prices in order to attract shoppers "hungry" for better deals.

Ma and his colleagues say that when the price of gas rises, the monthly grocery bill is the prime target for cuts. The researchers noted that there are two sets of decisions made in the gas versus grub dilemma. The first choice deals with location, which Ma notes is based on choosing the frequency of shopping visits, and distance to the venue. The second is deciding what to buy and when—in other words, whether to forgo a favourite brand for a no-name substitute or middle-tier replacement item—or to search vigilantly for deals or promotions. Consumers may also elect to purchase at wholesale or warehouse stores thus, choosing to buy bulk products in order to save money.

Ma says that wise retailers, those who recognize the changes in their customers' spending trends, will give the people what they want. Industry inclinations towards opening warehouse clubs and supercentres are not something that companies can resist if they hope to survive.

"You have to start thinking about providing one-stop shopping for consumers; they want to go to one place and buy everything in the same store," said Ma. "You have to provide them with that convenience."

And while the gas-and-groceries concept has been around for some time, Ma notes that more retail grocers are using their own gas stations on site as a shopping incentive for customers. By offering discount fuel prices or savings incentives from in-store purchases, it is a value-added attraction for customers to frequent the stores, even if they may be a little further out of the way.

Gone also, he says, should be the idea of retailers putting only single items on sale. Consumers will less likely be attracted to a store for one item in the expensive gas environment. Savvy grocers will have to come up with novel incentives, such as offering a basket of goods at a reasonable price, as a viable means of attracting consumer, says Ma.

"If grocery retailers can offer a promotion or a pricing strategy that fits the customer's objectives, if they tailor their promotional message to consumers based on how they can save money, it would be much more effective than some blind (single item) promotion," he said.

Retailers are not the only ones who will feel the effect of shifting loyalties in the wake of the groceries versus gas struggle. Manufacturers also need to find a way to become more competitive without cannibalizing their own brands, says Ma. He cites the example of top-tier brands offering lower-cost, brand-name alternatives to lower priced no-name brands, introduced briefly during the recent economic downturn. Scaling back a product's price means that the quality is also scaled back, says Ma. But he warns that frugal consumers still want their money's worth from a product, especially when filling the family car with gas is drawing directly from the grocery budget.

"Manufacturers have to think of the best strategy to use ensure long-term prosperity, and not just for short-term gain," he said.

Ma's article recently appeared in the Journal of Marketing.

Jamie Hanlon | EurekAlert!
Further information:
http://www.ualberta.ca

Further reports about: Manufacturers consumer's buck grocery retailers save money

More articles from Business and Finance:

nachricht Innovation among SMEs continues to fade
25.02.2015 | KfW

nachricht RWI/ISL Container Throughput Index: Growth of world trade continues to slow down
19.02.2015 | Rheinisch-Westfälisches Institut für Wirtschaftsforschung e.V.

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Experiment Provides the Best Look Yet at 'Warm Dense Matter' at Cores of Giant Planets

In an experiment at the Department of Energy's SLAC National Accelerator Laboratory, scientists precisely measured the temperature and structure of aluminum as...

Im Focus: Energy-autonomous and wireless monitoring protects marine gearboxes

The IPH presents a solution at HANNOVER MESSE 2015 to make ship traffic more reliable while decreasing the maintenance costs at the same time. In cooperation with project partners, the research institute from Hannover, Germany, has developed a sensor system which continuously monitors the condition of the marine gearbox, thus preventing breakdowns. Special feature: the monitoring system works wirelessly and energy-autonomously. The required electrical power is generated where it is needed – directly at the sensor.

As well as cars need to be certified regularly (in Germany by the TÜV – Technical Inspection Association), ships need to be inspected – if the powertrain stops...

Im Focus: 3-D satellite, GPS earthquake maps isolate impacts in real time

Method produced by UI researcher could improve reaction time to deadly, expensive quakes

When an earthquake hits, the faster first responders can get to an impacted area, the more likely infrastructure--and lives--can be saved.

Im Focus: Atlantic Ocean overturning found to slow down already today

The Atlantic overturning is one of Earth’s most important heat transport systems, pumping warm water northwards and cold water southwards. Also known as the Gulf Stream system, it is responsible for the mild climate in northwestern Europe. 

Scientists now found evidence for a slowdown of the overturning – multiple lines of observation suggest that in recent decades, the current system has been...

Im Focus: Robot inspects concrete garage floors and bridge roadways for damage

Because they are regularly subjected to heavy vehicle traffic, emissions, moisture and salt, above- and underground parking garages, as well as bridges, frequently experience large areas of corrosion. Most inspection systems to date have only been capable of inspecting smaller surface areas.

From April 13 to April 17 at the Hannover Messe (hall 2, exhibit booth C16), engineers from the Fraunhofer Institute for Nondestructive Testing IZFP will be...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

World Conference On Regenerative Medicine 2015: Registration And Abstract Submission Now Open

25.03.2015 | Event News

University presidents from all over the world meet in Hamburg

19.03.2015 | Event News

10. CeBiTec Symposium zum Big Data-Problem

17.03.2015 | Event News

 
Latest News

Biology in a twist -- deciphering the origins of cell behavior

31.03.2015 | Life Sciences

Wrapping carbon nanotubes in polymers enhances their performance

31.03.2015 | Materials Sciences

Research Links Two Millennia of Cyclones, Floods, El Niño

31.03.2015 | Earth Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>