Familiarity beats price in store choice

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Morrisons' takeover of Safeway is widely expected to lead to a new
price war in the British supermarket sector, with Tesco and Asda
both seen as likely to respond aggressively to the roll out of
Morrisons' EDLP policy to the traditionally high-price Safeway
stores. But price is only one factor in consumers' choice of where
to shop - and one declining in importance - suggesting that
Morrisons will have to do more than just slash prices to win new
custom, writes Chris Jones.

Just this week Morrisons announced that Safeway shoppers were already seeing the benefits of price cuts, with the average weekly shopping basket now some £12 cheaper, but a recent survey carried out by the food and grocery think tank IGD in the UK shows that it is more likely to be the revamp of Safeway's outlets which will be the determining factor in attempting to steal customers from the likes of Tesco and Asda.

The IGD survey shows that consumers place price as the second most important factor when choosing a grocery store, behind familiarity of store layout. Some 17 per cent of consumers said that they chose where to shop because of the prices, but this was less of a factor than in the previous year (when 21 per cent cited price as the most important).

Familiarity with store layout is the most important factor for 43 per cent of those questioned, up from 35 per cent in 2003, according to the IGD survey. The importance of this factor is clearly evidenced by Sainsbury, the UK's third largest grocer, which has been refitting almost its entire store portfolio over the last year and has lost a large number of customers as a result.

As Morrisons begins to roll out its own store design to Safeway outlets (including its store-within-store concept which is hugely popular with Morrisons shoppers but which is a radical departure for the more traditional Safeway), ensuring that convenience and ease of shopping continues - and indeed improves - will play a major role in determining whether the takeover is a success. Joanne Denney-Finch, chief executive of the IGD said: "It is encouraging to see that consumers recognise and appreciate that the grocery industry continues to be competitive and offers good prices. There is absolutely no doubt that in a competitive environment, price will remain high on the agenda for retailers and manufacturers, but we must not lose sight of the fact that shopping made easy is still number one on the shoppers' agenda."

The food retail trade in general seems to be listening to its customers, at least according to the survey's findings. Some 81 per cent of those questioned said that shopping had improved for them in the past year, with three of the top five improvements relating to price: 25 per cent said they felt the price of food had not increased, while 20 per cent highlighted the fact that there were more discount stores in their area and a further 18 per cent said they had seen more price promotions in store.

The other two leading improvements were an increase in the number of supermarkets in the area (highlighted by 18 per cent) and an increase in the number of farmers' markets/farm shops in the area (14 per cent).

Another interesting development, especially given the concerted push by the major multiple groups into the convenience store market, is the decline in importance of location. Just 10 per cent of those questioned said they chose to shop in a particular outlet because it was the easiest one to get to, down from 14 per cent a year earlier.

When making food choices in store, price seems to play an even more minor role. Some 17 per cent of those questioned by the IGD said that the ingredients were the most important factor, while 16 per cent said they wanted a brand they knew. Price was only the third most important reason for choosing a particular product (11 per cent).

Related topics: Retail & Shopper Insights