Chain Image and Store-Choice Modeling: The Effects of Income and Race

Abstract

Addressed in this paper is the lack of understanding of the extent to which the image of a store can affect store selection and of the extent to which this image varies across market segments. The subject of the analysis is the choice of supermarkets for major grocery shopping, and image is here measured by the chain to which a supermarket belongs. Evidence is presented through the use of descriptive statistics from a sample of consumers and through several store-choice model calibrations that chain image is an important determinant of store choice. In the particular data set employed, chain image is at least as important as store size and store competition. Evidence is presented on the effects of peoples' income and race on their store selection. Differences are found in chain image both across income groups and across racial groups. Differences are also reported in distance deterrence across income groups, although in the opposite direction to common belief. It appears that low-income consumers are willing to travel further for grocery shopping, ceteris paribus, probably to take advantage of lower prices. Higher income consumers may be unwilling to spend the extra time involved to shop at the stores with the lowest prices and therefore give up low prices for the sake of convenience. The general conclusion from the results presented here is that intrinsic differences in store-choice behavior exist across different groups of consumers and that analyzing store location accurately demands knowledge of such differences.

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