Store Loyalty as a Category - Specific Trait – What Drives It ?

The literature on store loyalty views a consumer as possessing store loyalty towards a particular store for her/his overall grocery shopping needs. In this study, we show that store loyalty is a category-specific trait of a consumer. In other words, while a given customer may be loyal to Store A in category 1, the same customer may be loyal to Store B in category 2. We call this store-category loyalty. We estimate household-, category-, and store-specific drivers of store-category loyalty using scanner panel data of 1321 households in 284 grocery categories across 16 stores over a 53-week period. We find that different stores in the same market have different category-independent baseline loyalties. Further, we find a household’s store-category loyalty towards a store in a category to be positively influenced by (1) the household’s category budget share, (2) the household’s store visit frequency, (3) the breadth of the SKU assortment in the category at the store, (4) the uniqueness of the SKU assortment in the category at the store, (5) relevance of the SKU assortment to the household in the category at the store, (6) perceived price advantage to the household in the category at the store, and negatively influenced by (1) frequency of purchases in the category, and (2) price variability in the category at the store. Two household variables – family size and household income – are found to have interesting moderating effects on the estimated effects of various drivers on store-category loyalty. These findings will be invaluable to retailers in terms of enabling them to better manage household patronage in categories where their current loyalty positions are weak.