How does assortment affect grocery store choice?
Briesch, Chintagunta & Fox
Why do consumers shop at the stores they do? Shoppers report that retail assortments affect their
store choice decisions, ranking it behind convenient locations and low prices. The law of retail
gravitation = the probability of choosing a retail outlet is positively related to its size but inversely
related to its distance from the shopper’s home. The size of the outlet is the product of the number
of categories offered and the number of items within each category.
Related literature
Consumers make a trade-off when choosing a store. They may be willing to travel farther to stores
that offer more products in their assortments than to stores that offer fewer products. Unlike lower
prices and more convenient locations, larger assortments are not always preferred. Assortment is
fundamentally different from price and convenience are uniformly preferred, but larger assortments
are not. Three factors affect consumers’ perceptions of assortment in a category: the number of
SKUs, the amount of shelf space devoted to the category, and the availability of the consumer’s
favorite item. Shoppers’ perceptions of a retail assortment depend on the availability of their favorite
items, which vary by individual. The ideal size of an assortment depends on shopping costs.
Discussion
Convenience (operationalized as travel distance) has a greater effect on store choice size than price
and product assortment. The effect of price on store choice is much smaller than that of
convenience. On average, the frequency of feature advertising does not seem to affect store choice.
Some consumers consider feature advertising when making their store choice decisions.
Retailers advertise many categories every week to communicate the breadth of their product
offerings. Across categories, this causes positive correlations because categories appear together in
feature advertising so often. Within category, this causes a negative correlation because competing
brands are advertised in sequence, not in parallel.
The number of brands, SKUs/brand, sizes/brand, proportion of unique SKUs, and presence of the
household’s favorite brands in the assortment affect store choice significantly. By carrying more
brands, retailers increase the probability that the average household will choose their stores.
Retailers that offer fewer SKUs/brand, fewer sizes/brand, and proportionally fewer unique items in
the assortment also increase the probability that the average household will choose their stores.
If retail assortments can be reduced without eliminating brands, particularly consumers’ favorite
brands, the associated reductions in operating costs and out-of-stocks could make SKU reduction an
effective and profitable strategy. The effect of assortment changes depends on the characteristics of
the items being added or removed.
Consumer heterogeneity influences the effect of shoppers’ store choice. Although shoppers
uniformly prefer lower prices and shorter travel distances, they prefer different assortment
characteristics. The less importance a household assigns to assortment, the more it values
convenience, and vice versa. The heterogeneity in assortment response suggests that retailers should
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Briesch, Chintagunta & Fox
Why do consumers shop at the stores they do? Shoppers report that retail assortments affect their
store choice decisions, ranking it behind convenient locations and low prices. The law of retail
gravitation = the probability of choosing a retail outlet is positively related to its size but inversely
related to its distance from the shopper’s home. The size of the outlet is the product of the number
of categories offered and the number of items within each category.
Related literature
Consumers make a trade-off when choosing a store. They may be willing to travel farther to stores
that offer more products in their assortments than to stores that offer fewer products. Unlike lower
prices and more convenient locations, larger assortments are not always preferred. Assortment is
fundamentally different from price and convenience are uniformly preferred, but larger assortments
are not. Three factors affect consumers’ perceptions of assortment in a category: the number of
SKUs, the amount of shelf space devoted to the category, and the availability of the consumer’s
favorite item. Shoppers’ perceptions of a retail assortment depend on the availability of their favorite
items, which vary by individual. The ideal size of an assortment depends on shopping costs.
Discussion
Convenience (operationalized as travel distance) has a greater effect on store choice size than price
and product assortment. The effect of price on store choice is much smaller than that of
convenience. On average, the frequency of feature advertising does not seem to affect store choice.
Some consumers consider feature advertising when making their store choice decisions.
Retailers advertise many categories every week to communicate the breadth of their product
offerings. Across categories, this causes positive correlations because categories appear together in
feature advertising so often. Within category, this causes a negative correlation because competing
brands are advertised in sequence, not in parallel.
The number of brands, SKUs/brand, sizes/brand, proportion of unique SKUs, and presence of the
household’s favorite brands in the assortment affect store choice significantly. By carrying more
brands, retailers increase the probability that the average household will choose their stores.
Retailers that offer fewer SKUs/brand, fewer sizes/brand, and proportionally fewer unique items in
the assortment also increase the probability that the average household will choose their stores.
If retail assortments can be reduced without eliminating brands, particularly consumers’ favorite
brands, the associated reductions in operating costs and out-of-stocks could make SKU reduction an
effective and profitable strategy. The effect of assortment changes depends on the characteristics of
the items being added or removed.
Consumer heterogeneity influences the effect of shoppers’ store choice. Although shoppers
uniformly prefer lower prices and shorter travel distances, they prefer different assortment
characteristics. The less importance a household assigns to assortment, the more it values
convenience, and vice versa. The heterogeneity in assortment response suggests that retailers should
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