When loyalties clash purchase behavior when a preferred brand is stocked out: The tradeoff between brand and store loyalty

Journal of Retailing and Consumer Services 19 (2012) 570–577

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When loyalties clash purchase behavior when a preferred brand is stocked out: The tradeoff between brand and store loyalty Sanjay Puligadda a,n, William T. Ross b,1, Jinjie Chen a,2, Elizabeth Howlett c,3 a

Department of Marketing, Farmer School of Business, Miami University, Oxford, OH 45056, USA Department of Marketing, University of Connecticut, Storrs, CT 09269, USA c Department of Marketing, Sam Walton School of Business, University of Arkansas, Fayetteville, AR 72701, USA b

a r t i c l e i n f o

a b s t r a c t

Article history: Received 14 March 2012 Received in revised form 16 May 2012 Accepted 6 July 2012 Available online 23 July 2012

The interplay between brand and store loyalty is investigated in the situation of stockout of a preferred brand at a preferred store through three studies. A four-item scale for measuring store loyalty is developed and tested. While brand loyalty influences between-store substitution and within-store substitution in a stockout, store loyalty does not have any influence, suggesting the dominance of brand loyalty over store loyalty in a stockout. Relevance and implications of the results are discussed. & 2012 Elsevier Ltd. All rights reserved.

Keywords: Brand loyalty Store loyalty Stockouts

1. Introduction Extensive research on loyalty towards a brand, (Jacoby and Kyner, 1973; Fournier, 1998; Rundle-Thiele and Mackay, 2001; Lau and Lee, 1999; among many others) has identified both behavioral and attitudinal dimension to brand loyalty (Yi and La, 2004; Dick and Basu, 1994) and consumers are known to go to great lengths to acquire brands of their choice (Tellis, 1988; Gounaris and Stathakopoulos, 2004). Similarly, considerable research attention has been directed towards an analogous construct–store loyalty (Reynolds et al., 1974/75; De Wulf et al., 2001), which has also been found to consist of behavioral, and attitudinal dimensions (Bloemer and Ruyter, 1998). Because most brands are purchased at stores with which consumers often build strong relationships (Ray and Chiagouris, 2009), the interplay of brand and store loyalty is interesting and merits investigation. One situation in which this interplay between brand and store loyalty is likely to become especially significant is when a preferred brand is stocked out or out of stock (OOS) at a preferred store.

n

Corresponding author. Tel.: þ1 513 529 1226 (office). E-mail addresses: [email protected] (S. Puligadda), [email protected] (W.T. Ross), [email protected] (J. Chen), [email protected] (E. Howlett). 1 Tel.: þ1 896 486 8491 (office). 2 Tel.: þ1 513 255 3861 (mobile). 3 Tel.: þ1 479 575 3227 (office). 0969-6989/$ - see front matter & 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.jretconser.2012.07.002

In this research, we investigate the relative influence of brand versus store loyalty on consumer behavior, specifically, withinstore substitution (substituting a less preferred brand for a more preferred brand), and between-store substitution (going to a less preferred store to buy a preferred brand) (Fitzsimons, 2000) when a preferred brand is stocked out at a preferred store. Stockout behaviors are important to investigate as they are varied and numerous (Emmelheinz et al., 1991) and indeed, considerable research has attempted to unravel this phenomenon (Peckham, 1963; Verbeke et al.,1998; Campoet al., 2000, 2003; and Sloot et al., 2005). As evidenced above, while brand loyalty, store loyalty and stockouts have each individually been investigated extensively, and the influence of brand loyalty and that of store loyalty on stockouts has been studied, we extend this literature by investigating the interplay of all three. Specifically, we investigate the interplay of brand and store loyalty in the event of a stockout. Furthermore, we do this using a methodology (laboratory experiments) not often used in research in the field. In doing so, we develop a scale to measure store loyalty. Because this research investigates possible influences on brand and store choice, the potential interest to both brand and store managers is considerable.

2. Conceptual framework and hypotheses 2.1. Stockouts Stockouts are of great consequence, for the retailer and the brand manager, especially because they are prevalent (about 8.2%

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items are out of stock on a given afternoon, Fitzsimons, 2000). Not surprisingly, consumer responses to stockouts have been investigated extensively (for a comprehensive review, please refer to Sloot et al., 2005). Stockouts can have immediate and/or delayed effects as they may influence consumer behavior even after the stockout period is over (Campo et al., 2003). Besides betweenand within-store substitution, consumers faced with a stockout may also purchase smaller sizes or less units to reduce the risk of a poor choice (Campo et al., 2000). Consumers faced with a stockout often switch brands (32%) or SKUs (17.5%) (Emmelheinz et al., 1991) which, taken together, constitute within-store substitution and add up to an occurrence of nearly 50 percent of all stockout situations. In contrast, between-store substitution occurs to a lesser extent (14%) (Emmelheinz et al., 1991). 2.2. Brand loyalty Earlier conceptualized as mainly behavioral, (e.g. Newman and Werbel, 1973; Tellis, 1988), brand loyalty is now recognized as also being attitudinal, including cognitive, affective, and conative aspects such that consumers reach ultimate loyalty in a fourphased approach (Oliver, 1999). According to this conceptualization, brand loyalty is defined as ‘‘a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behavior’’ (Oliver, 1999, p. 34). Attitudinal brand loyalty is distinct from behavioral loyalty or repeat-purchase behavior (Jacoby and Chestnut, 1978). Brand affect, or the brand’s potential to elicit a positive emotional response, leads to brand commitment (Chaudhuri and Holbrook, 2001)–the emotional attachment to a brand (Lastovicka and Gardner, 1978)–that, in turn, leads to attitudinal loyalty (Coulter et al., 2003). While behavioral brand loyalty has been measured using long-term choice probability for a brand (Carpenter and Lehmann, 1985), or switching (Raju et al., 1990), attitudinal brand loyalty has been operationalized as (a) ‘‘repeat purchase intention’’ (Anderson and Sullivan, 1993; Cronin and Taylor, 1992), (b) ‘‘willingness to pay a premium price’’ (Zeithaml et al., 1996) or the loyal consumer’s willingness to expend a larger amount of monetary resources to acquire the brand, and (c) ‘‘intention of word-of-mouth (WOM)’’ (Boulding et al., 1993) which is the tendency or inclination to speak favorably about the brand. Thus attitudinally loyal consumers who are willing to endorse their preferred brand are distinguished from repeat purchasers who may continue repurchase but lack the inclination to disseminate favorable word of mouth about the brands.

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low-equity (high-equity) brands, and (b) increases store switching with 10 (25)% of consumers switching stores for low-equity (high-equity) brands. Further, brands associated with utilitarian products are switched more often (39%) than those of hedonic products (31%) but lead to store switches less often (13%) than brands of hedonic products (26%; w2 ¼22.581, p ¼0.000) (Sloot et al., 2005). Despite the above moderators, several studies have established that, in general, when faced with the stockout of a brand, the more loyal a consumer is to the brand, the less will be her propensity to switch brands and the more her propensity to switch SKUs within the same brand or switch stores in search of the brand. (Sloot et al., 2005). If a preferred brand, stocked out at a preferred store, is available at another (less preferred) store, the consumer can choose either to travel to the less preferred store to buy the preferred brand (between-store substitution), or to remain at the preferred store and buy a substitute (within-store substitution). Between-store substitution is indicative of brand loyalty, inducing the consumer to make the additional trip. Within-store substitution, in contrast, is indicative of loyalty towards the store, so the consumer simply substitutes for the preferred brand with a less preferred brand. For the remainder of this manuscript, we make an important assumption necessary to tease out the interplay between brand and store loyalty: that there is only one store that the consumer prefers, all other stores are less preferred. In such a situation we predict the following: H1: if a preferred brand is stocked out at a preferred store: (a) between-store substitution occurs to a larger extent when the preferred brand is available at a less preferred store than when it is not and (b) within-store substitution occurs to a lesser extent when the preferred brand is available at a less preferred store than when it is not. More importantly, we argue that brand loyalty influences the choices a consumer makes when a preferred brand is stocked out at a preferred store such that between-store (within-store) substitution occurs to a greater (lesser) extent if the consumer is highly loyal to the preferred brand. Thus we predict: H2: brand loyalty influences choice such that, if a preferred brand is stocked out at a preferred store: a) between-store substitution occurs to a larger extent when loyalty towards the preferred brand is higher and b) within-store substitution occurs to a lesser extent when loyalty towards the preferred brand is higher.

2.3. Brand loyalty in stockouts 2.4. Store loyalty Extant research has identified some moderators of the influence of brand loyalty on consumers’ response to stockouts such as product category (Campo et al., 2000), number and similarity of SKUs within the brand (Campo et al., 2003), brand equity, and whether the product is hedonic or utilitarian (Sloot et al., 2005). In their study, Campo et al. (2000) found that while consumers tended to switch away from the stocked out brand of cereal to buy the same type or flavor, they tended to stick with the same brand of margarine, buying a different size. Consumers also have a lower tendency to switch away from the stocked out brand if the brand has more SKUs, the available SKUs are more attractive than competitive brands, or if the available SKUs share important attributes with the stocked out SKU (Campo et al., 2003). In the event of a stockout, brand equity (a) reduces brand switching (w2 ¼54.622, p ¼0.000), with 51 (26)% of consumers switching

Some 51 years ago, Tate (1961) reported that 10% of households shopped at only one store and 26% shopped at only one or two stores during a year suggesting that many consumers have a high level of loyalty to one or a few stores. Years later, Ray and Chiagouris (2009) reported that store atmosphere, store uniqueness, merchandise value and store familiarity influence store affect which in turn influences store loyalty. Store loyalty programs have also been found to influence store loyalty through their influence on store satisfaction (Bridson and Hickman, 2008). Another relationship–that of store brands and store loyalty–has been examined in literature. Store brands (private labels) have been found to have a nonmonotonic relationship with store loyalty, which increases up to a point because store brands provide some level of differentiation (Ailawadi et al., 2008;

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Martos-Partal and Gonza´lez-Benito, 2011). Evidently, the store loyal shopper has been discussed extensively and his/her shopping behavior investigated (Stephenson and Willett, 1969; Moschis, 1976; Korgaonkar, 1981). Kukar-Kinney (2005) uses a behavioral measure of store loyalty (whether a person who bought a certain item from a store also bought another item from the same store). De Wulf et al., 2001 also investigated behavioral loyalty, showing that a retailer’s relationship marketing tactics can positively influence behavioral loyalty to their stores; they also show that individual differences among consumers in their relationship proneness, and product category involvement moderate the influence of relationship marketing tactics on behavioral loyalty. However, store loyalty, like brand loyalty, should not be examined purely in terms of behavioral variables; there can indeed be a continuum from spurious loyalty (without any commitment) to true loyalty (with commitment; Bloemer and Ruyter, 1998). In fact, the attitudinal dimension has been recognized by several researchers in the scales they have employed to measure store loyalty (e.g. Ray and Chiagouris, 2009; Bridson and Hickman, 2008). Taking the analogy between brand and store loyalty further, Bloemer, and Odekerken-Schroder (2002) use Jacoby and Chestnut’s (1978) definition of brand loyalty as a reference while defining store loyalty. The shopping experience does have hedonic value (Babin et al., 1994) and there are both utilitarian and hedonic drivers of store choice (e.g., Menon and Dube, 2000; Baker et al., 1992; Mattila and Wirtz, 2001; Manchanda et al., 1999; Bell and Lattin, 1998; Grewal, et al., 1998; Sirohi et al., 1998; Spangenberg et al., 1996; Hui and Bateson, 1991; Eroglu and Machleit, 1990). Utilitarian factors include pricing policy, locational proximity (Arnold et al., 1983), and retail agglomeration (consumers preferring to shop at centers where there is a larger cluster of stores enabling comparison-shopping; Eppli and Shilling, 1996). Prominent hedonic drivers of store choice are: scent (Spangenberg et al., 1996), congruence of ambient scent and music (Mattila and Wirtz, 2001), salespersons’ positive disconfirmation of customers’ normative expectations (Menon and Dube, 2000), social factors (employee or service quality perceptions), design factors (store design perceptions) and ambient factors such as music perceptions (Baker et al., 1992), excitement and expectations of romance (Boles et al., 2001), crowding (Eroglu and Machleit, 1990; Hui and Bateson, 1991), and ‘‘store atmosphere’’ (Donovan and Rossiter, 1982). Unlike utilitarian attributes, the perception of hedonic attributes represents holistic and multi-sensory experiences (Lageat et al., 2003). Hedonic attributes such as scent and music not only have a stimulus response reaction but also cause perceivers to create multi-sensory images within themselves that contain sights, sounds and impressions, which are experienced (Hirschman and Holbrook, 1982). These images are aided by past experience and emotional reactions (Lageat et al., 2003). The above suggests that hedonic attributes, due to their experiential nature, are likely to lead to stores being uniquely differentiated from each other. Thus, while the location and the pricing policy of a store can be imitated or at least approximated by others within the cluster, the experience created by the unique combination of a store’s atmosphere, its music and scent, and its employees’ service is likely to be unique to that store. Secondly, hedonic attributes elicit emotional reactions (Lageat et al., 2003), which is likely to catalyze the affective phase of the four-phase loyalty model (Oliver, 1999). Thus, it is possible that, hedonic attributes can elicit attitudinal loyalty, due to the emotional responses they elicit. Indeed, research has recognized that store or mall visits may be made for the pleasure in the visit itself (Bellenger and

Korgaonkar, 1980; Dawson et al., 1990) and has acknowledged that excitement–a combination of pleasure and arousal (Russell and Pratt, 1980)–increases hedonic shopping value (Dawson et al., 1990; Babin et al., 1994). MacCannell (2002) has compared shopping to recreational travel, emphasizing consumers’ need for entertainment while on a shopping trip. Finally, stores are brands too with their own brand equity (Keller, 1993). For example, Wal-Mart and amazon.com are ‘‘Olympic brands’’ as per BrandSignatureTM although the former is more familiar to consumers than amazon.com (Clarke, 2001). Hence, just as a consumer develops both attitudinal and behavioral brand loyalty, she may develop attitudinal and behavioral loyalty towards a store. We develop and test a scale to measure store loyalty along the two dimensions (described in Study 3). Consumers loyal to a store are less likely to switch to another store in the case of a stockout (Campo et al., 2000; Emmelheinz et al., 1991), and are more likely to buy store brands (Ailawadi et al., 2001). Thus, while loyalty to a brand in a category is likely to reduce a consumer’s consideration set (Reilly and Parkinson, 1985), loyalty to a store is also likely to minimize the consumer’s consideration set to the brands available in that store. Thus, when a preferred brand is stocked out at a preferred store, loyalty towards the brand and loyalty to the store will conflict, especially if the consumer is aware of the availability of the preferred brand at another store. The interplay of brand and store loyalty in a stockout: We now turn to the interplay between brand and store loyalty in a stockout situation. While store and brand image both affect one another (Grewal et al., 1998) and brand choice could be interrelated with store choice (Aaker and Jones, 1971), in a situation of a stockout of a brand, there is potential for a conflict between brand and store loyalty. There is some evidence that how consumers respond to a stockout depends on two competing costs viz. the cost of switching brands and the cost of switching stores such that if switching brands costs lower (higher) than switching stores, consumers will follow within-store (betweenstore) substitution (Corstjens and Corstjens, 1995). When a consumer is shopping at a retail location, the interplay between that consumer’s loyalty towards a brand and the store could influence the consumer’s consideration set because consideration sets are formed to (a) simplify the choice process and (b) optimize the choice outcome (Chakravarti et al., 2003). Specifically, brand loyalty towards a product-brand in a category is likely to reduce the consideration set to that brand, to the exclusion of all other brands whereas loyalty towards a store is likely to minimize the consideration set to the set of brands available in that store. While brand loyalty is likely to influence between versus within-store substitution in a stockout, the extent of loyalty the consumer has towards the store may moderate this influence such that: H3: loyalty to a preferred store moderates the influence of brand loyalty on choice such that: a) brand loyalty increases between-store substitution when loyalty towards the store is low and b) brand loyalty decreases within-store substitution when loyalty towards the store is low.

3. Method As summarized by Sloot et al. (2005), extant literature on the subject has relied on field experiments, and surveys to investigate the relationships and test the hypotheses. In field experiments, true stock-outs are studied while surveys consider hypothetical stock-outs in which respondents are asked how they would react

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if a purchased item or brand was unavailable (Sloot et al., 2005). We concur that such methodology is essential for external validity (Shadish et al., 2002). However, we also feel that laboratory experiments, that may not be very high on realism, offer better control of the variables involved and thereby, provide more internal validity (Shadish et al., 2002). Consequently, we believe that such a methodology would be an excellent complement to extant research and we use a combination of a survey (Study 1) and experiments (Studies 2 and 3). In the first round of exploratory research, we conducted indepth interviews among the staff members (n ¼10) of a large Northeastern university to verify the existence and understand the phenomenology of store loyalty from the consumers’ perspective. Essentially, participants reported loyalty to a retail chain and/or to a specific store within the chain such that they would prefer any store of this preferred chain/the specific store and actively search for it. Specifically, participants would buy some products at any store of convenience that stocked the brands they preferred while there were some products, which they invariably purchased in their preferred store, regardless of the brand available. After this qualitative espousal of our construct, we collected data through a survey on actual grocery store patronage at a large university in the Midwest for quantitative support. 3.1. Study 1 Two hundred and twenty-seven participants completed the survey although some of the participants’ completed questionnaires had to be deleted due to incomplete responses, reducing the set of valid responses to 157. We collected data on a multitude of dimensions, using a 22-item questionnaire (Appendix A contains the relevant items reported). We measured store loyalty indirectly by asking participants to record (a) one store they had visited most often in the past ten grocery visits and how many times they had visited the store, (b) the time taken to reach their primary (first preference) grocery and (c) the time taken to reach their secondary or second choice grocery store. The higher the frequency of visit, the higher the behavioral loyalty and the larger the mean of the time taken (whether the store is primary or secondary), the more time participants were willing to spend to get to that store–a sign of resistance to switching costs or attitudinal store loyalty. Wal-Mart seems to enjoy the most store loyalty of its patrons as survey participants visited Wal-Mart most often and, whether it was their primary or secondary grocery store, they also traveled the longest to get to it (Table 1). 3.1.1. Response to stock out We coded the response to item 10 (Appendix A) as response to stockout such that options a, b, c, d and e were coded as 1, 2, 3, 4 and 5 respectively. Thus a response close to 2 or lower would indicate a preference for within-store substitution, a response close to 3 would indicate a preference for purchase postponement and a response close to 4 or higher would indicate a preference for between-store substitution. Of the participants who did Table 1 Indirect measures of store loyalty–Study 1. How often visited in last 10 visits Walmart Kroger Brookshire’s Save a lot

80.53 76.58 79.54 76.25

SD

16.9 18.65 18.38 22.63

Time taken to reach secondary grocery store 2.27 2.05 1.82 2.00

SD

1.11 1.11 0.96 0.926

Time taken to reach primary grocery store 2.5 2.42 1.36 2.00

SD

1.10 1.15 0.674 0.816

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respond to item 10 (n ¼107), responses 1 and 2 (within-store substitution) occurred 40% of the time, response 3 (purchase postponement) occurred 34% and responses 4 and 5 (betweenstore substitution) occurred 26% of the time. 3.1.2. Discussion The first round of data collection focused on understanding the nature of store loyalty, brand loyalty, and the tradeoffs consumers make between brand and store loyalty. Specifically, we examined stockouts, and the lengths consumers are willing to go to for a store versus a brand. To test the hypotheses more explicitly in a controlled experiment, we conducted Study 2. 3.2. Study 2 In this study, we used an experimental manipulation of stockout of preferred brand. We selected toothpaste and breakfast cereal as the focal products for this experiment because these two products are commonly used and the student sample was likely to be highly familiar with the brands available in these two categories. Fifty undergraduate students at a medium-sized Midwestern university were asked to imagine they were going on a grocery shopping trip and that there were only two stores to shop from–stores A and B. Participants were instructed that store A (store B) was geographically closer (farther) to them and consequently was their preferred (less preferred) store. Only relatively less known brands, Ipana, and Mallow Oats for toothpaste and cereal respectively (these brands were selected from a pretest), were available in the preferred store (store A) to all participants thus forcing them to consider either betweenstore substitution or within-store substitution. We manipulated the availability of preferred brand of both toothpaste and cereal in the less preferred store. For participants in the favorite brand not available condition, another less known brand (Gleem and Alpen for toothpaste and cereal respectively) was available in the less preferred store (store B), while for participants in the favorite brand available condition, their preferred brand (as indicated by them) was available in store B. 3.2.1. Measures Following the manipulations, participants responded to two items, (anchored by 1¼disagree completely and 9¼agree completely) for each product. The items were: ‘‘I would much rather buy ____(Ipana/Mallow Oats) from Store A than go to the other store,’’ (within-store substitution), and ‘‘I would much rather go to Store B to buy my preferred brand than buy ____ (Ipana/ Mallow Oats) at Store A,’’ (between-store substitution). 3.2.2. Results Across toothpaste and cereal, as expected, between-store substitution occurred more when the preferred brand was available in the less preferred store than when it was not (M ¼6.004M ¼3.17; F (1,47)¼38.72, p o0.0001) in support of H1a. In addition, within-store substitution occurred less when the preferred brand was available in the less preferred store than when it was not (M¼3.769 oM¼5.804; F (1,47)¼12.67, po0.001) in support of H1b. The results were consistent for both product categories separately as well (Mtoothpaste ¼5.776 4 Mtoothpaste ¼3.601; F (1,47)¼39.086, p o0.0001 and Mcereal ¼ 5.7764Mcereal ¼3.601; F (1,47)¼39.086, p o0.0001). 3.2.3. Discussion Thus, in this study we see evidence for between- and withinstore substitution. However, the intended contribution of this research lies in the investigation of the influence of brand loyalty

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on between- and within-store substitution and the interplay between brand and store loyalty. In order to investigate that brand and store loyalty must be measured rather than manipulated experimentally because, while it may be possible to manipulate the attractiveness of an option and thereby its preference at any given point of time, it is not feasible to manipulate a longitudinal construct such as loyalty. Consequently, we measured brand and store loyalty in Study 3.

3.3. Study 3 3.3.1. Pretest On the basis of our conceptualization of the construct, we generated a set of 4 scale items (see Table 2), which we administered to 113 undergraduate students at a medium-sized midwestern university. While the first two items measure the attitudinal dimensions of loyalty, the last two measure the behavioral dimensions. In one of the earlier rounds of data collection, Kroger emerged as the store enjoying the most loyalty in the area where the participants live; consequently the participants were asked to indicate how strong their loyalty is to Kroger. A principle component exploratory factor analysis on the data yielded one factor with an eigenvalue greater than 1 that explained 65% of the variance. Thus, only one component was extracted and each of the items loaded satisfactorily on the single component (0.77, 0.89, 0.87 and 0.66 respectively). The corrected item-to-total correlations of the remaining items were all satisfactory ( 40.50), as were the average inter-item correlations (Table 2) and the Cronbach’s alpha for the items was 0.81. We computed a store loyalty score for each participating by taking a mean of the scores on the four items. As expected, the store loyalty score for the sample was normally distributed (Mean¼5.07; SD¼1.54; Shapiro Wilk test statistic ¼0.98, p40.3). We developed a four-item scale of store loyalty to test our hypotheses primarily because we wanted to use a parsimonious scale that taps into both attitudinal and behavioral components of store loyalty. Based only on these two characteristics, we preferred our scale to the scales in extant research (please refer to Table 3 for a summary of three existing scales measuring store loyalty). For example, Ray and Chiagouris (2009) employed a three-item scale (Table 3), which also has good psychometric properties. However, in our scale two items (1 and 2) pertain to the attitudinal and two items (3, and 4) pertain to the behavioral dimension of store loyalty. Bridson and Hickman (2008) also recognize the importance of the attitudinal and behavioral components and employ a 16-item scale of store loyalty, which has good psychometric properties. While we have no concerns about the information provided by this scale, we feel our scale, being a four-item scale, is parsimonious and less likely to cause participant fatigue. Finally, Reynolds et al. (1974/75) also employed a four-item scale which, while comparable in parsimony, does not do enough justice to the attitudinal component of store loyalty,

with almost all of the items (except 3, to a lesser extent) measuring the behavioral component of store loyalty. 3.3.2. Main study We used the same products (toothpaste and cereal) as Study 2 for consistency. Similar to Study 2, 76 undergraduate students at a medium-sized Midwestern university were asked to imagine they were going on a grocery shopping trip and that there were only two stores to shop from–store A (closer and preferred) and store B (farther and less preferred). Similar to Study 2, the participants completed the task of product and store selection, and the responded to the measures. Table 3 Store loyalty scales used in extant research–Study 3. Authors

Item

Reynolds et al. (1974/75)

I do most of my shopping in the same stores I have always shopped inb Once I get used to where things are in a super market, I hate to change storesb. I like things the old, established waya. Once I have made a choice on which store to buy clothes in, I am likely to shop there without trying other storesb.

Ray and Chiagouris (2009)

I am committed to this storea. I intend to return to shop at this storeb. I will use this store next time I buy ( )b.

Bridson and Hickman (2008)

I consider myself a regular customer of this retailerb. I feel loyal towards this retailera. I consider this retailer to be my first choice when shopping for the category of goods it sellsb. I intend to do more business with this retailer in the futureb. I always find myself consistently buying from this particular retailerb. I make most of my purchases from this retailerb. I often find myself telling people about the positive experiences I have had with this retailera. Because of my experiences with this retailer, I try to convince friends, family and co-workers to switch to this retailera. I say positive things about this retailer to other peoplea. I would recommend this retailer to someone who seeks my advicea. I encourage others to do business with this retailera. Even if this retailer was more difficult to reach, I would still keep buying from ita. Regardless of competitors’ offers, I always shop at this retailerb. I would never consider switching to another retailerb. Even if another retailer had a sale, I would still buy from this retailera. If this particular retailer was closed, I would find it difficult to find a substitute retailerb.

a b

Pertains to attitudinal dimension of store loyalty. Pertains to behavioral dimension of store loyalty.

Table 2 Item-to-total correlations, and intercorrelations–Study 3. Number

1 2 3 4

Item

‘‘I think Kroger/my preferred store is overall better than other stores.’’ ‘‘I really like Kroger/my preferred store.’’ ‘‘I intend to keep shopping at Kroger/my preferred store.’’ ‘‘No matter what other stores may offer, I will always shop at Kroger/my preferred store.’’ a b

Item-to-total correlations

0.60 0.75 0.70 0.50

First reported figures are from pretest, figures in parentheses are from the main study. All correlations are significant at the 0.01 level (2-tailed).

a,b

(0.86) (0.84)b (0.82)b (0.53)b

Items 1

2

3

4

1 0.57 (0.91)b 0.50 (0.82)b 0.43 (0.50)b

1 0.81 (0.81)b 0.41 (0.48)b

1 0.41 (0.51)b

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3.3.3. Measures Besides the measures collected in Study 2 (between-store substitution, and within-store substitution), we also collected measures of brand loyalty as per Putrevu and Lord (1994) for each product through two items (anchored by 1¼disagree completely and 9 ¼agree completely): ‘‘I always purchase my preferred brand of __toothpaste/breakfast cereal,’’ and ‘‘I am willing to buy a new brand of ____(toothpaste/breakfast cereal).’’ The second item was reverse coded to assess brand loyalty for each product. Finally, after completing the tasks related to the products, participants responded to the four-item store loyalty scale. Because the manipulation involved imaginary stores, unlike the pretest, participants indicated their loyalty towards their preferred store, instead of Kroger (refer to Table 2 for items). 3.3.4. Results Consistent with the pretest, the four-item scale for store loyalty had good psychometric properties. The EFA (principle component) on the items yielded one factor with an eigenvalue greater than 1 that explained 77% of the variance. The corrected item-to-total correlations of the items were all satisfactory ( 40.50), as were the average inter-item correlations (Table 2) and the Cronbach’s alpha for the items was 0.89. Similarly, the two-item measure of brand loyalty had high reliability for each product (Cronbach’s alpha was 0.77 and 0.61 for toothpaste and cereal respectively). An analysis of covariance (ANCOVA) with brand loyalty and store loyalty as the covariates revealed that, brand loyalty increased between-store substitution for both products (btoothpaste ¼0.9, Wald w2 ¼25.57, p o0.001 and bcereal ¼1.05, Wald w2 ¼42.42, po0.001) in support of H2a and reduced within-store substitution for both products (btoothpaste ¼  0.96, Wald w2 ¼42.06, po0.001 and bcereal ¼  1.03, Wald w2 ¼32.18, p o0.001), in support of H2b. Contrary to expectations, store loyalty had no influence on between-store substitution for either product (Wald w2tooth2 paste ¼ 0.74, p 4 0.4 and Wald wcereal ¼1.76, p 40.2); similarly, store loyalty had no influence on within-store substitution for either product (Wald w2toothpaste ¼ 2.8, p 40.09 and Wald w2cereal ¼2.21, p 40.1). Thus H3a and H3b were not supported. In fact, store loyalty had no main effect on between-store substitution for either product (Wald w2toothpaste ¼0.74, p 40.3 and Wald w2cereal ¼1.75, p40.1); store loyalty did, not have a significant influence on within-store substitution for toothpaste (Wald w2toothpaste ¼ 2.83, p40.09) but did have a marginally significant positive influence on within-store substitution for cereal (bcereal ¼0.33, Wald w2 ¼2.21, p o0.15). 3.3.5. Discussion The store loyalty scale developed in the pretest and tested in this study indicates that consumers are differentially loyal to a preferred store. Even so, the study also shows that the level of loyalty towards the store does not seem to influence behavior in a stockout of a preferred brand. Consumers seem to develop loyal relationships to brands that compel them to seek those brands at other stores, but loyalty to a store does not seem to influence behavior if a preferred brand is stocked out at the preferred store. This result suggests that brands that have built sufficient loyalties may, in doing so, have built an insurance against loss of sales to competition in the occasional stockout. 4. General discussion Stockouts irritate consumers, and lower their satisfaction (Fitzsimons, 2000). Retailers suffer if consumers switch stores or

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cancel purchases, while brand managers suffer due to brand switches and decreased brand loyalty (Sloot et al., 2005) although brand managers may suffer more than retailers (Campo et al., 2003). For example, a stock-out results in the manufacturer losing more than half of their buyers to competitors, but retailers lose only up to 14% of their shoppers (Campo et al., 2000). As Reichheld (1996) and Reichheld and Sasser (1990) report, an increase in customer retention of 5% increased net present value of profit between 25% and 95% across 14 industries indicating the importance to marketers of garnering consumers’ loyalty. Furthermore, customer retention is less costly than customer acquisition (Fornell and Wernerfelt, 1987). As consumers buy brands in stores, the consumer–store relationship becomes important to marketers because of the potential effects of the tug-of-war between the two loyalties on brand choice. While we hypothesized that store loyalty would moderate the influence of brand loyalty on choice during a stockout, we did not find any such influence. Instead, we found evidence for the strong influence of brand loyalty on behavior during a stockout. The four-item scale we developed to measure store loyalty had strong psychometric properties that were consistent across two studies; store loyalty scores were also found to be normally distributed. Thus there is evidence of differential levels of loyalty towards stores but this loyalty seems to be trumped by brand loyalty in stockout situations. This suggests that store loyalty may be somehow ‘‘colder’’ than brand loyalty. The consumer–store relationship may be based more on convenience whereas the consumer–brand relationship may be more akin to human relationships (Fournier, 1998) because consumers brings their brands home; consequently, they are willing to go to greater lengths to acquire the brand they are loyal to. There could be other moderating influences at play–for example, involvement with the product could influence behavior such that higher involvement products may lead to more betweenstore substitutions than low involvement products. Consumers also vary in terms of the size of their ‘‘shopping basket’’ (Manchanda et al., 1999). The large basket shopper who aims to complete a larger percentage of her shopping requirements in one shopping trip is more likely to let the set of brands available at the store determine her consideration set and has lesser flexibility to alter her purchase on the basis of availability. In contrast, a small basket shopper typically shops for a few things at a time, thereby enjoying greater flexibility to make alterations to what she buys and visiting more stores in order to get what she needs (Bell and Lattin, 1998). It is possible that a large basket shopper, who has lesser flexibility, is more likely to make within-store substitutions than between-store substitutions than the small basket shopper. Future research needs to investigate the possible role of involvement with the product and basket size on the interplay between brand and store loyalty. In this paper, we make three significant contributions. Firstly, we developed a four-item scale to measure store loyalty, which, like extant scales, has strong psychometric properties that were consistent across two studies but is unique because it taps into both attitudinal and behavioral components of store loyalty and is also parsimonious. Secondly, although we hypothesized that store loyalty would moderate the influence of brand loyalty on choice during a stockout, we did not find such an influence. Instead, we found evidence for a strong, independent effect of brand loyalty on behavior during a stockout. Thus we find evidence of differential levels of loyalty towards stores, but this loyalty seems to be trumped by brand loyalty in stockout situations. Thirdly, to add to the depth of research on the subject that has primarily relied on field experiments or surveys, we use a unique methodology (laboratory experiments), which enhance the internal validity of the findings. Having said that, channel types (e.g. convenience

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store, grocery store, and gas station) can likely influence the relationships tested. While the focus of the current research has been internal validity or the test of the specific relationships only, future research must replicate the studies in the different formats to ensure generalizability (external validity). A limitation of this research is that fictitious stores and situations were used and participants were asked to imagine that they were going on a shopping trip. It can be argued that responses to such tasks may not represent behavior in reality. However, it must be noted that such conditions were presented to all participants in all conditions of the experiment and we found differential effects based on levels of certain factors (e.g. brand loyalty). If all other conditions are kept the same, differential results are attributable to the factor whose levels are different, thereby suggesting a causal relationship. Such experimental methodology, while not strong on external validity or generalizability, is very strong on internal validity or the ability to examine the hypothesized relationships (Shadish et al., 2002). Another limitation of this research is that only undergraduate students participated in our studies. Again this was justifiable from internal validity perspective but for generalizability, future research should replicate the results on a non-student sample.

Appendix A. Grocery Shopping Survey The following questions are about your grocery shopping habits. There are no right or wrong answers. We are simply interested in the shopping habits of a sample of consumers. 8.In the past several times that you visited a grocery store, do you recollect any particular brand/product of your choice that was stocked out? Circle either yes or no. Yes

No

10.If your answer to question 8 was ‘‘yes,’’ what did you do? Please circle the letter of the sentence that best matches your response. (a) I like this brand, but if it is not there, I will substitute another brand for it (b) I will substitute another product for the brand. (c) If this brand is not there, I will get it next time I visit the store (d) I will go to another store to get the brand (e) I will go to as many stores as needed till I get this brand Product Category

Preferred Brand

Response to outage? a/b/c/d/e

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