Brand-size complementarity in the choice of retail stores

Abstract

Shopping patterns of consumers vary as the level of size and brand of stores change jointly or separately. Brand and size can be either complementary or substitutable with respect to consumers’ shopping characteristics. They are complementary to spending per visit, or brand magnifies the positive effect of size to spending per visit. Weekend consumers also tend to view size and brand complementary, which is so strong that there exists polarized shopping at either large nationwide brand or small unbranded stores during weekend. Car owners exhibit very similar patterns as weekend consumers. On the other hand, substitutability exists to explain shopping frequency. This effect is so high as to generate the polarized pattern; shopping frequency is high with regard to small nationwide brand and large unbranded stores. Substitution patterns also arise for working women, people older than 50, and high-income consumers.

Keywords:

• retail stores
• brand
• size
• complementarity
• substitutability
• assortment

JEL Classification:

• M31

Funding

This research was financially supported by the Rural Development Administration (RDA) of Korea [grant number PJ008729].

Notes

¹ The market shares of E-mart and top three in the large-sized retail industry is 37.3% and 87.4% in 2012 (E-mart Annual Report, 2012).

² Year 2012 is omitted, because the Distribution Industry Development Act in Korea began to regulate large discount stores and SSMs from April 2012.

³ This data is compiled based the receipts that household attach on the monthly account book.

⁴ We skip the discussion about working women, car owners and weekend shoppers due to page limit.