Date of this Version
California Management Review
In this paper, we present a perceived shopping utility framework for analyzing the impact of retail price format on store choice, which in turn determines three key performance metrics: (1) number of shoppers, (2) number of trips, and (3) average spending per trip. Our approach is based on the premise that when choosing a store, consumers evaluate both the fixed and variable utilities of shopping. The fixed utility does not vary from trip to trip whereas the variable utility depends on the size and composition of the shopping list. We apply our model to summarize prior findings on store choice, analyze how retailers can improve their performance, and interpret the practices of leading retailers. Our framework can also accommodate situations when retailers face multiple segments who have different sensitivities to fixed and variable utilities. Finally, we discuss recent trends (e.g., online shopping) using our approach.
Tang, C., Bell, D., & Ho, T., Store Choice and Shopping Behavior: How Price Format Works, California Management Review 43, no. 2: pp. 56-74. Copyright © 2001 UC Berkeley Haas School of Business. Reprinted by permission of SAGE Publications.
This is a pre-publication version. The final version is available at http://dx.doi.org/10.2307/41166075
price format, perceived shopping utility, EDLP, HILO
Tang, C., Bell, D., & Ho, T. (2001). Store Choice and Shopping Behavior: How Price Format Works. California Management Review, 43 (2), 56-74. http://dx.doi.org/10.2307/41166075
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Date Posted: 15 June 2018
This document has been peer reviewed.