The Finnish Competition and Consumer Authority (FCCA) has conducted a survey to investigate consumers’ shopping behaviour in the grocery retail trade. The specific focus was on the impact of customer loyalty programmes on shopping behaviour.
Based on the results of the FCCA survey, store location was clearly the deciding factor in the selection of both the primary and complementary store. The results are in line with the FCCA’s earlier study on the regulation of store locations. After location, the choice of store was most affected by a product selection matching the consumer’s needs, the familiarity of the store, the reliable availability of goods, the high quality of products and the cleanliness and pleasant ambience of the store.
Opening hours also had a significant impact on the choice of complementary shopping places, in particular. Factors related to loyalty programmes, on the other hand, were of smaller significance than location and opening hours. Even so, more than half of the survey respondents estimated that factors related to customer loyalty have a significant or very significant effect on their choice of shopping place.
The structure and reward scheme of the customer loyalty programme affect shopping behaviour
On the basis of the report, the better consumers were financially rewarded afterwards for concentrating their purchases in one trade group, the more likely they were to do so. The greater the monetary reward, the more carefully the respondents also monitored the amount of money they used on grocery shopping and the more willing they were to change their shopping behaviour in order to obtain a better reward.
Based on the responses, the consumers participating in the survey could be divided into three different categories: those who concentrated more than half of their shopping in the K group, those who concentrated more than half of their shopping in the S group, and those who decentralized their purchases and did not concentrate more than half of their shopping in any specific trade group.
The attitude of each category towards customer loyalty programmes was analysed separately. Analysis of the data revealed clear and significant differences between the different groups. Those who concentrated their shopping in K group stores attached the most importance to product offers and the convenience of the store location, while those who concentrated their purchases in S group stores attached the most importance to concentrating their shopping within the same trade group and store loyalty. Shoppers who decentralized their purchases, on the other hand, based their choice of store on its special offers and cheap prices.
The different groups also differed clearly in respect to factors related to customer loyalty programmes. The survey results show that consumers who concentrated their shopping in the K group appreciated reduced prices and advertising targeted at the customers of loyalty programmes more than a monetary reward for concentrating purchases. Those who concentrated their shopping in the S group were more inclined to concentrate their purchases in the same trade group. They considered a monetary reward for concentrating purchases important and were also prepared to increase their purchases in pursuit of the next bonus tier. Consumers who were loyal to the S group also appeared to take advantage of the loyalty programme benefits offered by the partners of the trade group more often. This was particularly evident in the use of service station and restaurant services. The shopping behaviour of consumers who decentralized their purchases was primarily guided by the reduced prices of loyalty programmes, while a monetary reward received afterwards was not important to them.
Implementation of the study
The study was conducted using a consumer survey. The survey was responded to by 1,009 Finnish consumers between the ages of 18 and 74. The survey included questions regarding the amount of money used monthly on grocery shopping, the frequency of shopping and the stores visited as well as attitudes towards loyalty programmes schemes and their impact on shopping behaviour. The data was collected in May 2014 via an Internet questionnaire by Taloustutkimus Oy.
The survey results serve the assessment of customer loyalty programmes from the perspective of competition law
The survey is part of a broader inquiry by the Finnish Competition and Consumer Authority, launched at the turn of 2013–2014, to assess whether the customer loyalty programmes and customer owner programmes of companies in a dominant position in the grocery trade have a potentially restrictive impact on competition in the grocery trade market. The work will continue during 2015, and the results of the published report will form a part of the assessment of the competitive impact of customer loyalty programmes.
Under Section 4a of the Competition Act, which entered into force from the beginning of 2014, a dominant position is deemed to be held by enterprises in the grocery trade holding at least a 30-per cent market share of the Finnish retail trade of grocery retailing. Currently, both the K and S trade groups are in a dominant position in the Finnish grocery trade market. Loyalty programmes in the grocery trade may lead to abuse of dominant market position if they deviate from normal competitive methods, thus further reducing competition in a concentrated market.
Read the report (in Finnish):
Päivittäistavaroiden ostaminen ja kuluttajien näkemykset kaupan kanta-asiakasjärjestelmistä