Study: Americans Who Most Believe In Equality Are Most Likely To Buy On Impulse

"Power-Distance Belief and Impulsive Buying," authored by Rice University Management Professor Vikas Mittal found Americans who believe in equality are more-impulsive shoppers.

Power-distance belief (PDB) is the degree of power disparity the people of a culture expect and accept. The higher the PDB, measured on a scale of 0 to 100, the more a person accepts disparity and expects power inequality. In general, Americans have a low PDB score relative to people in countries like China and India. The study found that people who have a high PDB score tend to exhibit more self-control and are less impulsive when shopping.

"In our studies, people with low PDB scores spent one-and-a-half times the amount spent by high-PDB individuals when buying daily items like snacks and drinks," Mittal said.

The effect was even more pronounced for "vice goods" -- tempting products like chocolate and candy -- than for "virtue goods" like yogurt and granola bars. The researchers hypothesized that people with low PDB scores -- who also should have lower self-control -- would show even stronger impulsive buying for vice goods because of their desire for immediate gratification. Researchers found low-PDB people spent twice as much on vice goods as high PDB people spent.

For the study, the researchers conducted multiple experiments and surveys. In one large-scale survey, they asked 901 Americans to provide measures of their PDB, or their attitude toward equality. Then, the researchers observed the participants' online shopping behavior by giving them $10 to purchase a selection of items and telling them they could keep any unspent money.

The U.S. scores at a relatively low 40 PDB, compared to Russia (93), the Philippines (94), Singapore (74), China (80) and India (77). Austria (11), Germany (35) and New Zealand (22) also score low, whereas Japan (54), Vietnam (45) and South Africa (49) score more in the middle.

Retailers dealing with multicultural markets may want to apply knowledge about consumers’ cultural background of PDB to adapt their advertising, promotions and displays.  “Marketers need to ascertain whether their products or brands are viewed by different consumer segments as virtue or vice products," Mittal said. "Our study shows that vice products will be more susceptible to impulsive buying among low-PDB consumers.”

This is an interesting concept, though I'm not sure how much the average c-store operator can take away from this in terms of product selection, merchandising and marketing. Still, knowing more about your customers is always a good thing. -- Barb Grondin Francella

Post-Recession Relationships

C-store operators have long grumbled about their relationships with the world's largest consumer products makers, whose new product introductions, pricing, merchandising and marketing strategies have a profound effect on retail category management efforts. For every company praised by retailers for their ability to partner for mutual benefit, there are others that elicit disgruntled mutters.

The recession, however, is altering the give-and-take of the retailer/supplier relationship. As the recession eases, name brand makers will be under even greater pressure, according to Deloitte LLP, which recently presented a list of 2010 trends for retailers and consumer products.

Among Deloitte's predictions: The retail industry will continue to consolidate and operators will expand their private-label programs. This is likely to mean more power for the retailers left standing, as they reduce overall shelf space and give much of the remaining space to store brands.

Retailers already are reducing the number of brands on the shelf and, in some cases, removing entire categories. For example, Deloitte pointed out, under its “Win-Play-Show” initiative, Walmart is reducing product assortment by 15 to 18 percent.

In response to these changes, suppliers will be forced to monitor even more closely a perpetual point of retailer/supplier contention -- pricing.  At the same time, Deloitte predicts, they will continue cost-saving initiatives, from divesting non-core or lower-margin brands to product rationalization and co-manufacturing with other manufacturers.

As retailers increasingly position their own brands through private label and original menu items, it will be interesting to see where consumer goods makers put their money and where they cut back. New product development, retailer incentives, consumer marketing -- or e-commerce efforts, to bypass retail altogether?

The give/take continues. -- Barbara Grondin Francella

 

The Power of Diversity In the Workplace

The c-store industry has evolved into one of the most diverse industries in the country, if not the world. Behind the counter may be a college student, recent retiree, single mom, career entrepreneur-turned--store manager, second-job seeker or new American. Just about anyone with an affinity for retail and customer service can succeed, and feel comfortable, working in a c-store.

Still, at many chain headquarters and in the offices of large consumer goods companies, whose products define each retailer, diversity and inclusion don't come quite as naturally, according to "White Men: Enrolling the Dominant Culture in Diversity and Inclusion,"  a report by the Network of Executive Women, Consumer Products and Retail Industry, whose members include representatives of the c-store industry, as well as other retail channels and the nation's largest consumer products makers.

An online survey last August of 635 NEW members and supporters revealed nearly 80 percent believe white men have an advantage in hiring and promotions. Thirty-seven percent believe white men have a clear advantage, while another 40 percent believe white men have "somewhat" of an advantage. The remaining 23 percent believe "the playing field is level."

The majority of those polled -- 70 percent -- were white women. (Sixteen percent were nonwhite or Latina women, 12 percent were white males and 1 percent of respondents were nonwhite or Latino males.)

When I saw the results of this poll, I thought about my first years covering the c-store industry, 20-plus years ago. While attending petroleum industry meetings, especially, I was often one of a handful of women, the others often members of the supplier community, in a workshop.

Once, a woman working the meeting's registration area handed me a badge and asked me what spouse program I wanted to attend.

Even the old boy's club of the petroleum industry is much more diverse now. Still, nearly half of the NEW survey respondents said the performance of white men in their organization on diversity and inclusion issues "needs improvement."

Not to say white males are a problem that needs to be fixed. While many white men may not recognize some of the inherent benefits they receive simply by being white and male, they are often misunderstood, misinformed, underestimated or stereotyped when it comes to diversity and inclusion efforts,  the report noted.

One way to help white men better identify with their diverse colleagues, the report said, is to educate them about their own diverse characteristics, such as ethnic heritage, age, religion, veteran status or political views. This approach moves their perspective from white/black and male/female and encourages a better understanding of the multicultural and multigenerational workplace, which leads to more open communication, stronger teamwork, more creative solutions to business issues and greater input from diverse perspectives.

"Successful diversity and inclusion efforts have real bottom-line advantages for every business person," noted Alison Kenney Paul, president of the Network of Executive Women (NEW) and a Principal at Deloitte LLP. "But not enough white men are given the opportunity to both understand their role in diversity as well as participate as partner in the solution. -- Barbara Grondin Francella  

Consumers Tea-ing Up

As a group, the c-store industry has done an excellent job of positioning coffee programs as high-quality alternatives to much-more-expensive coffee houses.  Few, though, have given the same thought to their hot tea offer.

But, according to a recent study by Packaged Facts, tea's image as an innovative - but accessible -- beverage that is good tasting, good for you, and budget friendly has kept  tea profitable, with 2-percent annual gains in 2008 and 2009, according to "Tea and Ready-to-Drink Tea in the U.S.: Retail, Foodservice and Consumer Trends," by market research publisher Packaged Facts. 

Over the next several years, the research firm predicts, tea sales will return to the double-digit gains experienced prior to the recession, particularly as additional research solidifies tea’s healthy and functional properties.

Packaged Facts estimates the U.S. market for tea sold through retail and foodservice channels will reach $9 billion this year and forecasts a 5-percent increase in 2010. Steadily rising annual percentage gains are projected through 2014, when growth will reach 10 percent and sales will exceed $12 billion.

Among the many new product introductions in the tea category: exotic flavored teas, tea and fruit infusions, and premium loose tea bags, which are at the forefront of innovations in both the retail and foodservice arenas.

"Tea’s healthfulness is still, of course, the beverage’s primary appeal, but in the current market environment consumers are increasingly recognizing good quality, customized tea as a comforting, affordable premium beverage splurge," notes Don Montuori, publisher of Packaged Facts.

Other factors driving the market, especially relevant to c-store operators: the greater involvement of the country's mega beverage companies; a greater emphasis on tea in the foodservice channel with the expansion of specialty brews; hybrid tea beverages crossing over into sparkling water, energy drinks and superfruit juices and the additional penetration of RTD teas in the c-store channel.

To someone who gets through the work day alternating Diet Pepsi with hot green tea, this study is spot-on.

 -- Barbara Grondin Francella

New York City Drug Store Institution Expands Convenience Store Lines

Duane Reade, the New York City-based drug store chain, consistently ranks among the top retailers in the drug store channel in sales per square foot. But, according to Supermarket Guru Phil Lempert, the retailer might be over-reaching with its new private label snack and beverage line, called DR Delish.
Lempert, writing on his food blog recently said, “No matter how ‘politically correct’ the packaging (suggestive of green and natural) or ‘health formulated’ the product (gluten-free, multigrain, etc.), it’s hard to imagine why the smart merchants at this chain think this line could succeed. Why would they expect fast-paced New Yorkers to spend time pondering a private label line of cookies, chips, trail mix and more—25 items at its launch—when their favorite snack brands that always satisfy are readily available?”

Millions of Manhattan residents and workers turn to Duane Reade because of its ubiquitous locations, not for innovation, according to Lempert. “Not even health, for that matter. And certainly not food leadership. At Duane Reade, convenience counts most,” wrote the NBC TV food editor and frequent contributor to both Convenience Store News and Progressive Grocer.
Lempert predicts DR Delish will fall short of expectations.

By contrast, Lempert points out that Walgreens, which enjoys a more robust image for healthcare excellence and complete one-stop shopping, including food for every daypart, is rolling out its new Customer Centric Retailing format stores to 400 more stores this year, after initial success with the first 35 test stores of this format.
As we've reported on CSNews Online, www.csnews.com, the new format includes the drug chain’s reintroduction of beer and wine to its shelves, a feature that will expand nationally (to about 70 percent of its 7,000 stores) over the next 12 to 18 months.
Lempert clearly prefers Walgreens’ approach to food and beverage because it more naturally suits its customers’ tendencies than the private label push by Duane Reade.

I can’t argue with Lempert’s analysis. However, I think Duane Reade will have better luck with the new line of Zabar’s sandwiches it has recently introduced in its stores. Zabar’s is a Manhattan institution known for its quality food in much the same way that Duane Reade is noted for its many locations. Either way, all this activity on the drug store front is a direct attack on some of the most important categories in a convenience store.
Duane Reade’s moves are obviously a very regional phenomenon. What are drug stores doing in your part of the country? Let us know? Reply here or email me at dlongo@csnews.com. I think competing successfully against the drug channel is going to become more critical than ever for the future of convenience store chains.
-- Don Longo, Editor-in-Chief, CSNews
 

Generation Why?

Generation Y, aka the Millennial Generation, aka Generation Next , aka Echo Boomers (with birthdates ranging roughly from 1980 to 2003) are probably the most important age cohort for your business.

These twentysomethings will be outspending baby boomers by 2015. As employees, they can attract and relate to Gen Y customers like no other employee.

During a presentation on Gen Y at the recent Network of Women Leadership Summit, Jayne O'Donnell, USA Today's retail reporter and coauthor of "Gen BuY: How Tweens, Teens and Twentysomethings are Revolutionizing Retail," told attendees these consumers feel greater love of and connection to shopping and brands than older shoppers do, haven't notched back spending as much as their parents have, and greatly influence what their parents and others buy.

They're a forgiving bunch too. In one study cited by O'Donnell, 45 percent of Gen Yers said they were bothered by untrained salespeople, while more than 60 percent of customers over 30 were.

As employees, they have traits that would benefit any c-store operator. According to O'Donnell, they become authentic marketers when they can claim some ownership in products, ideas and advertisements.

But, they hate looking like everyone else. Retailers may want to give them the chance to personalize their work attire, she suggested - -and make the store environment one that's fun to be in. Another suggestion: Empower them to connect with consumers on and off-line.

Even this Baby Boomer would be attracted to that type of retail experience.

 -- Barb Grondin Francella

Keep on Working to Win

Dear Don,

Great editorial (Longo's Viewpoint, Oct. 19, "Government's Crippling Effect"). I've been in the industry 30 years. I have never seen it this bad or seen such opposition to business at the state and federal levels.

You mention NACS lobbying (and by inference state organizations lobbying) and customers lobbying their representatives. Lobbying is but one step in the process and it comes on the down stream side of the process.

What I would like to bring to your attention is a partnership with a grassroots group such as Americans For Prosperity. Lobbying the current group of representatives has not proven to be hugely successful.

Grassroots groups educate and mobilize the voters. The real strength of our system is "We the people."

Just consider the possibilities if we change the legislators.

Legislation that understands the needs of business, free markets, and real reform of health care and the credit card mess.

Better legislators = better legislation.

We need to think outside the box and form new and unique partnerships if the free enterprise system is to survive and prosper.

I would enjoy the opportunity to continue this discussion with you at your earliest convenience.

Jim Zeiler

To read Don Longo's October 19 Viewpoint, go to http://www.csnews.com/csn/print/article_display.jsp?vnu_content_id=1004019005