Danish Grocery Retail: Does Preference Structure Influence the Perception of Price and Quality?

Christie Nielsen & Ninna Aarfelt Andersen

Student thesis: Master thesis

Abstract

In recent years, the Danish grocery retail has been facing substantial changes as the competitive landscape increases. Discount supermarkets are reporting high growth rates, whilst the sales of conventional supermarkets are decreasing. The development is mainly caused by Danes favoring low prices on groceries, which discount supermarkets are offering. Despite lower price ranges, discount supermarkets have expanded the assortment to include high quality products thus targeting not only the price sensitive consumer but also the consumer with preference for high quality products. Thereby, discount stores are moving away from its original definition as they meet many shopping needs at once. The current competitive situation is not in favor of supermarkets. Recent research has proved that supermarkets are “stuck in the middle” as they cannot fulfill consumer needs, and as a result supermarkets are expanding the assortment with several private label products to meet the needs of the price sensitive consumer. Given the trend above, this thesis aims to examine the Danish grocery retail to segment Danish consumers based on their set of values and selection criteria. Doing so have two aims: First, it is investigated how a greater focus on quality affects consumers’ perception of price and quality across the store formats as well as product formats. Furthermore, the second aim of this thesis is to provide a link between consumer’s preference structure and the perception of price and quality. The research findings are based on empirical results conducted from a study of 506 Danish consumers somewhat responsible for the household’s grocery shopping. The results indicate four consumer types: Average Joes, Premiuers, Value seekers and Discounters. Average Joe and Discounter both have a preference structure for low price and low quality, whilst Premiuers favor high quality and high price. Value seekers are seeking high quality at low prices, hence the name. Further, the results show that preference structure do influence consumer perception of price and quality in Danish grocery stores as well as on product level. The practical implications of the results are based on the previous results. As competition increases, retailers need to differentiate the store formats and assortment even further to remain competitive.

EducationsMSc in Economics and Marketing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2016
Number of pages209
SupervisorsTorben Hansen