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Abstract
Retailing has been a growing but increasingly competitive activity. However, scientific research has not kept pace with such growth. In the last decade, store retailers have struggled to maintain position in a competitive retail market (Moye & Kincade, 2002). This is because, on the one hand, consumers tend to become more mobile and better informed, which discourages store loyalty to individual stores. On the other hand, major retailers, in general have invested heavily in site location and image building in order to differentiate themselves from competing stores and to target consumer groups more effectively (de Chernatony et al., cited in Knox & Dension, 2000).
Since stores prosper when customers give them a high share of their spending (share of loyalty) and retain them over long periods (Moye & Kincade, 2002), an understanding of why shoppers select one store over another and what factors generate store loyalty is critically important (Huddleston , Whipple, & VanAuken, 2004).
Peterson and Balasubramanian (2002) indicated in their article the research gaps in retailing and the call to develop comprehensive theories of retailing highlighting some issues that deserve research attention. It was pointed out, in their research agenda that concerning choice and loyalty, the dominant research perspective has been brand choice and brand loyalty instead of retail loyalty (e.g. Cunningham, 1961; El Sahn, 1999; Jacoby & Kyner, 1973). It can not be expected that models created for consumer and brand loyalty have direct application for retail loyalty. That is because, the retail setting has a unique nature that must be reflected in an avenue totally devoted to exploring different retail formats. East, Hammond, Harris and Lomax (2000) asserted that: “In sole buyer markets we treat defection (ceasing to buy the brand) as the opposite of retention, but in retail markets there is a second way in which a customer can end first store retention by demoting the store to secondary status”. This means that consumers patronize different retail types at the same time to satisfy their needs. Research suggests that traditional segmentation, which assumes that specific types of products are exclusively bought in certain outlets, is no longer true for product categories such as food (Farhangmehr, Marques & Silva, 2001). Accordingly, considerable research is needed in finding out the drivers of consumers’ retail store choice and store loyalty, especially in the food sector.
In the last decade, Egypt has witnessed the introduction of different retail formats all competing for the household’s share of visit and share of their expenditure. Some of these markets exist as anchor stores in shopping malls; others are to be found independently (Abdi & El Masry, 2001).This was not restricted to Egypt solely, but in many other countries as well, like Chile, Portugal, Sweden, the United States, the United Kingdom and Finland (Bianchi & Mena, 2004; Farhangmehr et al., 2001; Maegi, 2003; Morganosky 1997; Morganosky & Cude, 2000; Schmidt, Segal & Cartwright, 1994; Uusitalo, 2001).
More importantly, the introduction of such mega stores to the market represented a serious threat for small grocery retailers (Abdi & El Masry, 2001).
However, Dreesmann (1968) claimed that small stores are not doomed to die, as well as Kirby (cited in Brown,1987) where he introduced the polarization principle, which asserts that the well-documented trend toward fewer but larger retail establishment is counterbalanced by a rebirth of the small shop sector. Small shops therefore, complement, rather than compete with their larger brethren.
That is why, we can say that these large and small stores face an intertype competition, which describes the competitive environment that exists between businesses selling the same type of merchandise, but however have different operating formats and strategies (Moye & Kincade, 2002).Under such competition, customer share of wallet for retailers is of great significance and an important question is how shoppers divide their purchases across competing stores and whether and how retail managers can increase their share of their customers’ total category expenditures (Maegi, 2003).