The influence of store attributes on consumer attitudes towards private labels the case of metro cash and carry vietnam

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY Nguyễn Như Chang The influence of store attributes on CONSUMER ATTITUDES TOWARDS PRIVATE LABELS – The case of Metro Cash and Carry Vietnam MASTER’S DISSERTATION In Business Administration Ology code: 60.34.05 Supervisor Asso Prof Dr Nguyễn Đình Thọ Ho Chi Minh City, 2010 THE INFLUENCE OF STORE ATTRIBUTES ON CONSUMER ATTITUDES TOWARDS PRIVATE LABELS – THE CASE OF METRO CASH & CARRY VIETNAM ACKNOWLEDGEMENTS ABSTRACT ABBREVIATION Chapter 1: INTRODUCTION 1.1 Background to the research 1.2 Retail modernization in Vietnam 1.3 The Metro Cash and Carry Vietnam 1.4 Research objectives 1.5 Significance of the study 1.6 Research question 1.7 Structure of the thesis 1.8 Definitions 1.9 Scope of the study 1.10 Summary Chapter 2: LITERATURE REVIEW AND HYPOTHESES 2.1 Introduction 2.2 Retailer motivations for private labels 2.3 The evolution and repositioning of priva 2.4 The store attributes 2.5 The relationship between store attributes labels 15 2.6 The effects of store attributes on consum 2.7 Summary 2.8 The research gap Chapter 3: METHODOLOGY 3.1 Introduction 3.2 Research Methodology 3.2.1 The development 3.2.2 The questionnaire 3.2.3 Measurement 3.2.4 Data Collection 3.2.5 Sample Size and 3.3 Summary Chapter 4: DATA ANALYSIS 4.1 Introduction 4.2 Preliminarily qualitative examination of t 4.3 Respondent profile 4.4 Quantitative examination of the data through questionnaire 32 4.5 Summary 37 CHAPTER 5: CONCLUSIONS AND IMPLICATIONS 39 5.1 Introduction 39 5.2 Significance of findings 39 5.3 Implications for theory .41 5.4 Managerial implications 42 5.5 Limitations of the research .43 5.6 Further research 45 5.7 Dissertation conclusions 46 REFERENCE 48 TIẾNG VIỆT 48 ENGLISH 48 APPENDIX A: LIST OF TABLES 52 APPENDIX B: MCCVN’S PRIVATE LABELS PORFOLIO 60 APPENDIX C-1: THE SURVEY QUESTIONNAIRE– TIẾNG VIỆT 61 APPENDIX C-2: THE SURVEY QUESTIONNAIRE – ENGLISH 66 APPENDIX D: THE INTERVIEW TOOLKITS 71 List of Tables Table 1: MCCVN performance Table 2: The item list of store attributes 23 Table 3: Demographic profile of all respondents 31 Table 4.1: Descriptive statistics – Store attributes 52 Table 4.2: Descriptive statistics – Consumer attitudes 53 Table 5.1: Reliability – Store attributes 53 Table 5.2: Reliability – Consumer attitudes 54 Table 6.1: EFA results – KMO result .54 Table 6.2: EFA results – Communalities result 55 Table 6.3: EFA results – Total variance explained 56 Table 6.4: EFA results – Rotated component matrix .57 Table 7.1: Regression analysis – R2 value .58 Table 7.2: Regression analysis – Coefficients results 59 Table 8: Hypothesis test results 36 ACKNOWLEDGEMENTS Here are numbers of persons who have played important roles in assisting me finishing this research I would like to thank Asso Prof Dr Nguyen Dinh Tho who is my sponsor of the dissertation Thanks to his invaluable academic guidance while leading me to this approach and encouraging me in uncovering the issues in comply with a great understanding towards my working and studying time table, I deeply dug out the matter that is understood as also useful to the company I worked for I also would like to thank Dr Tran Ha Minh Quan who was my class head teacher and gave me lots of encouragement and proactive support over the course By the way, I couldn’t help acknowledging my classmates and colleagues who gave up their time to look for related documents and to help coaxing data in case So does a thorough understanding of my family, especially my beloved husband during the progress, become a significant motivation for me to successfully fulfill this master project I therefore would be grateful to their support and patience indeed Last, I would thank all consumers who have joined the questionnaire with sincere and active feedback to help me put the theory of consumer attitudes towards private labels in practice, specifically applied on the real case of Metro Cash and Carry Vietnam i ABSTRACT The retail market is now growing faster and bigger than ever over the world of which Vietnam is the sixth most attractive retail market in the developing world in 2009 Considered as one of key motivation strategies to differentiate retailers from retailers, private label products have been introduced and quickly become a global phenomenon and of increasing interest to practitioners and academics alike (Hoch and Banerji, 1993; Quelch and Harding, 1996) Private labels have achieved a significant global sales share, especially in grocery market, with a bright future of further development foreseen Still there is little research on private labels in Vietnam This dissertation therefore would contribute an empirical study about the influence of store attributes on the consumer attitudes towards private labels, explored specifically to Metro Cash and Carry Vietnam There are two parts to deeply be deployed in the dissertation: 1) store attributes, their roles and measurement scales; 2) consumer attitudes towards private labels in reference with the influence of store attributes And the Metro Cash and Carry Vietnam case is chosen to examine Deploying private labels from 2002, MCCVN enjoyed great success last year with sizeable sales share increased nearly double from 1.8% in 2008 to 3% in 2009 and its target to 2016 is 20% (MCCVN source, 2009) With the effort to find out determinants of the success of private labels, consumer attitudes have been dug into while the concept of retailer risen as brand The study bases on Chowdhury et al (1998) and Dodd and Lindley (2003) empirical studies of the influence of store attributes on the perceptions of specific private labels with reference to problem approach of Fraser (2009) dissertation, and deep analysis on brand equity of Nguyen & Nguyen (2008) ii From an academic viewpoint, this study contributes by illustrating that store attributes are considered as major strategic tools in the highly competitive retailing environment This finding points to the need for both practitioners and researchers to examine the “fit” between store positioning and private label positioning For retailers, the finding suggests the need to reduce perceived risks of private labels For manufacturers, the finding indicates that they should highlight the differences between their national brands and private labels, especially in terms of the superior quality For researchers, the finding also suggests that store attributes should be incorporated in models predicting consumer proneness towards private labels iii ABBREVIATION GRDI: The Global Retail Development Index Horeca: Hotels, Restaurants and Caterings MCCI: Metro Cash and Carry International MCCVN: Metro Cash and Carry Vietnam MGD: Modern Grocery Distribution SCO: Services, Companies and Offices iv Chapter 1: INTRODUCTION 1.1 Background to the research Private label products, or store brands, have become a major force with more than 268 billions US dollars in sales presented (Perez, 2008) Despite their market penetration varies from countries to countries, from retailers to retailers and from product categories to product categories; these brands, owned and managed by retailers, have grown to be a noteworthy threat to national brand manufacturers because of the tooclosed quality gap between them To retailers, private labels are not only one of key motivations for differentiation but also a strategy to improve their profitability, store attributes and brand loyalty (Quelch and Harding, 1996) This dissertation discovers consumer attitudes towards private labels of MCCVN with respect to key attributes of the store Even though consumer attitudes towards private labels have been span more than 40years in the world, this concept is still new in such a developing market of Vietnam as the first stage of penetration and further development prospect predicted in the future The literature review would deeply draw the whole scene of private labels from the viewpoint of retailers It also presents private label positioning as well as determinants of consumer attitudes towards private labels in which store attributes impressed and analyzed in detail base on the research of Chowdhury et al (1998) and Dodd and Lindley (2003) with reference to the dissertation of Fraser (2009) and Beyza and Leyla (2007), and the examination on brand equity of Nguyen & Nguyen (2008) Within the scope of the first chapter, the retail market of Vietnam in general and Metro Cash and Carry Vietnam in particular is examined The research question and hypotheses together with the methodology used in the study are introduced in the subsequent sections, following by definitions and explanations of some terminologies The last part provides a summary of the chapter 1.2 Retail modernization in Vietnam In Vietnam, the modern retailing began in the mid 1990s in the HCMC area (James M Hagen, 2002), followed by the capital, Hanoi, and Danang By end of 2007, there are 153 supermarkets (Lotte Mart, Coop Mart, Maximark, Citimart,…), 70 convenient stores (G7 mart, Shop and Go, Vinatex…), hypermarkets (Big C) and warehouse clubs (MCCVN) (Retail and shopper trends – Urban HCMC and Hanoi, AC Nielsen, 2008) Private labels have been established in 2000s, mostly by namely substantial stores as MCCVN, Coop Mart, Big C and Maximark Although they are considered as one of key parts of the modern retail strategy, their contribution is humble to count for, even in their internal sales shares, for example in MCCVN (one of the biggest concentrating on private labels from the beginning) private label sales share is only by 3% in 2009 As ranked by global management consulting firm A.T Kearney (the Global Retail Development Index – GRDI), Vietnam has fell down to th in 2009 from the most attractive retail market in the developing world in 2008 because of inflationary pressures from its own real estate boom, consumer price inflation in the last half of 2008, and a significant drop in its export-driven economy However, this retailing is still considered one of the most attractive industries in Vietnam and continuing to transform Vietnam economics with domestic consumption as a primary focus coinciding with its committable opening doors to international investors, young population and continuously urbanizing process – a trend that should favor continued growth in retail over the long term (Moriarty and Shabat, A.T Kearney partners) This retail process of modernization and innovation would trigger enhance the bright prospect of the private label development 1.3 The Metro Cash and Carry Vietnam MCCVN has started business in Vietnam since 2002 By 2009, it is voted as the first choice international wholesaler and the market leader in Vietnam with stores nationwide currently and more plots expansion processing With sales regularly increase year after year, in 2009, it achieved vnd bil7,188 (11% increase in compare with 2008) vs vnd bil15,770 of the modern grocery distribution in hypermarket and supermarket (MGD; 37% increase in compare with 2008); or 45.6% of MGD Vietnam (Source: Euromonitor, MCCI Corp Controlling) However, competitors still exist as hypermarkets, supermarkets and convenient stores (Big C, Saigon Co-op, Maximark, Lotte…), wet markets, importers, black/grey markets and shortly coming international retailers like Tesco, Auchan, Aeon Its most limitations but opportunities to improve are payment method by cash and limited delivery services It is also necessary to have a quick glance on MCCVN’s customer types MCCVN is a solely special business type in Vietnam that mostly concentrates on sales in bulk Their customer types are professionals, classified into three: Horeca to concentrate on hotel/accommodation, restaurant, bar/café, canteen, eateries and catering customers; Traders to concentrate on big groceries, mom and pop shops and small wholesalers; SCO to concentrate on service, companies, offices and non-residents consumers While customer shares among these types are in turn 12.6%, 19% and 68.4%; the turnover shares are slightly alike 15%, 30% and 55% (MCCVN source, 2008) For the scope of this dissertation, SCO consumers are chosen to examine because of its largest ratio in both consumers share and sales share In another reason, SCO is also the consumer type of other supermarkets, hypermarkets and convenient stores That not only helps expand the dissertation scope to apply to other store types (supermarket, hypermarket, convenient store…) in somehow but also be adaptable for retailing concept applied for MCCVN in retailing aspect Lưu yù: 1 Metro siêu thị bán sỉ Việt Nam Anh/chị phải có thẻ thành viên Metro vào mua sắm kho Metro 2 Hàng hóa mang thương hiệu riêng Metro Việt Nam gồm thương hiệu sau: Aro/ Fine Food/ H-Line/ Luxana/ Horeca Select/ Sigma/ Fairline/ Authentic/ L.Lambertazzi/ Rioba/ Watson Tarrington House Đây sản phẩm thuộc quyền sở hữu quản lí riêng Metro (được gọi sản phẩm mang thương hiệu riêng Metro) Anh/chị mua chúng tận gốc từ kho Metro mà thơi 3 Ngồi sản phẩm mang thương hiệu riêng Metro, siêu thị khác có sản phẩm mang thương hiệu riêng họ, siêu thị Coopmart (có sản phẩm mang thương hiệu riêng Coopmart), Maximark (có Arluy) and Big C (có Wow…)… 4 Sản phẩm mang thương hiệu khác sản phẩm tạo ra, quản lí, kiểm sốt thuộc quyền sở hữu công ty sản xuất Head and Shoulders, Omo, P/S, Coca-Cola, X-men, gốm sứ Minh Long… Các sản phẩm bày bán siêu thị không thuộc quyền sở hữu siêu thị -o0o - Cảm ơn anh/chị nhiều tham gia trả lời bảng câu hỏi khảo sát Chúc anh/chị ngày vui vẻ làm việc hiệu 65 APPENDIX C-2: THE SURVEY QUESTIONNAIRE – ENGLISH THE SURVEY QUESTIONNAIRE Completion of this questionnaire is taken as your consent to participate Screening questions: Have you ever shopped at Metro? Ỉ If Yes, keep going on; If No, stop here Thank you for your willing with us 2 Have you ever used own-brand products of Metro? Ỉ If Yes, keep going on; If No, stop here Thank you for your willing with us Main questions: Instructions: Please read the following statements and circle the number that most accurately gives your opinion Circling means you strongly disagree with the statement and means you strongly agree You may also wish to circle any number in the middle to show how strong your opinion is What are your opinions about Metro image? Variables VA-1 VA-2 MCCVN carries MCCVN has a VA-3 66 MCCVN is one- QA-1 MCCVN sells o QA-2 MCCVN produc QA-3 I like MCCVN p QA-4 I can count on t QA-5 I'm satisfied wit PR-1 I can buy produ PR-2 I get value for m PR-3 The prices at M SV-1 MCCVN emplo SV-2 MCCVN emplo SV-3 The service of M SV-4 I am pleased w SV-5 Sales promotio AP-1 The appearanc AP-2 I like music play AP-3 I like colors use AP-4 MCCVN is alwa AP-5 MCCVN is mod AP-6 Merchandising CV-1 MCCVN is not t CV-2 CV-3 I can go for sho I like shopping What are your opinions about private labels of Metro (Metro private labels)? Variables AT-1 AT-2 I like MCCVN p I get value for m AT-3 67 My capability to AT-4 AT-5 I believe to want to buy MCCVN private label products MCCVN private labels are my first choices upon shopping at AT-6 MCCVN Overall MCCVN private label products are excellent If you are asked to rate the degree of frequency that you spend for your supermarket calls in rough, what percentage of your supermarket spending is at each of the following supermarkets? Metro …….% What is the share among your supermarket spending on each of the following brands? Please tick to the rate that is closest to your spending: Description MCCVN private labels Other supermarkets’ private labels (e.g.)3 National brands 68 Once you spend on private labels, please estimate the average percentage of your spend on food/non-food private label products for your supermarket calls in rough, what average percentage of your spending is at food/ non-food private label products every time of your shopping at supermarket? Please circle the number that is most appropriate to you: A Gender Female Male C Age group 20 – 34 years old 35 – 49 years old 50 – 65 years old Over 65 years old Notes: 69 1 MCCVN is a solely supermarket in Vietnam that sells in bulk MCCVN member card is of its primary requires to get in and to make a purchase in its store chains 2 MCCVN private labels = Aro/ Fine Food/ H-Line/ Luxana/ Horeca Select/ Sigma/ Fairline/ Authentic/ L.Lambertazzi/ Rioba/ Watson and/or Tarrington House These products are exclusive product lines of MCCVN, called MCCVN own brands (private labels) You only can find them originally from MCCVN store chains 3 There are other private labels in other supermarkets, named Coopmart (Coopmart brands), Maximark (Arluy) and Big C (Wow…)… 4 National brands are brands managed, controlled and/or belong to manufacturers such as Head and Shoulders, Omo, P/S, Coca-Cola, X-men, Minh Long ceramics… These products are also sold in supermarkets but their brands don’t belong to supermarkets -o0o - Thank you very much for joining the questionnaire It is great help and highly appreciated 70 APPENDIX D: THE INTERVIEW TOOLKITS Retail market in Vietnam Ỉ Metro General trade Small Grocery E&D Copyright © 2009 METRO Cash & Carry Vietnam ƒ Metro system: - stores currently: (HCM), (Bien Hoa), (Can Tho), (Danang), (HP) & (HN) more opening: HCM, Long Xuyen, HN, NT & BD - Cash payment & self-delivery Contents - Customer types: Trader, Horeca & SCO Introduction METRO Cash & Carry Vietnam Page Member of METRO Group Retail market in Vietnam Ỉ Metro Metro own brand porfolio interview steps Discussion METRO Cash & Carry Vietnam Page 71 Member of METRO Group Introduction Topic: THE INFLUENCE OF STORE IMAGE ON CONSUMERS’ ATTITUDES TO PRIVATE LABELS – THE CASE OF METRO CASH & CARRY VIETNAM Research requirements: -Collect full answers from at least 240 respondents who are interviewed directly at Metro exit gate of An Phu (District 2) & Hiep Phu (District 12) METRO Cash & Carry Vietnam Page Member of METRO Group Retail market in Vietnam Ỉ Metro Trading in VN General trade On premise Grocery At works/ School/ E&D/ Entertainment & hospitality ƒ Metro system: - stores currently: (HCM), (Bien Hoa), (Can Tho), (Danang), (HP) & (HN) more opening: HCM, Long Xuyen, HN, NT & BD - Cash payment & self-delivery - Customer types: Trader, Horeca & SCO METRO Cash & Carry Vietnam Page 72 Member of METRO Group Metro own brand porfolio HoReCa „Kitchen“ Core Needs „Guest Contact“ General Needs Complem „Me Needs Price Entry Products Brands Special Interests *TH mainly on Complementary Needs / partly on General Needs Æ Top OB: Horeca select, Fine Food, Aro, Rioba & H- line Member of METRO Group Focus on core Brands Price level A-BRAND C O VALUE R E BRAND N E E D S PRICE ENTRY METRO Cash & Carry Vietnam Own brands as a Unique Selling Proposition METRO Cash & Carry Vietnam Page Member of METRO Group Private label value added Differentiation Profitability Defense METRO SUPPLIER Range development Customer development Volume development METRO Cash & Carry Vietnam Marketing benefits Page 74 Member of METRO Group interview steps Step 1: Preparation -Double check if interview toolkits available -Customer seeking & filtering Step Customer greetings Step Presentation Step Objections/ Feedbacks handling Step End of interview Step Data records Friendly but target aiming at first Principle: Friendly, esteem, smiling & professional Principle: listening & positive in solving Thank you customers for their participation Gift offers Rearrange documents & data records if any for the next interviews Member of METRO Group DISCUSSION METRO Cash & Carry Vietnam Page 10 75 Member of METRO Group ... attitudes towards private labels b Product quality on consumer attitudes towards private labels c Price on consumer attitudes towards private labels d Service on consumer attitudes towards private labels. .. specific attributes, they can gain the advantage of store on the one hand and on the other hand transfer these positive attributes to consumer attitudes towards their private labels, by which private. .. percent of the variance in consumer attitudes towards private labels was explained by the combined effect of the store variables The consumer attitudes towards private labels were regressed on the store