Consumers aren’t all running for Walmart’s “everyday low prices,” research suggests. Work by Pranav Jindal of the University of North Carolina, Ting Zhu of the University of British Columbia, and Chicago Booth’s Pradeep K. Chintagunta and Sanjay K. Dhar finds that consumers are also responding to other factors. Understanding those factors could help brands and retailers attract shoppers.
The researchers compared the performance of premium, value, and private-label brands, focusing on four products in particular: toilet paper, paper towels, eggs, and orange juice. They looked at how brands for those products sold at Walmart and at traditional grocery stores, and what drove the sales.
To control for how Walmart and grocery stores can price products differently, and carry more or fewer competing products, the researchers looked at relative shares of brand types. For example, instead of looking solely at how well Charmin toilet paper (a premium brand) and Angel Soft toilet paper (a value brand) performed in various store formats, they looked at how premium and value toilet-paper brands performed relative to each other at the different stores.
They find that shoppers are influenced by several factors. By considering assortment in addition to pricing, retailers can increase sales in particular products and better determine what products sell best in their stores.