Grocery Store Pricing and Its Effect on Initial and Ongoing Store Choice

Abstract

This article details the determinant bundle of store choice and the role of price as one of the major components in initial and ongoing store selection. Through a literature review and empirical research, the author confirms the results of over forty years of research into consumer price knowledge but questions internal reference price (IRP) theory. Implications for management are discussed.Consumers in EDLP, discount, HILO, and HILO/Value stores were randomly surveyed with unaided responses noted for shopper type and reasons for initial and ongoing store choice. The results show that, while most shoppers may have a market basket reservation price, they do not have a specific sense of product price or internal reference price when they shop. This lack of IRP may also affect initial and ongoing store choice.