Luận văn thạc sĩ the influence of store attributes on consumer attitudes towards private labels the case of metro cash and carry vietnam

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 Administra

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

ABSTRACT 1

ABBREVIATION 1

Chapter 1: INTRODUCTION 1

1.1 Background to the research 1

1.2 Retail modernization in Vietnam 2

1.3 The Metro Cash and Carry Vietnam 3

1.4 Research objectives 5

1.5 Significance of the study 6

1.6 Research question 6

1.7 Structure of the thesis 8

1.8 Definitions 9

1.9 Scope of the study 10

1.10 Summary 11

Chapter 2: LITERATURE REVIEW AND HYPOTHESES 12

2.1 Introduction 12

2.2 Retailer motivations for private labels 13

2.3 The evolution and repositioning of private labels 14

2.4 The store attributes 14

2.5 The relationship between store attributes and consumer attitudes towards private labels 15 2.6 The effects of store attributes on consumer attitudes towards private labels 17

2.7 Summary 20

2.8 The research gap 21

Chapter 3: METHODOLOGY 22

3.1 Introduction 22

3.2 Research Methodology 22

3.2.1 The development of the scales 23

3.2.2 The questionnaire design 24

3.2.3 Measurement 25

3.2.4 Data Collection 25

3.2.5 Sample Size and Type 26

3.3 Summary 27

Chapter 4: DATA ANALYSIS 29

4.1 Introduction 29

4.2 Preliminarily qualitative examination of the data through focus group (pilot study)29 4.3 Respondent profile 30

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 4

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

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

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)

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

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

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 too-closed 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…), 4 hypermarkets (Big C) and 5 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 6th 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 9 stores nation-wide currently and 5 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

Table 1: MCCVN performance

There are a number of MCCVN's 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 Metro, called Metro own brands (private labels – see Appendix B) They are targeted by different levels, such as Aro is considered as price entry (C-level) of food and partly non-food products while Fine Food is positioned as umbrella brand (B-level brand of price and A-level brand of quality) of food products only1 They are therefore set to compete to corresponding levels of national brands

1The brand level is ordered from A (premium level) to B (value for money) to C (price

Member of METRO Group

METRO Cash & Carry International GmbH

Source: MCCVN

Metro vs competitions among professional customers

METRO performance METRO performance

Sales share per branch 2008

MCC sales growth, % , p.y.

Horeca

Food Non food

Trader Total

SCO

11.0 30.4 38.0

-9.9 4.1 26.3

6.6 23.9 35.0

10.8 33.2 39.0

15.8 38.0 42.0

-0.4 14.1 30.7

2

28

71 100

13

32 57

16 5

30

6 1

17

0 20 40 60 80 100 120

Top 1 supplier Top 2 supplier One of many

suppliers (prompted)

Prompted awareness

Customers (HoReCa, Trader, SCO), %

METRO

Big C Saigon Coop Maximart

Binh Tay Market

Source: IMAS study 2008

1.4 Research objectives

As previously mentioned, private labels are new phenomenon in Vietnam To retailers,

it plays an important role and becomes 6th out of retailers’ top ten critical issues (Fraser, 2009; MCCVN – Ownbrand training, 2009) Not only a key motivation to create competitive advantages through store differentiation which helps retailers to enhance store patronage and store loyalty, to create brand loyalty as well as to attract more consumers from other retailers through high-quality private labels; it is also considered as a means to improve profitability, through both higher retail margins and increased bargaining power with national brand manufacturers (Fraser, 2009)

Vietnam is a developing market The role of brand image is more and more important

However, there is little research examined brand image in Vietnam, or they are not perfectly fit in well with Vietnam case (Nguyen & Nguyen, 2008) The dissertation examines consumer attitudes towards private labels with reference to store attributes, only more recently has there been research of their roles on attitudes towards private labels, tested in other countries outside Vietnam With the purpose to contribute an empirical study on this issue, the overall objective of this dissertation is to explore the impact of store attributes on consumer attitudes towards private labels Specifically, it examines the impacts of:

a Product variety on consumer 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

e Atmosphere on consumer attitudes towards private labels

f Convenience on consumer attitudes towards private labels

1.5 Significance of the study

The study would help supermarkets, hypermarkets, convenience store chains, marketing companies, market research companies, marketing researchers and students

to have clearer view on what private labels are and how they are important as well as the influence of store attributes:

− To supermarkets, hypermarkets and convenience store chains: to draw their strategies on improving their competence and revenue as much effective as possible

in reference to the role of private labels

− To marketing companies and market research companies: to catch the important attributes of the store on consumer attitudes towards private labels as well as ways

to measure them From that point, they would deploy efficient market research projects as well as give solutions to improve private label images and/or store image to their clients

− To marketing researchers and students: this study would somehow draw an empirical study on the role of store attributes on consumer attitudes towards private labels It is a useful reference for researchers and/or students who would have deeper studies on this subject in Vietnam

1.6 Research question

The research problem is addressed in the following question:

How do store attributes influence consumer attitudes towards private labels in terms of Metro Cash and Carry Vietnam?

Private labels chosen to examine here are Metro private labels, based on the known brands by consumers; including Aro, Fine Food, H-Line, Luxana, Horeca Select, Sigma, Fairline, Authentic, L.Lambertazzi, Rioba, Watson and Tarrington House

well-According to Chowdhury et al (1998), there are six attributes of the store: product variety, product quality, price, service, atmosphere and convenience The research uses these attributes to test their influence on consumer attitudes towards private labels and they are called independent variables There are twenty-four items in which variety (3 items), quality (5 items), price (3 items), service (5 items), atmosphere (5 items) and convenience (3 items) And the dependent variable “consumer attitude” consists 6 items

There are six hypotheses developed to test the role of store attributes on consumer attitudes towards private labels:

(H1): Product variety positively influences consumer attitudes towards private labels (H2): Product quality positively influences consumer attitudes towards private labels (H3): Price positively influences consumer attitudes towards private labels

(H4): Service positively influences consumer attitudes towards private labels (H5): Store atmosphere positively influences consumer attitudes towards private labels (H6): Convenience positively influences consumer attitudes towards private labels The questionnaire is built base on these hypotheses (see Appendix C) And the five-point Likert scales with the anchors from strongly disagree (1) to strongly agree (5) are

used to measure the items in the study This approach would simplify data entry and interpretation, as higher scores mean higher ratings

1.7 Structure of the thesis

This dissertation is organized in five chapters The introduction chapter outlines the research objectives and empirical significance of the study in line with a brief of research problem and hypotheses Some terminologies’ definitions and explanations are also provided in the next section, followed by the summary in the last part of the chapter

Chapter two presents the literature review, starts with an overview of retailer motivations for which private labels are introduced Also does retailer positioning of these brands provide in a brief, followed by an another deep discussion of the relationship between store attributes and private labels as well as the effects of store attributes on consumer attitudes towards private labels

Chapter three develops the methodology that is used to collect and analyze the data for the research In line with the quantitative methodology to be followed, six hypotheses are developed in the association between store attributes and private labels Research methods used to collect and measure the data include the development of the scales, questionnaire design and data collection The data is also to be collected using an intercept survey and a self-administered questionnaire

Chapter four summarizes the result of data analysis, including the qualitative examination through focus group, respondent profiles and the quantitative examination through questionnaire of which presented descriptive statistics results, the assessment

of reliability, validity and the results of the hypothesis tests The examination indicates that most of store variables which hypothesized to affect consumer attitudes towards private labels are significantly correlated with attitude dependent variable Six

hypotheses are tested using multiple regression analysis According to the result, consumer attitudes are strongly affected by perceptions of store attributes in reference

of product quality, price, service, atmosphere and convenience, except product variety

Chapter five presents significance of findings, the implications for researchers and managers and limitations of the study as well as opens new trends of further research

The research concludes that store attributes play an important role in consumer attitudes towards private labels, and that private label positioning should be uniquely related to the unique positioning of the store Concurrently, investment in the store atmosphere could have a positive impact on consumers’ perceptions about private label quality Above all, the retailers are suggested to implement other marketing decisions than store attributes to attract new buyers of private labels and to increase their negotiation powers to manufacturers Albeit the scale and scope limited with only two stores in HCMC of Metro Cash and Carry Vietnam examined, the study opens further areas for the additional research in the future

1.8 Definitions

Since the private label is a new concept in Vietnam, it’s necessary to have an explanation of what that term is and how it is used in this study Private labels are defined as consumer products that are designed, produced, controlled by, and which carry the name of the store or a name owned by the store; also known as store brands

or dealer brands (Supply Chain Insight, 2007) An example would be MCCVN’s

“Aro” products Sometimes we see another terms used for private labels such as own brands, own labels (Fraser, 2009), house brands, distributor brands According to MCCVN, private labels are called own brands And they are defined as private labels handled by modern retailers whose goods and/or services are produced by themselves and/or a multiple third parties It can be named by the retailer’s name, or a separate name, or a combination of both For instance, Sam’s Choice is one of Wal-Mart’s

private labels while Woolworth includes both Signature Range and Woolworths Select brands

Moreover, the term “retail brand” or “retailer brand” may either refer to the overall brand or name of the retailer Also, generics are one kind of private labels that refer to no-name, unbranded or brand-free products They are usually packaged in white or single color surroundings with minimum required product information listed on the package with price set well under the brands’ In fact, there is unofficially agreed terminology for private labels and other terms to be used in the literature, although they all refer to the same phenomenon (Fraser, 2009) For the purposes of this study, the term private labels is used to comprise all different private label types and various terms used for them

The national brand is another considered terminology That is the brand name of a product distributed nationally under a brand name owned by the producer or distributor, as opposed to local brands (products distributed only in some areas of the country), and private label brands (products that carry the brand of the retailer rather than the producer (en.wikipedia.org/wiki/National_brand) 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 stores

1.9 Scope of the study

Since Vietnam is in the first stage of private label establishment and development, the findings would differ from other countries with which the variety of private label development level as well as the difference of retail concentration and consumer attitudes The important point should be underlined is MCCVN’s customer types Only one kind of its customer types (SCO) is examined The stores chosen in the research are MCCVN’s stores (An Phu and Hiep Phu in HCMC) to examine consumer attitudes

towards its private labels As a result, the findings may not be typically general results

to all MCCVN's stores nationwide, to other stores outside MCCVN system in Vietnam (for example Big C, Coopmart, Maximark…) and to all private labels

1.10 Summary

The chapter is divided intro 10 sections to introduce the basis of the dissertation

Starting with a brief background, the research question and hypotheses are set out The next section outlines the theory bodies which would be reviewed deeply in the chapter two, together with the methodology, which would be treated as a large part to be discussed separately in the chapter three Then the outline of the whole dissertation is clearly drawn to easier follow up its flow of deployment The private label and national brand definitions are provided as useful contributions The last part identifies the delimitations of the study Base on the address of the research question “How do store attributes influence consumer attitudes towards private labels in terms of MCCVN?”, the study begins in detail with the chapter two of relevant literature review

Chapter 2: LITERATURE REVIEW AND HYPOTHESES 2.1 Introduction

Recognizing the more and more importance of private labels to both retailers and national brand manufacturers, as well as the variation of their market penetration from countries to countries, retailers to retailers, categories to categories… as mentioned in the chapter one, there are numbers of private label literature streams to examine the consumers, retailers and market factors for their success According to Grewal et al

(1998), positive store attributes are considered as some of key factors for retailers to achieve and sustain their success in an increasingly competitive marketplace Retailers who manage their image effectively can influence consumers’ store patronage decisions and improve their competitiveness Similarly, private labels - that are unique

to the store - may increase consumer traffic, generate greater store loyalty and contribute to profitability (Dick et al 1996)

In the marketing literature store attributes are identified and studied by many researchers In line with those studies, this chapter would base of the previous empirical studies of Dodd and Lindley (2003); Beyza and Leyla (2007) and Fraser (2009) to dig into the influence of a set of store attributes on consumers’ perceptions of private labels

The first part of this literature review presents private labels’ motivations and benefits

to retailers Those explain why retailers try to introduce private labels in the role of not merchants but marketers Following is the evolution and repositioning of private labels

Subsequently, the next two parts outline store attributes in line with the effect of store attributes on consumer attitudes towards private labels Main outcomes from these literature reviews is also summarized before the research question once again indicated

in the final section to thoroughly develop in the following chapters

2.2 Retailer motivations for private labels

Retailers always try to increase as much gross margin as possible in doing business

However, the competition among retailers on the same national brands depresses retailers’ margin emergence They thus have to find out another way to easier control their margin Base on industry sources, to Hoch and Banerji (1993), gross margin to retailers on private labels is from 20 to 30 percent higher than on national brands (To MCCVN, private labels’ gross margin is set 10-20% higher averagely) On the other hand, the market share taken by private labels also creates actual or potential threats to national brand manufacturers, enhances retailers’ bargaining power as well as lessens wholesales prices of national brand products (MCCVN – Ownbrand training_v2.ppt)

This finding has largely been confirmed in private label literature The manufacturers

in this case may response depending on consumer loyalty to national brands (Gabrielsen and Sorgard, 2007)

While gross margin is one of the earliest reasons for retailers to introduce private labels, another key motivation is to create competitive advantage through store differentiation By offering products unique to the stores, the retailers expect to enhance store patronage and store loyalty (eg Quelch and Harding, 1996) However, there are mixed evidences on whether store loyalty is created by private labels in practice Some confirm that private labels do create store loyalty According to Richards et al (2007), private labels play an important role in attracting consumers from other retailers Similarly, Anselmsson and Johansson (2007) report that the more private labels bought, the more loyal consumers are to the store Sudhir and Talukdar (2004) study that store patronage is enhanced through store differentiation by private labels while Corstjens and Lal (2000) find that high-quality private labels create store loyalty and differentiation through consumer “inertia” (Fraser, 2009)

Private labels are also proved to compete with leading national brands by creating brand loyalty It means that market share is taken by private labels from national brands Private label brand loyalty, nevertheless, is determined at least in part by store loyalty

2.3 The evolution and repositioning of private labels

Laaksonen and Reynolds (1994) develop a typology showing how retailers have repositioned their retail brands over time According to this typology, private labels tend to evolve through four stages or “generations” The first generation is lower quality and low price – “generics”, while the next generation comprises private labels

of slightly higher quality but still lower quality than national brands, where price is still important The next stage of development is third generation – “me too” private labels

of comparable quality to national brands but which have slightly lower prices than national brands and are perceived as value for money The more advanced fourth generation private labels offer innovative, unique products of the same or better quality than national brands and prices that are equal to or higher than national brand leaders

While this typology is developed largely in relation to developments in the United Kingdom and Europe, retailers in North America have also started to introduce private labels of equal or even better quality than national brands although still at lower prices (Quelch and Harding, 1996)

2.4 The store attributes

Knowing which attributes of the store contribute positively to consumer attitudes towards private labels can provide retailers strategic advantages By investing in those 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 labels are generally perceived as low quality compared to the

national brands (Dick et al 1996) A private label can be successful in one category whereas not in other category This may be because of the variances in promotional activities, design of package, and the perceived quality of private labels in different product categories

Store attributes are regarded as critical subjects to the retail success because of their influences They are believed to have positive impacts on store patronage behavior and hence profitability (Hansen and Solgaard, 2004) In order to maintain and enhance retailers’ positions under today’s tough competition environment, retailers can use store attributes as strategic tools, which have a positive effect on profitability and store performance Additionally, store attributes can increase the consumers’ likelihood to shop in the store again, length of stay in the store and quantity of purchase (Fraser, 2009)

Within the scope of this study, store attributes are adapted from the related literature (Chowdhury et al., 1998; Dodd and Lindley, 2003) Store attributes thus commonly mentioned by those studies are product variety, product quality, price, store atmosphere, employee service and location/convenience

2.5 The relationship between store attributes and consumer attitudes

towards private labels

Consumer inferences about the quality of merchandise (brands) and service are antecedents of the store Meanwhile, they discover some factors that have effects on private labels As confirmed, favorable store atmosphere in relating to store design not only increases favorable perceptions of merchandise quality but also leads consumers

to believe that merchandise price is higher Furthermore, the store assortment (variety)

is also another factor that offers consumers the convenience of one-stop shopping to purchase products with wide cross-categories (Ailawadi and Keller, 2004) As

confirmed by Sayman and Raju (2004), the bigger the number of private labels present

in the store, the more favorable the consumers regard the private labels in a given category

On the other hand, the store reputation is a cue to product quality Following the findings of Grewal et al (1998), store name positively affects on the store and store attributes till their turns affect on purchase intentions for a product However, consumers’ purchase decisions are not only rely on the store name but also the brand name and price because of wide competing products sold over a broad quality range while the retailer reputation is not specific to a product quality

Consumer perceived quality of private labels is often examined in the literature within the context of perceived risks There is an extended model of risk which is also relevant to private labels In this model, consumers assess their overall perceived risks based on prior knowledge, involvement, purchase goals and usage, uncertainty and consequences relating to relevant product attributes The product attributes in turn are linked to functional, monetary, social, and psychological risks These risks can be defined in terms of potential losses: the functional risk relates to the potential loss resulting from inadequate product quality, the financial or monetary risk relates to the potential financial loss resulting from a bad purchase, while the social risk relates to the potential loss of image or prestige resulting from the purchase or use of a product, especially if used in public

There are reciprocal influences between store attributes and private labels Citing from Semejin et al (2004), consumer perceptions of private labels are influenced by their judgment of store attributes And store attributes can play a role of “risk reducer” by reducing functional and psychosocial risks associated with buying private labels in certain categories or according to Liu and Wang (2008), store attributes are strong

predictors of general attitudes towards private labels in Taiwan In a Spanish study, Guerrero et al (2000) confirm that the perception of private label quality depends on the store, or again confirm the role of store attributes on consumer attitudes towards private labels Another recent study by Zielke and Dobbelstein‘s (2007) on specific brands have given an important highlight that “the attitude towards specific private labels is more important than general attitudes towards private labels in terms of willingness to buy new private label products” (Fraser, 2009) Prior to the study of Dodd and Lindley (2003), they posit that consumer perceptions of specific private labels and store attributes are positively associated, even though perceptions of specific private labels differ from stores

Simultaneously, private labels can also have an important role in positioning the retailer in consumers’ minds Private Label Manufacturer’s Association in 1999 proved that image is considered as one of the most important reasons for introducing private labels Earlier, Dhar and Hoch (1997) find that it is a positive factor to use store name

on private label products in explaining variances in private label penetration across retailers Later studies also confirm that private labels are important in enhancing retail store differentiation

2.6 The effects of store attributes on consumer attitudes towards private

labels

As mentioned above, store attributes lead consumers to form an overall evaluation that not only affect their attitudes towards the store as a whole but also their attitudes towards private labels The more positive thinking of consumers to the store, the more positive evaluations they appraise its private labels (Semeijn et al., 2004) Dodd and Lindley (2003) also found the effect of products’ quality that the store offers to its consumers on the attitudes towards the private labels It has been shown that

merchandise (variety and quality) influences positively consumer attitudes towards the private labels (Semeijn et al., 2004) So, we hypothesize that:

H1 Product variety positively influences consumer attitudes towards private labels

H2 Product quality positively influences consumer attitudes towards private labels

With respect to the price attribute of the store, Dodd and Lindley (2003) report that low prices in the supermarkets do not have any impact on consumer attitudes to private labels It may be because of the product specific nature of price’s effects on quality perceptions (Wheatley and Chiu, 1977) Product’s price solely is an indicator of perceived quality (Dick et al 1994) whereas price level in the store is not However, in the early stage of Vietnam, consumers perceive the quality of private labels lower than national brands and that perception is likely to stem from consumer’s proneness to associate quality with price That’s why we keep hypothesizing an effect of price attribute of the store on private labels:

H3 Price positively influences consumer attitudes towards private labels

Semeijn et al (2004) show that service (knowledgeable, courteous and helpful employees, no problems when returning items, convenient opening hours…) could influence consumer attitudes to private labels Consumers may believe that a store offering services of good quality (essentially, by the intermediary of its salespeople) is likely to stock and recommend products of quality:

H4 Service positively influences consumer attitudes towards private labels

According to the environmental psychology, environmental factors such as interior design, store layout, lighting, color, music, overall cleanliness of the store, etc

influence the consumer responses (Dick et al., 1996) The shopper may believe that the

private labels of a positively featured store may have good quality (Dick et al., 1996)

Dodd and Lindley (2003) found that the store atmosphere has a positive influence on private labels’ quality In addition, Dick et al (1996) shows that private label quality is perceived as higher in an aesthetically attractive store than in an aesthetically unattractive one The aesthetically attractive stores are described as stores with wide aisles, creative layout, bright colors, modern fixtures, and a clean retail environment:

H5 Store atmosphere positively influences consumer attitudes towards private labels

As indicated above, the scale of store attributes in the original study is derived from Chowdhury et al (1998) and Dodd and Lindley (2003), the attribute of convenience was not used in assessing the effect of the store on consumer attitudes towards private labels It was maybe because the survey had been deployed as face-to-face interviews

at the stores examined and collected by means of an intercept survey In Vietnam, most

of Metro stores are placed far from the center of cities Therefore, the convenience factor is also critical concern to consumers Stemming from that reality, the study is decided to be included the convenience factor So we hypothesize an effect of convenience attribute of the store on private labels:

H6 Convenience positively influences consumer attitudes towards private labels

Consumer attitudes towards private labels

Product variety

Product quality

Price/

ValueService

H1 H2 H3 H4

Atmosphere

Convenience

H5 H6

2.7 Summary

This chapter would outline the relationship between store attributes and private labels

as well as verifying the effects of store attributes on consumer attitudes towards private labels First of all, retailer motivations for private labels and store attributes are introduced Also the relationship and effects of store attributes on consumer attitudes towards private labels are latterly discussed in depth, along with relevant hypotheses interpretation

Stemming from the expectations of increasing margin as much as possible and creating competitive advantage through the store differentiation, retailers would urge private label introduction They would also improve their bargaining power, enhance store patronage and store loyalty to lead to an alternative solution for national brands by

creating brand loyalty as well The retailers have changed their positioning strategy from merchants to marketers And the private labels have been positioned through four stages, from generics with low both quality and price to premium quality ones with innovations

Along with this development, the effect of store attributes on private labels is more and more clear-cut It is considered as “risk reducer” by reducing functional and psychosocial risks It also has a positive association with specific private labels in consumer minds and affects on the consumer decision of private label purchase through its six attributes: product variety, product quality, price, store atmosphere, employee service and location/convenience As confirmed by Sayman and Raju (2004), the bigger the number of private labels present in the store, the more favorable the consumers regard the private labels in a given category

2.8 The research gap

Most of studies on private labels are examined in United States and European markets

They are rarely made for not-well established markets or in early stage of development markets as Vietnam Stemming from this limitation, in this study, store attributes’

effects on private label products is investigated in the context of food and non-food categories, specifying to private labels of Metro Cash and Carry Vietnam

Chapter 3: METHODOLOGY 3.1 Introduction

The previous chapter presented the literature review and the conceptual model In this chapter, the purpose is to describe the research methodology used to collect the data to test the model and hypotheses

The chapter includes three sections in which the first one is the introduction, followed

by the research methodology, consisting also of the development of measurement scale, questionnaire design, measurement, data collection and sample size and type

The data handling and analysis are mentioned later on The last part is the summary of the chapter

3.2 Research Methodology

The research comprised two phases, a pilot study (qualitative examination of the data through focus group) and a main survey (quantitative examination of the data through questionnaire) These phases were both deployed in Ho Chi Minh City, the principal business center of Vietnam Private label products chosen here were MCCVN's own brands which had wide range of product assortment, including both food and non-food categories The methodology used qualitative and quantitative approaches and statistical analysis of data collection through a convenient consumer survey to test hypotheses empirically

The pilot study was undertaken by using the technique of focus group of eight given private label prone consumers with ages from 26 to 33 Its results were thus used to modify and refine the scale items

The main survey was conducted mainly through face-to-face survey at Metro An Phu (District 2) & Hiep Phu (District 12) and a very small part through online questionnaire Instructions of how to complete the questionnaire were provided with the note that all answers respected (there were no wrong or right ones mentioned) The purpose of this main survey was to assess the scales and test the models

3.2.1 The development of the scales

The scales used to measure store attributes were based as far as possible on those developed by Dodd and Lindley (2003) Those scales in turn were derived from measures identified in Chowdhury et al (1998) study which was outlined

in chapter two The measuring scale used is the five-point Likert scales with the anchors from strongly disagree (1) to strongly agree (5) The items evaluated the following attributes: product variety (3 items), product quality (5 items), price (3 items), service (5 items), store atmosphere (5 items) and convenience (3 items)

Those items were adapted from previous studies of store attributes and listed in the following table 2 In addition, product category of the purchased private labels (food, non-food), and socio-demographic variables (age, gender, education, income) were also considered in the questionnaire

Table 2: The item list of store attributes

VA-1 MCCVN carries many brands

VA-2 MCCVN has a large variety of products

VA-3 MCCVN is one-stop solution for everything I need

QA-1 MCCVN sells only high quality products

QA-2 MCCVN products are fresh

QA-3 I like MCCVN products

QA-4 I can count on the products I buy at MCCVN being excellent

QA-5 I'm satisfied with the products I bought at MCCVN

PR-1 I can buy products for less at MCCVN

PR-2 I get value for my money at MCCVN

PR-3 The prices at MCCVN are fair

SV-1 MCCVN employees are friendly

SV-2 MCCVN employees are helpful

SV-3 The service of MCCVN is professional

SV-4 I am pleased with the service I receive at MCCVN

SV-5 Sales promotions are attractive

AP-1 The appearance of MCCVN is appealing

AP-2 I like music played in the store

AP-3 I like colors used in the store

AP-4 MCCVN is always clean

AP-5 MCCVN is modern

CV-1 MCCVN is not too far from my house

CV-2 I can go for shopping at MCCVN frequently

CV-3 I like shopping at MCCVN

According to Churchill and Iacobucci (2002), the reliability of a scale increased with the number of items used to measure it The result was thus a scale of store attributes comprising six main variables: product variety, product quality, price, service, atmosphere and convenience, consisting of twenty-four items (multi-item variables)

3.2.2 The questionnaire design

The measuring tool for store attributes was a self-administered questionnaire, of which a copy listed in the Appendix C There were five parts included in the questionnaire in which the two parts mention declarations relating to store

attributes (the independent variables) and consumer attitudes towards MCCVN's private labels (the dependent variables) correspondingly The respondents were required to circle their answer numbered from (1) to (5) on the five-point Likert scale

The third section was drawn to find out participants’ percentage of spend at different stores It was included in the original study to check if attitudes were affected by the store respondents shopped at most The next section kept checking the share between MCCVN's private labels vs other supermarkets’ or hypermarkets’ private labels and national brands The following section verified consumer percentage spends on food/ non-food private label products The last part was to get participants’ information to enable demographic profiles of respondents as well as to check whether they were right consumer type to concentrate on It was also to investigate somehow the relations between private labels prone purchase and demographic characteristics as previously mentioned

in chapter two

3.2.3 Measurement

With respect to the type of scales used to measure the items in the study, the five-point Likert scales, anchored by (1) strongly disagree and (5) strongly agree, were used to measure store attributes This approach would simplify data entry and interpretation, as higher scores mean higher ratings Respondents would be required to circle the number on the five-point Likert scales to indicate their opinions on each statement

3.2.4 Data Collection

The questionnaire would be completed by direct approaching consumer randomly after their shopping at the Metro store exit gate then asking for their

self-completion Instructions of how to complete the questionnaire were provided by the interviewers as well Some would be collected through emailing but limited to prevent its limitation of misunderstanding or non-answering questions This multi-sampling frame would create chance to approach more respondents than intercept survey that concentrating only on consumers shopping at the store on the designated day and time

The two stores selected were in Metro store chain and in relatively close proximity to each other within Ho Chi Minh City of Vietnam It meaned they have similar socio-economics profiles, and respondents were not too far to have too different perceptions on stores and products Pursuant to Bell et al (1998), location also played a major role in store choice Finally, the survey was intended to complete in two weeks with the support of MCCVN store staff at

An Phu and Hiep Phu

3.2.5 Sample Size and Type

Since multiple regression was used to test the hypotheses relating to the effect of store attributes on consumer attitudes towards private labels, high sample size enabled lower value of R2 for a hypothesized relationship to be identified as statistical significance at a chosen significant level

On the other hand, sample size also affected the result generalization In exploratory factor analysis (Hair et al., 2006), we had:

n = 5t Where:

n: size of sample

n: size of sample m: number of independent variables

⇒ n ≥ 8*6 + 50 or n ≥ 98 The statistically significant level of sample size was the maximum between the exploratory factor analysis and the multiple regression, or preferably 120 There were two stores to be applied multiple regression analysis, with reference to unusable responses and missing data, the sample size was finally set at 125 per each store, or total sample size was of 250

3.3 Summary

The chapter described the methodology that was used to collect and analyze the data for the research In line with the pilot study (a qualitative examination of the data through focus group), the main survey (a quantitative examination of the data through questionnaire) was conducted at Metro An Phu & Hiep Phu and a small part through online questionnaire Followings were the development of the scales, questionnaire design, the measurement and data collection The data was to be collected using an intercept survey and a self-administered questionnaire Sampling control issues were

discussed after that The desired size of the sample – 250 shoppers – was explained in terms of statistical power and generalization

Chapter 4: DATA ANALYSIS 4.1 Introduction

This chapter presents the results of the statistical analysis of the collected data, following the methodology outlined in Chapter 3 The primary purpose of this chapter

is to present the results as they relate to the hypotheses of the study, which were tested using multiple regression analysis after preliminarily qualitative research through focus group The data is then examined for reliability and validity in terms of the scales used

in the research The final section of the chapter discusses the results of the statistical analyses used to test the hypotheses

4.2 Preliminarily qualitative examination of the data through focus

group (pilot study)

Stemming from the difference in culture, consuming habits and the degree of economic development among countries, the scale was decided to be tested through focus group

to fit in well with Vietnamese environment

This research was thus executed to explore, adjust and amend the store variables as well as their relevant items which were established in chapter three It used the technique of focus group of eight given private label prone consumers with ages from

26 to 33 It was carried out in Ho Chi Minh City August 2010

There were six constructs to be used in the research that were also six attributes of the store: variety, abbreviated to VA, with 3 items (VA-1 to VA-3); quality (QA) with 5 items (QA-1 to QA-5); price (PR) with 3 items (PR-1 to PR-3); service (SV) with 5 items (SV-1 to SV-5); atmosphere (AP) 5 items (AP-1 to AP-5) and convenience (CV) with 3 items (CV-1 to CV-3) They were all measured by the 5-point Likert interval-scaled measurement

According to the consumers from focus group, there were two adjustments listed below, the rest was acceptable and understandable:

− The first screening question “Do you have Metro member card?” was changed to

“Have you ever shopped at Metro?” It was from the fact that one Metro member card could be used for maximum three people to enter the gate at the same time

There are numbers of people who don’t have Metro member card but they sometime shop at Metro

− With the main questions, one more statement called AP-6 “Merchandising at MCCVN helps easily finding products” was added Most of members in the focus group agreed that Metro was large with thousands of items, the skilled product arrangement on shelves was important to attract consumers

The total independent variables were thus 25 instead of 24 Through qualitative measurement, the consumers agreed that the Metro store was influenced by six attributes mentioned above: variety, quality, price, service, atmosphere and convenience The research therefore would be tested by regression analysis that presented in the following section

4.3 Respondent profile

The questionnaire had been administered by partly online through https://spreadsheets.google.com/viewform?hl=enandpli=1andformkey=dDVYeWlheUltZHdMbUc4UHhjSVJsaGc6MQ#gid=0 However, because of the filter conditions of the survey (Selected consumers were persons that have been shopped at Metro and have used Metro private labels Even if they have used Metro private labels, they might not recognize that because of either their neglect or no concept of such new topic as private labels), there were only thirty-four people participated in the online survey In

order to achieve 250 samples, it was decided to do face-to-face survey at An Phu and Hiep Phu stores (Metro stores in District 2 and District 12) on a sample of 280 Metro consumers interviewed from August 9 to August 25, 2010 The number of survey sample was higher than the given sample number of 250 to prevent misunderstanding

or non-answering questions or any possible response bias This survey was completed with the support of four university graduates and a Metro colleague To university graduates, half-day training was conducted with introduction about Metro, its private labels and the survey questionnaire as well as ways to approach and interview consumers (see appendix D – the interview toolkits) The respondents were selected at random and surveyed after they had finished their shopping in the store The response rate in the current study was estimated at around 70% Many shoppers did not wish to participate in the survey after finishing their shopping Anecdotally, those waiting for their cars or motorbikes and those with large grocery purchases were less willing to participate In summary, the total participants were 292 in which 70% were women with income most less than or equal to vnd5,000,000

The demographic profile of all respondents was provided in table 3, including interests

in gender, age, income and education

Table 3: Demographic profile of all respondents

Demographic variables Frequency (n) Percentage (%)

Female 204 69.9 Male 88 30.1

18 - 34 179 61.3

35 - 49 80 27.4

50 - 65 29 9.9 Over 65 4 1.4

Income level (vnd)

0 - 5,000,000 186 63.7

5,000,001 - 10,000,000 69 23.6 10,000,001 - 20,000,000 28 9.6

Over 20,000,000 9 3.1

Education level Primary/ Secondary/ High school 85 29.1

College 75 25.7 University 107 36.6 Post-graduate 25 8.6 Most of people participated in the survey were in age of 18-34 (61%) and 35-49 (27%)

Those earned monthly less than or equal to vnd5,000,000 occupied 64% while those with monthly earning from vnd5,000,000 to vnd10,000,000 accounted for 24% and the very little got higher income (12%) With respect to education, most of people were university graduates (~37%) while those were housewife and college graduates were respectively similar in size with 29 and 26 percent Most of shoppers spent less than one fourth for private label products In addition, two thirds of all private label prone consumers preferred buying non-food category (detergents, cleaning materials…) to food category (milk, pulses, delicatessen, sugar, yoghurt etc.)

4.4 Quantitative examination of the data through questionnaire

4.4.1 Descriptive statistics

The central tendency and dispersion of the interval-scaled variables were examined by calculating the means and standard deviations for consumer scores for both store attributes and consumer attitudes towards private labels Table 4.1

& 4.2 (Descriptive statistics – see Appendix A) presented the descriptive statistics for the twenty-five items in the scale for the independent store variables and for the six items making up the dependent variable measuring consumer attitudes towards private labels

The distributions showed a satisfactory spread on the scales In the responses for questions of store attributes, the mean score was highest for “MCCVN was always clean” (AP-4: 4.33) and lowest for “I like music played in the store”

(AP-2: 3.38) However, standard deviation was relatively high in perceptions of convenience (1.02 – 1.23) In reference of six items measuring consumer attitudes towards private labels, the mean score was highest for “I get value for

my money from MCCVN private label products” (AT-2: 3.31) and lowest for

“MCCVN private labels were my first choices upon shopping at MCCVN” 5: 2.49) The standard deviation indicated that consumers’ opinions differed most for “I like MCCVN private label products” (AT-1: 0.80) and differed least for both “MCCVN private labels were my first choices upon shopping at MCCVN” and “Overall MCCVN private label products were excellent” (0.69)

(AT-4.4.2 Normality of the distributions

The skewness and kurtosis figures beyond the range of plus and minus one indicated that some variables had moderately non-normal distributions

According to Hair et al (2006), with samples smaller than 50, and especially those smaller than 30, significant departures from normality could have a substantial impact on results However, the larger samples size the less effects

of non-normality on results and that the impact might be negligible for samples

of 200 or more The sample size in this study was 292, larger than the threshold

of sample size of 200 mentioned by Hair et al Therefore, it was considered that data transformations to obtain normality in all cases were not necessary

4.4.3 Reliability

Reliability was assessed by examining internal consistency of the scales through inter-item correlations and item-total correlations as well as Cronbach alpha