The determinants of consumers shopping behavior in retail in ho chi minh

62 4.2.3.6 Effect of shoppers' satisfaction with distance TsatisfyDis from home/ working place to traditional market on their shopping frequency FreqT and shopping satisfaction Tsatisfy

VIETNAM -NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

The determinants of consumers' shopping behavior in retail market in Ho Chi Minh City

BY

LE THAI BAO TRAN

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, Dec 2011

VIETNAM -NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

The determinants of consumers' shopping behavior in retail market in Ho Chi Minh City

A thesis submitted in partial fulfilment ofthe requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By

LE THAI BAO TRAN

Academic Supervisor

Dr NGUYEN MINH DUC

HO CHI MINH CITY, Dec 2011

1

ACKNOWLEDGEMENT

First of all, I would like to express my honest and special thanks to supervisor, Dr Nguyen Minh Due, for his enthusiastic assistances and guidelines during my writing of the thesis

I would like to express special thanks to Dr Peter Calkin for his useful comments on my thesis research proposal Besides, I am grateful to Dr Nguyen Trong Hoai, Dr Pham Khanh Nam and Dr Cao Hao Thi for their very helpful guidelines and comment on my thesis as well

I would like to send sincere thanks to my colleagues, my friends who have supported me a lot to do the survey in this thesis

Finally, I would like to express my sincere thanks to my family for their spiritual encouragement during the time of studying of Master of Development Economics

Dec, 2011

Le Thai Bao Tran

CONTENTS

ACKNOWLEDGEMENT ii

CONTENTS iii

LIST OF TABLES vii

LIST OF FIGURES xiii

ABSTRACT xiv

CHAPTER I: INTRODUCTION !

1.1 Problem statement I 1.2 Research objectives 4

1.3 Research questions 4

1.4 The organization of thesis 4

CHAPTER II: LITERATURE REVIEW 5

2.1 Definitions 5

2.1.1 Supermarket 5

2.1.2 Traditional market 5

2.1.3 Consumer behavior 6

2.2 Theoretical literature 7

2.2.1 Theory of Reasoned Action- TRA 7

2.2.2 Theory of Planned Behavior- TPB 8

2.2.3 Behavioral economics theory and neo classical economics theory 9

2.2.4 The process of customer's decision- making 10

2.2.5 Literature about store- choice 10

2.3 Conceptual framework 13

2.3.1 Shopping frequency 13

2.3.1.1 Price 14

2.3.1.2 Location 15

2.3.1.3 Shopping environment 15

2.3.1.4 Service 16

2.3.1.5 Advertising and promotion 16

2.3.1.6 Product assortment 16

2.3.1.7 Customer demographic characteristics 17

2.3.2 Customer satisfaction ofthe favorite store 17

2.3.3 Conceptual framework 19

CHAPTER III: AN OVERVIEW OF SUPERMARKETS/ TRADITIONAL MARKETS ACTIVITIES IN HO CHI MINH CITY 23

3.1 Overview of retail market in Vietnam 23

3.1.1 Population of Vietnam by gender and region 23

3.1.2 Total retail revenue of goods and services 23

3.2 Overview retail market ofHo Chi Minh City (HCMC) 23

3.2.1 Population 23

3.2.3 Development of supermarkets and traditional markets in HCM 27

CHAPTER IV: RESEARCH METHODOLOGY AND DATA ANALYSIS 29

4.1 Samples and data collection technique 29

4.1.1 Sampling 29

4.1.2 Data collection 30

4.2 Research methodology and data analysis 31

4.2.1 Variable measurement 31

4.2.1.1 Demographic characteristics 31

4.2.1.1.1 Location 32

4.2.1.1.2 Gender 32

4.2.1.1.3 Age 32

4.2.1.1.4 Married status (Mar) 32

4.2.1.1.5 Household size (Hsize) 32

4.2.1.1.6 Education (Edu) 32

4.2.1.1 7 Career 32

4.2.1.1.8 Kind of firm where shopper is working for (KindF) 32

4.2.1.1.9 Average monthly income ofshopper (Mincomei) 33

4.2.1.1.10 Average monthly income offamily of shopper (MincomeH) 33

4.2.1.2 Shopping information 33

4.2.1.3 Attributes ofsupermarket/ traditional market 33

4.2.1.4 Satisfaction of shopper with most frequently shopping place 33

4.2.2 Supermarket: 34

4.2.2.1 Descriptive statistics of variables: 34

4.2.2.2 Exploratory Factor Analysis (EFA) and reliability test (Cronbach's Alpha) 36

4.2.2.3 Model specification: 41

4.2.2.3.1 Model ofshopping frequency: .41

4.2.2.3.2 Model of satisfaction 44

4.2.2.4 Effects of demographic variables on shopping behavior at supermarket: 46

4.2.2.5 Bivariate correlation between FreqS and SSatisfy analysis: 4 7 4.2.2.6 Effect of shopper's satisfaction with distance from home/ working place (SsatisfyDis) to supermarket on their shopping frequency (FreqS) and satisfaction (Ssatisfy) with favorite supermarket: 48

4.2.2 7 Effect of preference of supermarket shopping (Likeshopsuper) on shopping frequency (FreqS) or satisfaction (Ssatisfy) of shoppers with supermarket: 50

4.2.2.8 The relationship between spending for each shopping time (Spendsuper) and shopping frequency (FreqS) at supermarket: 51

4.2.3 Traditional market: 51

4.2.3.1 Descriptive statistic of variables: 51

4.2.3.2 Exploratory factor analysis (EFA) and reliability test (Cronbach's Alpha) 52

4.2.3.3 Model specification: 56

4.2.3.3.1 Model of shopping frequency 56

4.2.3.3.2 Model of satisfaction 58

4.2.3.4 Effects of demographic variables on shopping behavior at traditional market: 60

4.2.3.5 Bivariate correlation between shopping frequency (FreqT) and satisfaction (Tsatisfy) 62

4.2.3.6 Effect of shoppers' satisfaction with distance (TsatisfyDis) from home/ working place to traditional market on their shopping frequency (FreqT) and shopping satisfaction (Tsatisfy) with favorite traditional market: 62

4.2.3 7 Effect of preference of traditional market shopping (Likeshoptradi) on shopping frequency (FreqT) or satisfaction (Tsatisfy) of shoppers with favorite traditional markets 64

4.2.3.8 The relationship between spending for each shopping time (Spendtradi) and shopping frequency (FreqT) at traditional market: 65

4.2.4 Comparison about the difference of shopping behavior (shopping frequency and satisfaction) between two sample size (supermarket and traditional market) 65

4.2.4.1 Shopping frequency at supermarket and traditional market 65

4.2.4.2 Satisfaction about supermarket and traditional market 67

4.2.4.3 The difference of the preference of shopping between two group shoppers 68

4.2.4.4 Satisfaction about distance from shopper's house to supermarket/ traditional market 69

CHAPTER V: FINDING AND CONCLUSION 70

5.1 Shoppers' behavior at supermarket 70

5.2 Shoppers' behavior at traditional markets 72

5.3 Comparison between supermarket and traditional market 74

5.4 Conclusion and recommendation 75

5.5 Limitation of this research and expectation for further research 76

REFERENCES 77

APPENDICES 82

APPENDIX 1: QUESTION AIRES 82

QUESTIONAIRE (in English) 82

QUESTIONAIRE (in Vietnamese) 91

APPENDIX 2: Overview of HCMC 99

APPENDIX 3: VARIABLE MEARSUREMENT 102

APPENDIX 4: EFA ANALYSIS (SUPERMARKET) 117

APPENDIX 5: RELIABILITY TEST (ATTRIBUTE OF SUPERMARKET) 121

APPENDIX 6: REGRESSION OF SATISFACTION ABOUT SUPERMARKET MODEL (1st time) 123

APPENDIX7: ONE-WAY ANOV A ANALYSIS (SUPERMARKET) 123

APPENDIX 8: EFA ANALYSIS (TRADITIONAL MARKET) 143

APPENDIX 9: 1sT REGRESSION OF SHOPPING FREQUENCY AT TRADITIONAL MARKET 144

APPENDIX 10: ONE-WAY ANOV A ANALYSIS (TRADITIONAL MARKET) 145

APPENDIX 11: COMPARISON ABOUT SHOPPING BEHAVIOR BETWEEN TWO SAMPLE SIZE (SUPERMARKET) AND TRADITIONAL MARKET 166

LIST OF TABLES

TABLE IN CONTENT

Table 1.1: Ranking of attractiveness of retail market in the world 1

Table 3.1: Population ofHo Chi Minh City by district 24

Table 3.2: Population ofHCMC by age 25

···

Table 3.3: Total retail revenues of goods and services by region 26

Table 4.1: Descriptive statistic of supermarkets' attributes 35

Table 4.2.: The result of3rd time conducting EFA 37

Table 4.3: Summary of Reliability test result 41

Table 4.4: Descriptive statistics of group factors affect to frequency of shopping at supermarket 42

Table 4.5: The result of regression (shopping frequency at supermarket) 43

Table 4.6: The result of2"d regression (satisfaction at supermarket) 45

Table 4.7: Correlation between shopping frequency and satisfaction 48

Table 4.8a: Ranks 49

Table 4.8b: Test statistics 49

Table 4.9: Descriptive statistic of variables of traditional market's attributes 52

Table 4.10: The result of2"d conducting EPA (traditional market) 53

Table 4.11: Summary of reliability test result (traditional market) 55

Table 4.12: Descriptive statistics of group variables of traditional market 56

Table 4.13: The result of 2"d regression (shopping frequency at traditional market) 57

Table 4.14: The result of regression (satisfaction at traditional market) 59

Table 4.15: Correlation between FreqT and Tsatisfy 62

Table 4.16a: Ranks 63

Table 4.16b: Test Statistics 63

Table 4.17: Frequency index ofFreqS and FreqT 65

Table 4.18a: Ranks 66

Table 4.18b: Test statistics 66

• Table 4.19: Satisfaction index about supermarket and traditional market 67

Table 4.20a: Ranks 67

Table 4.20b: Test statistics 67

Table 4.21: Like index of supermarket and traditional market 68

Table 4.22a: Ranks 68

Table 4.22b: Test statistics 68

Table 4.23: Satisfaction index about distance 69

Table 4.24a: Ranks 69

Table 4.24b: Test statistics 69

Table 5.1: Cross table ofFreqS and Age 72

TABLE IN APPENDICIES APPENDIX 2: Overview ofHCMC Table 3.4: Population of Vietnam by gender and region 99

Table 3.5: Retail revenues of goods and services by economic sector 100

Table 3.6: Number of traditional market, supermarket and trade centre until year 2015 101

APPENDIX 3: VARIABLE MEARSUREMENT Table 4.25: Variable measurement 102

Table 4.26: Location where shopper is living 112

Table 4.27: Gender of shopper 113

Table 4.28: Percentage of age of shopper 113

Table 4.29: Married status of shoppers 113

Table 4.30: Household size of shopper 113

Table 4.31: Education level of shoppers 114

Table 4.32: Career of shoppers 114

Table 4.33: Kind of firm where shopper is working for 114

Table 4.34: Monthly income of shopper 115

Table 4.35: Monthly income ofhousehold 115

Table 4.36: Shopping at traditional market is a long- standing traditional habit of Vietnamese 116

Table 4.37: Going to supermarket is not only for shopping but also for entertainment 116

Table 4.38: Going shopping at traditional market or supermarket is not important The important thing is that I can buy whatever I want efficiently 116

APPENDIX 4: EFA ANALYSIS (SUPERMARKET) Table 4.39: The first time of conducting EF A 117

Table 4.40: Second time of conducting EF A 118

APPENDIX 5: RELIABILITY TEST (ATTRIBUTE OF SUPERMARKET) Table 4.41: Reliability test of group 1 121

Table 4.42: Reliability test of group 2 (Policy) 121

Table 4.43: Reliability test of group 3 (Service) 122

APPENDIX 6: REGRESSION OF SATISFACTION ABOUT SUPERMARKET MODEL (1st time) Table 4.44: Regression result 123

APPENDIX?: ONE-WAY ANOVAANALYSIS (SUPERMARKET) Table 4.45: The relationship between Age and FreqS 123

Table 4.46: The relationship between Gender and FreqS 124

Table 4.47: The relationship between Household size and FreqS 124

Table 4.48: The relationship between monthly income of household and FreqS 125

Table 4.49: The relationship between married status and FreqS 126

Table 4.50: The relationship between education level and FreqS 126

Table 4.51: The relationship between Career and FreqS 127

Table 4.52: The relationship between Age and Ssatisfy 127

Table 4.53: The relationship between sex and Ssatisfy 128

Table 4.54: The relationship between Household size and Ssatisfy 128

Table 4.55: The relationship between monthly income of household and

Ssatisfy 129

Table 4.56: The relationship between marries status and Ssatisfy 130

Table 4.57: The relationship between education level and Ssatisfy 130

Table 4.58: The relationship between career and Ssatisfy 131

Table 4.59: The relationship between Likeshopsuper and FreqS 132

Table 4.60: The relationship between Likeshopsuper and Ssatisfy 132

Table 4.61: The relationship between Likeshopsuper and Age 133

Table 4.62: The relationship between Likeshopsuper and Sex 134

Table 4.63: The relationship between Likeshopsuper and household's size 134

Table 4.64: The relationship between Likeshopsuper and monthly income of household 135

Table 4.65: The relationship between Likeshopsuper and marriage status 136

Table 4.66: The relationship between Likeshopsuper and education level 136

Table 4.67: The relationship between Likeshopsuper and career 137

Table 4.68: The relationship between Spendsuper and FreqS 138

Table 4.69: The relationship between Spendsuper and Age 138

Table 4 70: The relationship between Spendsuper and Sex 139

Table 4.71: The relationship between Spendsuper and household size 139

Table 4 72: The relationship between Spendsuper and monthly income of household · ···.··· 140

Table 4.73: The relationship between Spendsuper and marriage status 141

Table 4.74: The relationship between Spendsuper and education level 141

Table 4.75: The relationship between Spendsuper and career 142

APPENDIX 8: EFA ANALYSIS (TRADITIONAL MARKET) Table 4.76: The result of 1st EFA 143

APPENDIX 9: 1sT REGRESSION OF SHOPPING FREQUENCY AT TRADITIONAL MARKET Table 4.77: Regression result 144

APPENDIX 10: ONE-WAY ANOV A ANALYSIS (TRADITIONAL

MARKEST)

Table 4.78: The relationship between age and FreqT l45

Table 4 79: The relationship between sex and FreqT 145

Table 4.80: The relationship between household's size and FreqT 146

Table 4.81: The relationship between monthly income of household and FreqT 147

Table 4.82: The relationship between marriage status and FreqT 147

Table 4.83: The relationship between education level and FreqT 148

Table 4.84: The relationship between Career and FreqT 149

Table 4.85: The relationship between age and Tsatisfy 149

Table 4.86: The relationship between gender and Tsatisfy 150

Table 4.87: The relationship between household's size and Tsatisfy 151

Table 4.88: The relationship between monthly income of household and Tsatisfy 151

Table 4.89: The relationship between marriage status and Tsatisfy 152

Table 4.90: The relationship between education level and Tsatisfy 153

Table 4.91: The relationship between career and Tsatisfy 153

Table 4.92: The relationship between Likeshoptradi and FreqT 154

Table 4.93: The relationship between Likeshoptradi and Tsatisfy 155

Table 4.94: The relationship between Likeshoptradi and Age group 155

Table 4.95: The relationship between Likeshoptradi and Sex 156

Table 4.96: The relationship between Likeshoptradi and household's size 157

Table 4.97: The relationship between Likeshoptradi and monthly income of household 157

Table 4.98: The relationship between Likeshoptradi and marriage status 158

Table 4.99: The relationship between Likeshoptradi and education level 159

Table 4.100: The relationship between Likeshoptradi and career 159

Table 4.101: The relationship between Spendtradi and FreqT 160

Table 4.102: The relationship between Spendtradi and Age 161

Table 4.103: The relationship between Spendtradi and Sex 161

Table 4.104: The relationship between Spendtradi and household size 162

Table 4.105: The relationship between Spendtradi and monthly income of household 163

Table 4.106: The relationship between Spendtradi and marriage status 164

Table 4.107: The relationship between Spendtradi and education level 164

Table 4.108: The relationship between Spendtradi and career 165

APPENDIX 11: COMPARISON ABOUT SHOPPING BEHAVIOR BETWEEN TWO SAMPLE SIZE (SUPERMARKET) AND TRADITIONAL MARKET Table 4.109: Comparison about FreqS and FreqT 166

Table 4.110: Comparison about Ssatisfy and Tsatisfy 167

Table 4.111: Comparison about Likeshopsuper and Likeshoptradi 168

LIST OF FIGURES

Figure 1.1: 2009 GRDI country attractiveness 2

• Figure 2.1: Theory of Reasoned Action (Fishbein & Ajzen 1975) 8

Figure 2.2: Theory of Planned Behavior (Ajzen 1991) 9

Figure 2.3: Conceptual framework 21

Figure 3.1 : Total retail revenues of goods and services by region 27

Figure 3.2: Number of traditional market, supermarket and trade centre in HCMC from 2008- 2015 : 28

Figure 4.1: The preference of shopping at supermarket and traditional market 30

Figure 5.1: The reason shopper goes shopping at supermarket 71

Figure 5.2: The reason shopper goes shopping at traditional market 73

•

ABSTRACT

Ho Chi Minh City is a big business centre of Vietnam where retail business is developing rather dynamically This paper studies the effect of attributes of retail format (supermarket and traditional market) on shopping behavior (shopping frequency and satisfaction) of shoppers in Ho Chi Minh City

Regarding to supermarket, the result indicates that marketing policy of supermarket would give a positive effect on both shopping frequency and satisfaction with favorite supermarket Price and products also positively affect

on customer satisfaction Unexpected, shopping environment and customer services gave negative influence on shopping frequency in supermarket Besides, the findings show that there are differences in shopping frequency, satisfaction, preference of supermarket shopping and spending for each shopping time at supermarket among different demographic shoppers groups This research shows that there is correlation between shopping frequency and satisfaction; there is a significant effect of shopper's preference on both shopping frequency and satisfaction; and there is no relation between spending for each shopping time and shopping frequency at favorite supermarket

Regarding to traditional market, the result expresses that the main factor which has positive effect on shopping frequency at traditional markets is their convenience (making bargain, saving time and hire- purchase) Besides of satisfaction with convenience of traditional market, shoppers are satisfied with product sold at market Besides, the findings show that there are differences in shopping frequency, satisfaction, preference of traditional market shopping and spending for each shopping time at traditional market among different demographic shoppers groups The research shows that there is no correlation between shopping frequency and satisfaction about traditional market; there is an effect of traditional market preference on shopping frequency and satisfaction at

traditional market; there is correlation between spending for each shopping time and shopping frequency at traditional market

In comparison, shopping frequency at traditional market is higher than that

of supermarket, but shoppers are satisfied with supermarket more than traditional market If shoppers prefer to go shopping at supermarket or traditional market, they will go shopping there more frequently Satisfaction index with distance of traditional market is higher than that of supermarket It means that there are many traditional markets are located near to shoppers' house and more convenience for them to go shopping

CHAPTER I: INTRODUCTION

1.1 Problem statement

Vietnam is a developing country that is attracting many foreign investors There are many foreign investors have invested in Vietnam in which Ho Chi Minh City is the place attracting many investors in many different areas One of potential area for foreign investors is retail market Because according to A T Kearney (2010), which is web site ranking retail market in the world, Vietnam

is the best retail market in 2008 in the world The next year, 2009, the Global Retail Development Index (GRDI) of Vietnam plunged from 1st to 6th due to global financial crisis Meanwhile, the GRDI of other essential markets keeps stable in the difficult time, even climbed up impressively to 1st and 2"d like India and Russia, respectively

Table 1.1: Ranking of attractiveness of retail market in the world

(Sources: A.T Kearney Global Retail Development Index, 2010)

However, the below survey of A.T Keaney about 2009 GRDI country attractiveness shows that Vietnam is an interesting market in terms of quite high potential although country risk is rather high Other rising markets like China, measured "on the radar screen" like Vietnam, country risk index of China is lower than Vietnam's, but its potential is lower than potential of Vietnam as well That is the reason why it is said that retail market in Vietnam is considered

a very potential market for foreign investors

•

2009 GRDI country attractiveness

100

Slovenia e On tile radar scree.? Sue of botib!e

To wosde! in(fca!r!s retail sales, net

(0 =low potential; f(}(J =high poten(ial)

(Source: AT Keaney) Figure 1.1: 2009 GRDI country attractiveness

The report 2009 Global Retail Development Index of A.T Keaney also said that Vietnam has some short term challenges, long- term outlook for the country remains positive The past years showed a large number of international retailers invested in Vietnam Nowadays, Vietnam has about 400 supermarkets and 2000 convenient stores which are operated by both domestic and foreign companies Many foreign retailers are well established in Vietnam such as Lottemart of Korea, Parkson of Malaysia, Big C of France, Dairy Farm of Hong Kong, and Metro Cash and Carry of German Besides, there are still some big international retailers such as Wal-Mart (America) or Auchan (France) plan to enter Vietnam retail market in the future Vietnam is still an attractive market Population of Vietnam is young and age segment between 15 and 39 grew more than in any other market Shopping demand of this age segment is always at high level

85

Moreover, Vietnam has joined WTO since 2001 According to joining route, from 1st Jan, 2009, Vietnam totally opened this market officially With this openness, retail market in Vietnam will be very eventful There will be more foreign retailers come to Vietnam, especially to Ho Chi Minh City with high expectation of doing business in this potential market Furthermore, the total retail revenue of Vietnam increases year by year According to General Statistics Office, 2010, the revenue reached 1,007,213.5 billion VND (USD

48.42 billion) in 2008 and increased by 21% in 2009 (1 ,214,532.1 VND billion equivalent to 58.39 USD billion) in which, the retail revenue of Ho Chi Minh City occupied 24% (General Statistics Office, 2010)

According to the Saigon Times dated on May th, 2009, in 2008, there are 82 supermarkets and 15 shopping centers in Ho Chi Minh City and there is a strategy to develop to 177 supermarkets and 163 shopping centers in Ho Chi Minh City until 2015 In addition, traditional market or street market has been being popular retail formats in Vietnam, from rural area to urban area Up to now, there are around 238 traditional markets in Ho Chi Minh City (Source: The Trade of HCMC, 2010) From the figures above, it is obviously seen that the number of potential supermarket/ shopping center is going to be 1.5 over current traditional markets Each of them has definite advantages: supermarket

is modem shopping way which is integrated services, suitable for modem life whereas traditional market is traditional distribution channel, shopping at traditional market is the habit of most Vietnamese in daily life

Ho Chi Minh City is the city which population density is always high in Vietnam The development of retail market in Ho Chi Minh City has affected shopping habit/shopping behavior of consumers Consumers have more choice

to decide where the most convenient place for them to go shopping However, there is limited in research on the determinants of shopping behaviors of customers in the city with a comparison between traditional market and supermarket

1.2 Research objectives

This thesis aims to study and clarify some following points:

The determinants of shopping behavior of consumer in retail market in Ho Chi Minh City

The difference m shopping behavior of consumers m retail market by demographic groups of shoppers

The relationship between shopping frequency and satisfaction of customer in each retail market format (supermarket and traditional market)

Facing to hot development of retail market, should Ho Chi Minh City focus

to enlarge number of supermarkets and dismiss traditional market; or restrict number of supermarkets and improve traditional market; or make development of supermarket and traditional market balanced? From perceived results of research, this thesis is expected to give appropriate strategies or recommendations to develop retail market in Ho Chi Minh City

1.3 Research questions

This study tries to answer the questions as following

Is there a difference on consumers shopping behavior between traditional market and supermarket recently?

Which retail format, traditional or modem (supermarket) is appropriate in the development of retail market in Ho Chi Minh City?

1.4 The organization of thesis

Chapter I: Introduction

Chapter II: Literature review

Chapter III: An overview of supermarkets/ traditional market activities and shopping behavior of individual in Ho Chi Minh City

Chapter IV: Research methodology and data analysis

Chapter V: Finding, conclusion and recommendation

CHAPTER II: LITERATURE REVIEW

2.1 Definitions

2.1.1 Supermarket

According to website businessdictionary.com, supermarket is defined as

"a large store that sells a variety of food and household items to customers" Nowadays, customer can find out whatever they need for their daily life In Vietnam, there are two kinds of supermarket One provides various kinds of products; one specializes in particular category such as indoor products, mobile phones, computers, electrical and electronic products, etc In this paper, supermarket is studied as the place where provides various kinds of products such as food, non food, household items, clothing, grocery and stationary, etc

2.1.2 Traditional market

According to Decision 1117 /QD- UB- TM dated on 22nd Jul, 1993 of People's committee of HCMC, traditional market is the fixed place with border line on inhabitant's area Traditional market with or without lean- to is set up by decision of People's committee Traditional market is a place which concentrates all business of all economic sectors with one or many categories and different legal mode of business Traditional market is a place where merchandises are exchanged between the seller and the buyer for production and consuming demand In Vietnam, there are two kinds of traditional market They are administrative market and non-administrative market Administrative market is market which is controlled by board management of State Non-administrative market is market which is set- up spontaneous without management of State like street markets In this paper, both of two kinds of market are considered as traditional market

- - - - - - -

-2.1.3 Consumer behavior

According to Jagdish, et.aL ( 1999), there are four groups of determinants which affect customer behavior They are market characteristic, market context, personal characteristic and personal context

Market characteristic comprises climate, topography and ecology that affect human lifestyle, taste of individual as well as feature of products and play an important role in developing human culture

Market context includes domestic economy; government policy and technology also affect consumer behavior significantly

Personal characteristic includes factors such as genetics, race, gender, age and personality

Personal context contains culture, social classes, groups that have direct

or indirect effect on attitude or behavior of individuaL It is considered as the fundamental element of an individual's demand and behavior

In addition, there is different idea about customer behavior from Philip Koltler, et.al (2003) He assumes that there are four determinants affect consumer behavior, consisting cultural elements, social elements, personal elements and psychological elements

Cultural elements include culture and social classes are as same as one part of determinants in individual context as mentioned above

Social elements contain family, reference groups, and social roles /statuses Reference groups are all the groups that have a direct or indirect effect on the attitudes or behavior of an individual and members

of family supposed constitute the most influential primary reference group

Personal elements are referred to age, stage in the life-cycle, economic circumstances, lifestyle, occupation, personality and self- concept of the individuaL

Psychological groups include factors such as motivation, perception, learning, belief and attitude

In comparison with theory of Jagdish, et.al (1999), theory of Philip Kotler, et.al (2003) did not mention to market characteristic and market context

2.2 Theoretical literature

2.2.1 Theory of Reasoned Action- TRA

TRA was formulated in 1967 to supply consistency in studies of the connection of behavior and attitudes (Fishbein & Ajzen 1975; Werner 2004) In

TRA, it is assumed that individual is rational in thinking their action and implying their action (decision-making) Rational decision-making supposes that the decision is created under precariousness (Basu 1996; Eppen et al.1998) Rational decision-making expresses that either best results were expected or the decision- making unit was aware of all the influences and consequences (Basu 1996; Bazerman 2002; Eppen et al.1998)

There are two main concepts m TRA; they are "principles of compatibility" and "behavioral intention" (Ajzen 1988; Fishbein & Ajzen 1975) Principles of compatibility determine that to foretell a particular behavior aimed at a particular objective in a given context and time, particular attitudes that match to the particular purpose, time and context should be assessed (Ajzen 1988; Fishbein & Ajzen 1975) The concept of behavior intention denotes that

an individual's motivation to engage in a behavior is specified by the attitudes that affect the behavior (Fishbein & Ajzen, 1975) Behavior intention shows that an individual tries their utmost in order to undertake to implement such behavior Higher commitment is higher possibility of behavior performance Behavioral intention is specified by attitudes and subjective norms (Ajzen 1988; Fishbein & Ajzen 1975)

Beliefs and Attitude

Figure 2.1: Theory of Reasoned Action (Fishbein & Ajzen 1975)

2.2.2 Theory of Planned Behavior- TPB

TPB (Ajzen, 1991) was extended from TRA (Werner, 2004) TPB is a social psychological theory which is used to predict and explain specific behavior (Ajzen, 1991) According to TPB, intention of individual is explained

by three reasons; they are the behavior performance is positive or negative (attitude); social pressure about mandatory or non- mandatory in behavior (subjective norm) and controlling competence of individual to perform behavior (perceived behavioral control)

The difference between TPB and TRA is controlling competence of individual to perform behavior

Attitude toward behavior

Subjective norm

Perceived behavioral control

Figure 2.2: Theory of Planned Behavior (Ajzen 1991)

2.2.3 Behavioral economics theory and neo classical economics theory

Neo classical theory assumed that consumers are rational and their decision making bases on maximizing utility However, it is not everyone is good at calculation to maximize their utility In reality, people are not always make decision with the goal is maximizing utility; they just make decision following the other's action In other words, their decision is affected by the other's action For example, people tend to buy at place/ store where there are many customers In this case, customer behavior is affected by the others Furthermore, people do something not only because of optimal utility but also because of their habit due to habit are difficult to change However, habit is not mentioned in neo classical theory while habit is important factor in customer's behavior Neo classical theory cannot explain all of the customer's behavior because consumer's behavior depends on customer's psychology when making decision That is the reason why it is necessary to apply behavioral economics

theory in researching about consumer's behavior because behavioral economics

is combined between psychology and economics to find out what occurs in the market

2.2.4 The process of customer's decision- making

According to Jagdish et.al (1999), the decision- making process of customer includes five steps including recogmzmg problem, searching information, evaluating alternative, experience about purchase and post-purchase Problem recognition is the first step of the process when a demand is realized to be satisfied or a problem is found out to be solved due to an internal stimulus ("perceived state of discomfort") or an external stimulus (information from market place leads customer to realized the problem or need) Continuously, the customer will look for information from different sources to figure out the problem or satisfy their demand Before going to make decision, customer will evaluate several criteria concerning to a product or a service Customer will decide where and when to purchase a product After purchasing, customer will evaluate it and express satisfaction or dissatisfaction about it The response is the decision of the customer whether buy or not buy it again in the future

2.2.5 Literature about store- choice

Store-choice literature focuses on studying key variables which affect the customer's preferences when shopping at a specific place According to Craig,

et al (1984), store- choice models can be split into three groups:

The first group consists of models relying on some normative assumptions Consumer goes to the nearest outlet where she can find the products and services of demand That is the most common assumption The model is over simple since it assumes only one variable affecting consumer's store-choice Consumer surveys were conducted by the group to fmd out the

geographic of the certain trade area It was realized that consumers trade-off the cost of travel with the attractiveness of alternative shopping opportunities In "Law of retail gravitation" (Reilly, 1929), the author said that the probability that a consumer patronized a shop is proportional to its attractiveness and inversely proportional to a power of distance to it"

The second group uses the revealed preference approach in the model They understand the dynamics of retail competition and factors determining consumer choice by using information of consumer behavior revealed in the past The first one who used the revealed preference approach to study retail store choice was Huff ( 1964 ) To find the probability of consumers shopping

at a particular retail store, he combined both factors that are the distance from customer's area to the store and store's size Although model of Huff give one additional variables to the simplest model of the first group, it was considered as simple model as only two variables involving in the model cannot reflect fully the consumer store- choice behavior To extend model of Huff, Nakanishi and Cooper (1974) introduced the Multiplicative Competitive Interaction (MCI model) with a set of store attractiveness attributes such as the image or appearance of store and service factor

"Reveal preference methods overcome the problems of normative methods because consumers are not assigned exclusively to one shop, and the model can be applied to cases where consumers shopping habits are independent of store size" (Rosa Colomeuand Daniel Serra, 2003)

Last but not least, the third group includes the models based on direct utility These model estimate consumer utility functions from simulated choice data using information integration, conjoint or logic techniques (Louviere and Woodworth, 1983 ) Instead of observing past choices, these methods examine the utility function through consumer evaluation of store description The best representative of this group is the model of Ghosh and Craig (1983) which is based on game theory

-Store choice model

The store choice model was built around suggested evaluation of expected basket attractiveness (EBA) (Bell, et al., 1998)

Whst! j = <I> s + \f t DISThs + \f 2 CONSIDsh + \f 3 EBAhst! j + \f 4 ADVhst + 0 r<s> SFREQh

Where

W\11 j : Utility for store s on trip t conditional on shopper type j

DIST\: the distance from household h to stores

CONS IDs h : a 011 variable equal to 1 if store s was visited in the initialization period

EBA\t/ j: the household's expectation about basket attractiveness at store

s, prior to visit t

ADV\t: feature advertising by stores at visit t

SFREQh: shopping trips per week

Shopper types include two types of customers who are large basket shopper and small basket shopper

The store choice model here supposes that the authors of the model partly belong to the third group of store choice literature because they also evaluate consumer utility function through the expectation of household about attractiveness of basket at store such as location of store, expected service levels, product assortment Besides, the model introduced one additional variable of advertising that can influence customer's decision on store they choose for shopping Advertising feature can be clearly prices or promotional specials at the store Furthermore, the variable of shopping trips per week was also put into the model to control the differences in shopping frequency among customers

Store choice decision is a kind of making decision Therefore, store choice decision process should follow stages of making decision process in

general According to Engel, Blackwell and Miniard (1995), there are four variables in order included in the store choice decision process Those are evaluative criteria or attributes; perceived characteristics form overall images of store to the customer At the comparison process, the customer will compare perceived attributes with perceptions of these attributes to determine which the store will be acceptable and which are unacceptable

2.3 Conceptual framework

2.3.1 Shopping frequency

Conceptual framework of this study is constructed from the combination

of theories were mentioned above and empirical studies in retailing major of many other authors Finding from some studies state that the frequency of store visits is affected by retailer attributes (Haynes et al., 1994) or store characteristics (Pessemier, 1980) and consumer demographics characteristics (Pessemier, 1980; Haynes et al., 1994) which suggest the estimated function of frequency as following:

FREQ = f (Store, demo)

Where

FREQ denotes frequency of visiting store

Store denotes store characteristics

Demo denotes consumer demographic characteristics

Frequency of going shopping in supermarket/ traditional market is the number of supermarket/ traditional market visits for shopping of individuals per month or per week The patronage to store for shopping also represents the frequency of going shopping at a certain store of individual As we know from the theory of customer decision making process (Jagdish et al., 1999; Engel et al., 1995), at the purchase stage in the process, customer decides when or where

to purchase a product Similarly, at the comparison stage in the store choice decision process (Engel et., al., 1995), customer compares perceived attributes

with perceptions of store attributes to choose the store to go for shopping Then, the customer will go shopping in the accepted store

Together with store choice literature, the result of other empirical studies also gives the list of variables having effect on shopping frequency at certain store They are as following:

2.3.1.1 Price

According to Bell and Lattin (1998), different retail price format or retail strategies attract different types of customer who have different frequency of visit to store The authors introduced two types of retail format They are

"promotion pricing" -HILO (it means that sometime retailer offers deep discount on price for certain products while other goods are still at regular price) and Every Day Low Price-EDLP (it means that retailer offer low price for every product category constantly) To small basket shoppers who shop more frequently but just spend small amount per shopping trip, they prefer to HILO store to EDLP store In contrast, larger basket shoppers who shop less often prefer EDLP store It was suggested that the shopping frequency had a negative impact on store chain choice for households who shop at EDLP stores but a positive impact on HILO stores (Peter, et al., 2004) Besides, regardless of the type pf shopper and under context that there are variety of retail formats emerging in the retail industry, shoppers choose stores of lower price to go shopping more often (Peter, et al., 2001)

However, according to Edward et al (2002), the variation in price just has little influence on consumer patronage Even "It seems that there is no any real effect of temporary changes in price on shopper mobility" (Hongjai Rhee,

et al., 2002) The reason is when choosing main store to go shopping, consumers pay much attention to the aggregate price rather than actual price level of specific products there

In summary, there are many empirical studies show that there is relationship between price and shopping frequency of consumer at store

2.3.1.2 Location

Location of a shopping place can be measured by travelling time It means that time for going to the shopping place (Edward et al., 2001; Peter et., al., 2001) or distance from shopper's area (home or workplace) to the store (Huff, 1964) As we know, convenience is one of personal value is sought by the buyer (Jagdish, et., al., 1999) The buyer would like this value because it can help her to save time and effort needed to get products or service From the first over simple model of store choice, "the nearest outlet" was considered as the reason for store choice of customer (Craig, et al., 1984) Therefore, to attract customers to the store and encourage them to patronize to the store frequently, retailer should offer them convenient store location Shorter shopping trip or less travel time from home or from workplace to store can make shopper go to store more often (Edward, et al., 2002; Peter et al., 2001 ) Consistent with the authors, Hongjai Rhee and David R Bell (2002) contribute a rather interesting finding that if the store location is less conveniently, the shopper may change a main store However, this less happen to large basket shoppers who spend large amounts per shopping trip since they suppose that they can get other benefit from that store for lower prices and wide range of preferred assortment, ect While Reilly (1929) recognized that regardless of customer's gender, customer trade off the cost of travelling with the attractiveness of alternative shopping opportunities Hongjai Rhee and Bell (2002) found that only women tend to trade off the less convenient location with good value in merchandise while men most concern about the proximity of the store

2.3.1.3 Shopping environment

In order to extend the Huff's store choice model including two variables which are the distance from customer's area to the store and the store size, Nakanishi and Cooper (1974) introduced the Multiplicative Competitive Interaction (MCI model) with a set of store attractiveness attributes such as store image, store appearance and service level Store image, store appearance

are factors which customers evaluate in the store choice decision making process There are many attributes can be included in the shopping environment such as nice display, offering pick and choice, recommended by people, lighting, layout, temperature, air quality, music (Letecia Nicole Moye, 2000) and so on The better shopping environment is recognized by the shopper, the more frequent people come to store and the longer they stay there (Jack Ries, 2005)

2.3.1.4 Service

Service is among of many reasons for store choice (Nakanishi and Cooper, 1974) To the buyers, service is one of market value they seek for as purchasing a product or service (Jagdish et al., 1999) It consists of three components; they are advice and assistance before purchasing, advice and assistance after purchasing and ability of refunding or exchanging the merchandise after buying

Service can be classified into three categories (Hasty and Reardon, 1997) The first category is service of convenience including store location, effective store layout, appearance, knowledgeable sales staffs The second one

is service facilitating sales (e.g., store credit card) The last one includes service

of gift certificates, gift wrapping, special orders, and mail orders The authors give us more factors of retail services

2.3.1.5 Advertising and promotion

It is interesting to figure out the effect of advertising and promotion on shopper's frequency Bell, et al.(1998) introduced advertising factor as an independent variable in store choice model With respect to in-store promotion,

it can make additional revenue for the store and has a positive effect on customer's patronage (Edward et al., 2002)

2.3.1.6 Product assortment

Product assortment, variety of different items in the store (Jagdish et al., 1999), has highly positive effect on patronage of shopper (Edward et al., 2002)

Shopper can make purchasing decision easier and more flexible as well as have chance to choose the best one among variety of alternative with larger assortment products (Alexander Chenev, 2003) Therefore, the larger assortment of products are, the more often patronage of shoppers (Peter et al., 2001; Michman, 1991)

2.3.1 7 Customer demographic characteristics

Demographic variables have a strong influence on store choice (Bell et al., 1998) Therefore, among four factors affecting customer behavior were mentioned as above: cultural, social, personal and psychological factors (Philip Kotler, et al., 2003), many previous researchers in retail major find the direct effect of personal factors on store patronage or indirect influence on frequency

of store visit through store choice Referring to the influence of shopper education on frequency of store visits, it was found that with better education, customer go shopping less often (Peter et al., 1997) Household size (number of member in a household) has the large effect on store preferences (Edward, 2002), which leads to positive effect on store choice (Peter et al., 2004 ) Household with more members patronize to the chosen store more often (Peter

et al., 1997) As to income factor, there are two opposite ideas One stated that the effect of income on patronage is limited (Edward et al., 2002) and one stated that household with higher income will go shopping more often (Peter et al., 1997)

In summary, there are six elements of customer characteristics (gender, age, education, career, household size and income) affect the store choice or store patronage

2.3.2 Customer satisfaction of the favorite store

Satisfaction is the contentment you feel when you have done something right; state of being gratified; great satisfaction; act of fulfilling a desire or need

or appetite In another way, Westbrook and Reilly (1983) defined that

"customer satisfaction is an emotional response to the experiences" These experiences are combined with particular products or services of retail stores

Consistent to the above definition, it is supposed that satisfaction of shoppers in this study is a comprehensive affective response on attributes of shopper's favorite supermarket/ traditional market where they often go shopping They are pricing strategy, product assortment, service, shopping environment and promotion activities provided a pleasurable level of fulfillment relating to such shopping experiences in supermarket/ traditional market

To measure customer's satisfaction with retail outlet, many items are introduced such as salespeople, store environment, perceived merchandise value, service, location and advertisement We can see that those factors represent typical attributes of the retail outlet in which location, advertisement and perceived merchandise value have most effect on the satisfaction level of the stores

In the different way, the study of "shopper's satisfaction levels are not the only key to store loyalty" classified estimated determinants of shopper's satisfaction with their primary stores into two categories They are shopper's shopping pattern consisting of 12 items and store attributes including 1 7 items

It was found that there are seven store attributes They are proximity from home

or workplace, product range, pricing, in-store promotion, aisle width, store ambience or layout and sales assistance influencing on shopper satisfaction level with the stores To shopper's shopping pattern, there is only time spent in st9re having influencing on store satisfaction

The combined result as mentioned above, it is suggested that store's characteristics of typical attributes such as pricing strategy, product assortment, store environment, service and salespeople, proximity from the shopper's home/workplace to store, in-store promotion are determinants of store satisfaction

From the theory of customer decision- making process (Jagdish et al., 1999; Engel et al., 1995), we got the perception of the relationship between the store choice and shopper satisfaction with stores After evaluating store's attribute to choose acceptable one, the shopper will go shopping at that store The shopping experience with the store makes the shopper re-evaluate the store and she will express the store satisfaction or dissatisfaction Therefore, we can suppose that there is a relationship between store attributes as the reason for store choice and the overall store satisfaction

2.3.3 Conceptual framework

Based on empirical studies mentioned as above, attributes of supermarket/ traditional market includes 4 factors which are product, price, service and policy of supermarket/traditional market are expected that having affect on shopping frequency and customer satisfaction at shopping place in Ho Chi Minh City In summary, the models can be presented as following:

Model of shopping frequency:

Shopping frequency= f (product, price, service, policy)

4 Marketing policy includes post-purchased services; promotion campaigns; membership card with added benefit

In addition, the distance from customer's house/working place to supermarket/ traditional market) and the preference of shopping at supermarket/ traditional market is considered as having positive effect on shopping frequency and satisfaction Furthermore, spending for each shopping time will be checked whether there is difference between it and shopping frequency at supermarket/ traditional market

Moreover, it IS assumed that shopping frequency, satisfaction of customer, spending for each shopping time and the preference of shopping at supermarket/ traditional market will be different by different groups of customers by age, gender, household's size, monthly income, marriage status, education level and career Based on previous empirical studies, there are six factors of customer characteristics In this paper, it is added one more characteristics, it is marriage status In other words, this paper just studies whether there is significant difference in shopping frequency, satisfaction of customer, spending for each shopping time and the preference of shopping at supermarket/ traditional market among shoppers of different demographic characteristics in supermarket/ traditional market Thus, model of shopping frequency and customer satisfaction excludes demographic factors It is also interesting to find out the relationship between shopping frequency and satisfaction of favorite supermarket/ traditional market

•

Supermarket/

traditional market's attribute:

I Products

2 Price

3 Service

4 Policy of supermarket

(Note

Shopping frequency to supermarket/ traditional market

Distance from shopper's house/

working place to supermarket/

Spending for each shopping time

at supermarket/ traditional market

, , ,

H2a/2a' \ , ,

,

\ \ , , ,

, , ' ' ' ' '

H5a/5a'

H2b/2b',' , ' '

' ,

, , , , ,

, , H6/H6' ',

' ' ' ' ' ' Satisfaction of customer about H5b/5b' The preference of shopping at supermarket/ traditional market supermarket/ traditional market

Figure 2.3: Conceptual framework

Hx (xis from 1 to 8): hypothesizes for testing at supermarket

Hx' (x' is from 1 to 8): hypothesizes for testing at traditional market)

gender, monthly income, education level, household size, career, marriage status

H3: There IS a positive relationship between satisfaction and shopping frequency of customer at each retail format (traditional market and supermarket)

H4a/H4b: There is significant effect of distance from shopper's house/ working place to supermarket/ traditional market on shopping frequency and shopping satisfaction

H5a!H5b: There is significant effect of the shopping preference at supermarket/ traditional market on shopping frequency and shopping satisfaction

H6: There is a statistical difference in the shopping preference supermarket/ traditional market between shopper groups of age, gender, monthly income, education level, household size, career, marriage status

H7: There IS significant effect of shopping spending at supermarket/traditional market on shopping frequency

H8: There is a statistical difference in shopping spending at supermarket/ traditional market by shopper groups of age, gender, monthly mcome, education level, household size, career, marriage status

CHAPTER III: AN OVERVIEW OF SUPERMARKETS/ TRADITIONAL

MARKETS ACTIVITIES IN HO CHI MINH CITY

3.1 Overview of retail market in Vietnam

3.1.1 Population ofVietnam by gender and region

Vietnam is a country which has big and young population It reached more than 86 million people in 2009 (according to result of population investigation in 01 st, April, 2009, General Statistic Office) Which big population like this, it is considers as a potential market for retail business In general, the ratio of gender is equal in 2009 Most of population is mostly living

in rural area The population in rural area occupies 70% total population However, recently the wave of immigration from rural area to urban area is increased per year In 2009, it is estimated that 30% of population lives in urban area while in 1990 this figure is 19.5% (see table 3.4, appendix 2)

3.1.2 Total retail revenue of goods and services

Total retail revenues of goods and services increases remarkably from 19,031.2 billion VND in 1990 to 1,214,532.1 billion VND in 2009 In general, total retail revenues of goods in services increased year by year from 1990 to

2009 From the year of 1999, it was always higher than 200,000 billion VND In

2009, it is up to 1,214,532.1 billion VND which increased by 504% since 1999

In which, revenues of non- state area occupies mostly in retail revenues of Vietnam It increased from 69.6% in 1990 to 86.9% in 2009 FDI (foreign direct investment) in retail sector also tends to go up In 2002, total retail revenue in this sector is 10,922.2 billion VND It increased by 274%, reached 40, 865.7 billion VND in 2009 (see table 3.5, appendix 2)

3.2 Overview retail market of Ho Chi Minh City (HCMC)

3.2.1 Population

With population of 7,165,398 people, Ho Chi Minh City is one of big cities in Vietnam It is considered as an economic and commercial centre where all economics activities are very busy and of course retail business is not an exceptional case

By its development, Ho Chi Minh City has attracted more and more people from different region to choose Ho Chi Minh City as a place to develop their career and living In which, people are living in most of districts such as Binh Tan, Go Vap, Binh Thanh and Tan Binh with population more than 400,000 people The population of labor age occupied 58.38% the population of whole city It is said that Ho Chi Minh City is a young and dynamic city

Table 3.1: Population of Ho Chi Minh City by district

Population (person)