MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY Nguyễn Như Chang The influence of store attributes on CONSUMER ATTITUDES TOWARDS PRIVATE LABELS – The case of Metro Cash and Carry Vietnam MASTER’S DISSERTATION In Business Administration Ology code: 60. Nguyễn Đình Thọ Ho Chi Minh City, 2010 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com THE INFLUENCE OF STORE ATTRIBUTES ON CONSUMER ATTITUDES TOWARDS PRIVATE LABELS – THE CASE OF METRO CASH & CARRY VIETNAM. Background to the research. Retail modernization in Vietnam.
The Metro Cash and Carry Vietnam. Significance of the study. Structure of the thesis. Scope of the study.
11 Chapter 2: LITERATURE REVIEW AND HYPOTHESES. Retailer motivations for private labels. The evolution and repositioning of private labels. The store attributes.
The relationship between store attributes and consumer attitudes towards private labels 15 2. The effects of store attributes on consumer attitudes towards private labels. The research gap. The development of the scales.
The questionnaire design. Sample Size and Type. 27 Chapter 4: DATA ANALYSIS. Preliminarily qualitative examination of the data through focus group (pilot study)29 4.
30 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Quantitative examination of the data through questionnaire. 37 CHAPTER 5: CONCLUSIONS AND IMPLICATIONS. Significance of findings.
Implications for theory. Limitations of the research. 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 .1: Descriptive statistics – Store attributes.2: Descriptive statistics – Consumer attitudes .1: Reliability – Store attributes .2: Reliability – Consumer attitudes .1: EFA results – KMO result .2: EFA results – Communalities result.3: EFA results – Total variance explained.4: EFA results – Rotated component matrix.1: Regression analysis – R2 value.2: Regression analysis – Coefficients results. 59 Table 8: Hypothesis test results. 36 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENTS Here are numbers of persons who have played important roles in assisting me finishing this research.
I would like to thank Asso. Nguyen Dinh Tho who is my sponsor of the dissertation. Thanks to his invaluable academic guidance while leading me to this approach and encouraging me in uncovering the issues in comply with a great understanding towards my working and studying time table, I deeply dug out the matter that is understood as also useful to the company I worked for. I also would like to thank Dr.
Tran Ha Minh Quan who was my class head teacher and gave me lots of encouragement and proactive support over the course. By the way, I couldn’t help acknowledging my classmates and colleagues who gave up their time to look for related documents and to help coaxing data in case. So does a thorough understanding of my family, especially my beloved husband during the progress, become a significant motivation for me to successfully fulfill this master project. I therefore would be grateful to their support and patience indeed.
Last, I would thank all consumers who have joined the questionnaire with sincere and active feedback to help me put the theory of consumer attitudes towards private labels in practice, specifically applied on the real case of Metro Cash and Carry Vietnam. i LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT The retail market is now growing faster and bigger than ever over the world of which Vietnam is the sixth most attractive retail market in the developing world in 2009. Considered as one of key motivation strategies to differentiate retailers from retailers, private label products have been introduced and quickly become a global phenomenon and of increasing interest to practitioners and academics alike (Hoch and Banerji, 1993; Quelch and Harding, 1996). Private labels have achieved a significant global sales share, especially in grocery market, with a bright future of further development foreseen.
Still there is little research on private labels in Vietnam. This dissertation therefore would contribute an empirical study about the influence of store attributes on the consumer attitudes towards private labels, explored specifically to Metro Cash and Carry Vietnam. There are two parts to deeply be deployed in the dissertation: 1) store attributes, their roles and measurement scales; 2) consumer attitudes towards private labels in reference with the influence of store attributes. And the Metro Cash and Carry Vietnam case is chosen to examine.
Deploying private labels from 2002, MCCVN enjoyed great success last year with sizeable sales share increased nearly double from 1.8% in 2008 to 3% in 2009 and its target to 2016 is 20% (MCCVN source, 2009). With the effort to find out determinants of the success of private labels, consumer attitudes have been dug into while the concept of retailer risen as brand. The study bases on Chowdhury et al. ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com From an academic viewpoint, this study contributes by illustrating that store attributes are considered as major strategic tools in the highly competitive retailing environment.
This finding points to the need for both practitioners and researchers to examine the “fit” between store positioning and private label positioning. For retailers, the finding suggests the need to reduce perceived risks of private labels. For manufacturers, the finding indicates that they should highlight the differences between their national brands and private labels, especially in terms of the superior quality. For researchers, the finding also suggests that store attributes should be incorporated in models predicting consumer proneness towards private labels.
iii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABBREVIATION GRDI: The Global Retail Development Index Horeca: Hotels, Restaurants and Caterings MCCI: Metro Cash and Carry International MCCVN: Metro Cash and Carry Vietnam MGD: Modern Grocery Distribution SCO: Services, Companies and Offices iv LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 1: INTRODUCTION 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.
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 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com subsequent sections, following by definitions and explanations of some terminologies. The last part provides a summary of the chapter. 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. 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. This retail process of modernization and innovation would trigger enhance the bright prospect of the private label development.
2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. 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. 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 12.4%; 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. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table 1: MCCVN performance MCCVN performance Metro vs. competitions among professional customers METRO performance METRO performance MCC sales growth, % , p.1 80 Non food Saigon Coop 71 39.4 5 Binh Tay Market 4 2 66 0 1 Sales share per branch 2008 Top 1 supplier Top 2 supplier One of many Prompted Horeca suppliers awareness 15% (prompted) 55% 30% SCO Trader Source: IMAS study 2008 Source: MCCVN METRO Cash & Carry International GmbH Member of METRO Group 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.