Insights on a new site

Editor’s note: Patrick Quinlan is principal of Quinlan and Associates, an Adrian, Mich., research firm, and a member of the Qualitative Research Consultants Association. He is also professor of marketing at Adrian College.

Retail chain systems, in all categories, rely heavily on store expansion into new markets and sites as the means to implement corporate growth strategies of market development and market penetration. Store location research which relies heavily on quantitative analysis often follows a pattern of developing a picture of the demographic and/or lifestyle characteristics of consumers within the trade area of successful stores, of selecting progressively smaller new market areas having the best match with these consumer characteristics and of testing prospective sites for sales potential using modeling procedures like multiple regression.

When traditional real estate options decline, many retailers recognize the need to adapt basic store concepts to match the opportunities available at nontraditional sites. These adaptations can range from modifications of current outlet configurations to partnering relationships with other retailers.

Focus groups, although not historically an important component of store location research, can be very useful in concept development and testing and can offer insights to characterize the potential existing at a proposed site. Here is an example of how this can work.

The problem

A retail chain system operating 45 supermarkets and 25 deep-discount drugstores in the Midwest requested a proposal for a focus group project to assist it in evaluating a site located in a southeastern Michigan market in which the organization did not have a presence. The current prototype for grocery outlets of the chain combines an old-world theme with an emphasis on the perishable departments. A unique food court offers a variety of lunch and dinner entrees to go with in-store space allocated to a quick-serve Asian food outlet. A second distinguishing characteristic of the store format was the availability of a store discount card. The card would be read at a checkout card reader and would automatically discount store-selected items. The card also provided consumers with check-cashing privileges and discounts at other local retailers. Management gained a rich customer database. The store prototype design allowed tailoring of store services for the unique needs of a market. In the somewhat rural market being evaluated, the prototype store, if built, would be the fifth grocery store entry into the market and would provide a more upscale grocery shopping experience than was currently available.

Management’s objectives for the research included assisting in determining if market acceptance of the concept of the store could be expected and in providing a definition of the store service mix desired in the market.

Focus group design

Given a somewhat lengthy topic outline proposed, recruiting a focus group of seven participants for each of two focus group sessions was recommended. Participants were recruited to match the demographic component of the firm’s target market definition as well as properly reflect the unique demographic characteristics of consumers living within the store’s predicted trade area. Knowledge of the demographic characteristics of the predicted store trade area allows proper representation of important subsegments of the population. In this situation, the predicted trade area included a significant population of Hispanic consumers. The recommended and approved topic outline and rationale for inclusion of topics follows.

I. Category assessment
After a traditional warm-up, the respondents were led into a category assessment centered around existing retail grocery outlets in the market. This technique was selected to provide management with insight into category behavior and to identify any competitive vulnerability. Topics explored were awareness, stores shopped, how decisions are made when selecting among retailers, store most often shopped as well as recent and predicted changes in shopping behavior. A flip chart was used by the moderator to record responses. Following the basic category assessment, a moderating technique I will call the “family of stores” was utilized. This technique moved the participants to disclose a greater depth of feeling toward competitors in the market. Participants were asked to imagine the stores in the current market as family members and were asked to provide a written description of the role that each store would play in the family as well as its most distinguishing characteristic or feature as a family member. Then, in the larger group they discussed their individual “family” structures.

II. Customer satisfaction
Any customers that would patronize a new grocery outlet would have to be drawn away from existing stores. Understanding satisfaction with current store offerings is important. Reaching back into the category assessment topics, participants were asked to recreate their most recent shopping experience. The moderating challenge was to help participants deconstruct their shopping experiences into component parts important to management. Although the discussion focused on the five existing grocery outlets, participants also discussed satisfaction with other relevant category competitors.

III. Concept evaluation - store design and merchandising description
A management need to determine if the concept for the store would be met favorably or not was satisfied through concept testing. Participants viewed four-color photographs of the food court area of an existing store to illustrate the old-world design of the store interior. They read a concept description that clearly identified the site under consideration and explained distinguishing service and merchandising characteristics of the proposed store. Respondents then were asked to indicate on the written concept description which characteristics were liked, disliked or not understood. As a group, they discussed their intention to shop, their likes and dislikes and their suggestions for improvement on the store concept.

IV. Concept evaluation - discount card
The store discount card was evaluated as participants read a description of the card’s characteristics. Again, participants individually indicated which characteristics they liked, disliked or did not understand. The group then discussed their intention to use the card, their likes and dislikes and their suggestions for improvement.

V. Shopper board
A primary concern of management was whether or not this particular market would accept a much more upscale shopping experience than currently existed. To better evaluate the strength of the market’s intention to shop at the store, a technique I’ll call the “shopper board” was utilized. In this technique participants received a set of pictures of people with obviously varying lifestyle and demographic characteristics. Each photo was represented by a unique letter. Participants were asked to indicate which people on the shopper board would “definitely” or “definitely not” shop at the store discussed in the concept testing stage. After the individual evaluations, a group discussion provided additional insights.

VI. Wouldn’t it be great if? (WIBGI)
During the final stage of the focus group, participants created a list of desired store service offerings. Divided into two groups, participants were given a list of potential service offerings under consideration by management. They were also allowed to develop additional services. The groups had 15 minutes to decide upon a final list of the desired services they would like to see provided in the store format. These smaller group discussions were videotaped. After each group had completed the exercise, they presented their services list.

Results

The category assessment, the “family of stores” exercise and the customer satisfaction discussions clearly indicated significant variation in the performance of the current competitors. Topics of greatest importance were the quality of produce and meat departments, brand assortment, competitive prices, quick movement through a single shopping experience and, especially, interactions between store personnel and individual customers. A store’s involvement in community activities was quite important to these consumers.

It was evident that inconsistent employee responsiveness, empathy and customer problem-solving skills were a major factor preventing many stores in this market from building the type of customer loyalty that could provide some degree of insulation from the ebb and flow of pricing advantage. Interestingly, the majority of the middle-income focus group participants expressed a willingness to trade-off some degree of cost reduction for consistently high levels of customer service in a new store.

The store and discount card concepts generated strong, positive reactions. It was also clear that the success of the store would not be so much a function of the store’s positioning focus on perishables, a unique store design, and the discount card. Instead, the store’s success hinged on its ability to provide strong produce and meat departments, a good assortment, competitive prices, quick movement through a store visit including the parking lot, and consistently positive customer interactions with store employees. The Hispanic participants provided insight into desired merchandise categories and brands not considered in the store merchandise assortment prior to the research.

Focus group participants were nearly unanimous in their belief that all of the various consumer types projected on the shopper board would try the store and, just as certain that customer service would be the key to turning an initial visit into committed shopping behavior. In addition to participants projecting their own attitudes and behaviors into certain images contained on the shopper board, they also projected those of family and acquaintances they saw as being similar to particular images. This had the added benefit of gathering some consumer behavior insight beyond that of the participants themselves and generated some of the most managerially useful discussion in the project.

It was very interesting that a great deal of time was spent in the WIBGI with participants discussing the problems encountered by mothers shopping with their children, even among participants having grown children. All of the subgroups talked about this issue in their final presentation of desired services, but fell short of asking for a child drop-off area on the store, citing security concerns. This discussion struck a chord with management as one of their major competitors, in larger markets, had recently been experimenting with a child care drop-off area in some of their stores. My client was not in favor of providing this service for the same security reasons cited by participants. Although there was a fair degree of heterogeneity in terms of services desired by participants, homogeneity did exist. The results of the focus groups and other information eventually led to a pharmacy being provided in the service mix selected for the site.

Early report

What did the client think? I provided them a written report well in advance of the due date and the scheduled presentation. When I arrived at the corporate offices, the marketing folks handed me my check and thanked me for the early report. That was a good sign, I thought. It turned out to be especially good since the electronic equipment for my presentation failed! I resorted to a sit-down chat with a group that included the founder of the 50+year-old chain listening to his very first focus group report. Well, that’s a story for another time...