Continued from The New Market Perspective.
As a student, I lived on ready meals. Despite being catered in College I often found myself, on an evening, strolling down to Tesco in order to pick out my dinner for the evening. I went with every intention of ‘stocking up’ so that I wouldn’t need to make a visit to a shop for the next few days but, invariably, I left with one meal that would cover me for the evening. This was only a year ago, and the rise of convenience was in full swing.
It is clear to me, only now, that the Tesco Metro I visited in central Oxford was actively altering (maybe not intentionally) my Interpurchase Interval for meals. By influencing my decision to purchase food that would only last me for one evening I was hand-bound to purchase food the very next day. Thus, the most likely shop that would be able to service that daily need was that very same Tesco Metro that was conveniently in walking distance from college. On the face of it, this store would have benefitted greatly from me doing a large shop on one visit and buying everything I needed for the week. My average spend per visit for the store would have been much larger for sure, but in the long-run would they have guaranteed my loyalty?
Had I bought food for the week I would not have needed food until the next week. My Interpurchase Interval for meals would have increased and such an increase would have been unlikely to benefit that Tesco Metro store. The reason for this is only uncovered once examining my rationale for visiting the Tesco Metro each day. As I had a daily need I was unlikely to undertake costly trips in order to service that need – even if that meant I had to pay higher prices and/or made me worse off in the long-term. My underlying preference for short-term gain meant that I would not make a long trip to a larger supermarket when I was accustomed to visiting the Tesco Metro every day without as much effort. Remember that I visited the store with every intention of making a long-term shop but this was thwarted by in-store conditions. Had I made a large purchase of meals in one trip to the store then my cycle of visiting every day would have been broken I would not have had to satiate my need for meals for a longer period. Thus I would have been much more likely to exert effort to visit the large supermarket and the expected cost of this effort could be spread over a longer expected period. Whilst in was in the steady-state cycle of visiting the Tesco Metro every day, the perceived cost of deviation from that cycle is too great to warrant visiting another store that require more effort to visit.
The rise of convenience shopping over the last few years is indicative that this kind of consumer behaviour is rife, particularly within the UK. The increased urbanisation of the British population, coupled with the disparity in spending power between London and other areas means that, with increasing probability, the variance in trip effort for the typical consumer is growing exponentially. For a consumer who lives rurally their trip effort is virtually fixed unless they have a local village store. They are almost guaranteed to have to use a car to travel anywhere. Once they are using their car the marginal effort required to travel an extra few miles is perceived as minimal if they can save money with lower prices.
For someone living in an urban environment this variance in trip effort is much larger. An urban consumer is less likely to own a car, making long distance travel more costly and less convenient. Additionally, this consumer will have far more retailers within walking distance that are smaller, with higher operating costs, and with greater probability, higher prices. Thus the cost of making a trip to different retailers for an urban consumer can vary from virtually nothing to a large monetary outlay to travel to an out-of-town store. So whereas the rural consumer will limit their visits to the retailers with the highest range and lowest prices to limit their fixed costs; the urban consumer will be able to visit a wide variety of stores much more regularly and at different intervals. As we observe increasing urbanisation in many countries the story of the urban consumer becomes far more applicable and more excitingly, exploitable.