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2. Introduction

In the recent past, the supermarket and hypermarket sector in China has experienced vibrant changes in the manner in which business is conducted. There are several foreign supermarkets in China such as Wal-Mart, Tesco, and Lotus, among others. The way the mainland shoppers want to buy commodities is rapidly changing as there has been an increase in the number of small local shops with an online shopping platform which have been very successful in the past five years. This has compelled foreign supermarkets to follow the lead of the local entrepreneurs by creating their own presence in cyberspace but they continue to struggle in the retail industry against the combined forces of the smaller local players. The changing shopping preferences of the local populace from traditional to a mixture of traditional and online shopping has been creating problems for the large foreign supermarkets because they cannot seem to penetrate the market as effectively as the local entrepreneurs with small grocery stores coupled with online purchase platforms. It is not the intention of this research to purely focus on the financial details of the issues at hand. Instead, this study intends to carry out an investigation of how small online/brick-and-mortar grocery stores are adversely impacting the business of big foreign firms. More specifically, this research explores the business strategies employed by the small local players that favour their market position in the industry against the larger foreign competitors. It should be noted that changes have been made since the proposal for this study was first written. Initially, the research focused on answering three questions that pertained to: (1) the market performance of the foreign supermarkets in China over the last five years; (2) the financial performance of foreign supermarkets in China in the last five years, and; (3) how online grocers have affected the market performance of the foreign supermarkets in China over the last five years. Instead, the study only focused on the third research question, as advised by the professor. The selected approach for analysis was also changed from a mixed method to qualitative method, since the master of this researcher is in entrepreneurship and large firms are not within its scope. However, the present study still covers some background information about large supermarkets in China for the purpose of comparison.

1.1.      Rationale for the Research

With all the seemingly unlimited financial capital of big foreign hypermarkets and supermarkets, it is interesting to observe that these industry giants have been unable to dominate the grocery store industry in China, unlikely to be a disruptive force that will wipe out the small grocery stores of the locals, and ineffective in capturing majority of the customers. This study is therefore important because it seeks to fill in a gap in knowledge which disproves the notion that large industry giants can easily displace small businesses. Instead, the opposite is happening as the big firms are losing millions of dollars against the small local shops. This study thus develops a deeper understanding of unique environmental forces in China that continually undermine the big foreign firms, resulting in the closure of hundreds of foreign-owned hypermarkets and supermarkets in the very recent past due to very low sales performance. Such a deeper understanding would be valuable not only to foreign firms that seek to expand operations in other countries, but also to small local companies in any country that are threatened by the presence of industry giants. The exploration will involve vital topics on psychological research grounded on theoretical perspectives about factors that influence the purchasing behaviour of consumers. This researcher believes that the success of any business, whether large or small, is ultimately dictated by the preferences of the customers.

1.2.      Research Aim and Objectives

The aim of this research is to investigate the business strategies employed by local online grocers which have adversely affected the business performance of foreign supermarkets in China over the last five years. The objectives of the research include an exploration of primary and secondary sources of information to answer the research question.

1.3.      Research question

How have the online grocers affected the market performance of the foreign supermarkets in China over the last five years?

1.4.      Research Hypotheses

This research presents three research hypotheses that shall be addressed:

H1: In China, success in business is dictated by the decisions and actions of the business owner.

H2: In China, success in business is dictated by the decisions and actions of the consumers.

H3: In China, success in business is dictated by the decisions and actions of both the business owner and the consumers.

1.5.      Outline of Structure for the Research

 

3. Literature Review

Customers will usually pay for goods or services that fulfil a need or provide some type of benefit or positive value. There is usually a direct relationship between the willingness to pay and the assessment of the perceived value (Gomes, 2015 p.96). This means that the more that customers are convinced that the purchase will fulfil their needs or provide a value, the more that they will be willing to pay for the good or service. Furthermore, if additional positive attributes can be associated with the product, this will also increase the willingness of customers to pay (Sarkar & Shaw, 2017 p.141).

In order to make a rational assessment of a potential purchase, a customer must be able to articulate his/her current decision-making criteria (Graziano, 2013 p.25). For example, if a rational decision-maker is seeking to purchase milk, he/she would be able to list the essential and desired criteria for the purchase. The rational decision-maker would then be able to assess the milk purchase options against each criterion; in other words, the advantages and disadvantages of making the purchase. Finally, the rational decision-maker would buy the option that best fulfils the decision criteria if the purchase options meet these minimum requirements. Naturally, if a product is superior on some criteria but inferior on others, then the rational decision-maker would next assess which criteria should be given more importance. In the above example on a milk purchase, if supporting the local industry and having no clinical additives in the milk product is more important than cost and fat levels, then the rational decision-maker would purchase the locally-produced milk.

Rational decision-making, however, takes time and is mentally draining, especially when there is no clearly superior purchase option, and that is why the majority of customers’ purchase options are not placed on rational decision-making (Bhattacharya, 2009 p.200). Emotional states when compared to rational decision-making allow customers to make quicker decisions with much less cognitive effort (Secchi, 2010 p.47). Marketers are very much aware that many of the customer’s purchase decisions are heavily influenced by his/her emotions (Strähle, 2015 p.170). Every human being experiences emotions such as happiness, anger, fear, and envy. Studies have found that when a person feels happy, he/she experiences positive feelings, a sense of satisfaction, and feels sociable, and the behavioural tendency would be to connect with other people and to actively seek out rewards and positive outcomes (Mowen & Minor, 2001 p.234). Such a state of mind would undoubtedly be favourable to marketers, a fertile ground for selling, so to speak.

Marketers understand that when people are afraid, this means that they have appraised the situation to be unsafe and are motivated to flee the danger or to find a safe environment. When people are angry, they believe that something they highly value is being threatened, whether it be themselves, their loved ones, or an ethical standard. When people are angry, they become highly-motivated to stand up and attack the perceived threat. When people are envious, they feel inferior to others who they feel has an advantage over them. As human nature dictates, an envious person will most likely seek to better the people they believe to be their rivals. While emotions may help people to successfully navigate everyday life, it should be noted that emotional states can also be manipulated by marketers in a way that influences the purchasing decisions of consumers (Gass & Seiter, 2015 p.348).

Marketers strategically seek to associate products with an emotional appetising experience that will increase the prospect of their product being purchased (Chitty, Barker & Valos, 2011 p.208). For example, people are more likely to pay for a gym membership than spend money on a holiday when they are experiencing the emotion of happiness; people are more likely to purchase insurance or home security systems when they are experiencing the emotion of fear. People would also be more likely to purchase from the local shops if they feel anger at the large and multinational supermarkets, and would be more likely to open an account at a local community bank if they are angry at the bigger banks. They would be more likely to spend money on prestigious status symbols such as expensive cars or watches when they are feeling envious or inferior to others.

Consumers would be more likely to buy an item if they feel attached to it (Hoyer, McInnis & Pieters, 2016 p.441). This is the reason why online magazines give a six-month free subscription trial period and why car sales persons are happy to let potential customers test-drive a car that the customer may be interested in. Even sales persons in jewellery shops often insist that the customers physically put on the items that catch their eye. These sales people are allowing the customer to become intimately connected with their product with the strategic goal of creating an attachment with the item on sale.

All good sales people know that once a potential customer forms an attachment with a product, he/she will consider paying a premium to keep that feeling of ownership. Behavioural economists and psychologists call this phenomenon the endowment effect (Robison & Ritchie, 2016 p.89). In a complicated world, customers do not really consider all the relevant information available when making a purchase (Nah & Tan, 2015 p.415). Instead, customers often apply heuristics, or rules of thumb, to guide their purchase decisions (Solomon, Russell-Bennet & Previte, 2012 p.268). Heuristics, like in motions, allow for quick decisions that are not mentally draining. Although heuristics, at times, can result in regretful purchases, most of the time they result in shopping decisions that are good enough (Hollis, 2010 p.38).

Some of the rules of thumb of heuristics that customers commonly use include purchasing the cheapest, buying the options that have the best features, buying the brand with the most attractive packaging, buying the brand that is known, and buying the same brand as the one that has been purchased before (Glimcher & Fehr, 2014 p.38). Customers are creatures of habit, especially when it comes to purchasing behaviour. If people are happy with the brand that was purchased before, there is always a risk associated with purchasing a new brand. Customers can only buy what they can afford and even in a world of easily accessible credit, the customer knows that there are still credit limits and upcoming obligations to make repayments. It should be noted, however, that psychological researchers found that people rarely use budgets that reflect their overall life situation; rather, people tend to draw upon several budgets for different types of expenditure (Buchanan, 2008 p.9). For example, an individual may have a budget for grocery shopping that is not related to budgets for eating out or buying gifts. It has also been found that budgets change when paying by credit card rather than cash (Berger, Molyneux & Wilson, 2015 p.313).

Knowledge of standard market prices sets a benchmark for how much people are willing to pay. If a customer knows that other shops are selling milk for $2 per bottle, then he/she will not be happy to pay $3 per bottle from other shops. In other words, the market price anchors how much customers are willing to pay (Smith, 2011 p.93). Large supermarket chains often try to lure customers into their stores by heavily discounting a small number of goods, knowing that the average consumer will also purchase a larger shopping trolley of normally-priced items (Strauss, 2012 p.119).

Nonetheless, random factors against price anchors can also significantly influence shopping behaviour. A market price usually anchors how much customers are willing to pay for a good or service but when the customer is not sure what the market price is, a random anchor that is presented just before he/she makes a ‘willingness to pay estimate’ can become the price anchor (Shimizu, 2012 p.99). This means that the customer makes up whatever justification he/she can accept as an anchor. Perhaps the random justification for the price [or the price anchor] would be ‘a fitting reward for my hard work’ or ‘a sacrifice for my loved one’.

Humans are social animals and their social instincts commonly affect their purchasing behaviour (Pillai, 1987 p.273). They often look to see what others are buying and seek to purchase what is popular at the time (Niyogi, 2016 p.90.) Understandably, this type of behaviour is based on the premise that ‘what is good for others is good for me’. A social endorsement from a respected figure can also increase the propensity to buy at a premium (Rosengren, Dahlén & Okazaki, 2013 p.103). For example, if the Air Jordan shoe was not associated with the basketball superstar but instead marketed purely based on product specifications without an endorsement from Jordan, then Nike sales and profit margins would almost certainly be a lot less.

When people buy a product, they want to actually purchase what was promised by the seller. Naturally, they will be less likely to purchase if they do not trust the seller or the quality of the product. Sellers with a reputation for providing a consistent quality product would benefit from high sales (Polinsky & Shavell, 2007 p.1541). In this regard, it can be observed that many sellers offer a return policy to overcome purchase barriers associated with concerns about quality.

Consumers will also be more likely to buy the premium if the seller is considered to be an expert (Elking, 2001 p.13). For example, a customer will probably be willing to pay more for a qualified trades person to fix the kitchen sink than a handyman without a qualification. This suggests that Chinese customers would be more likely to buy from local Chinese stores over foreign supermarkets because the smaller grocery shop owners understand the needs and expectations of the local customers better.

For people, time, like money, is valuable. No one likes being made to wait unnecessarily when buying something, or being forced to travel long distances to make a purchase, or having to expend additional effort filling out forms for no good reason when buying something. The success of online shopping has been proven that many people will pay a premium to participate in a convenient purchase process. A big benefit of online shopping is that a purchase can be made at home with an iPad and then have the goods delivered at the doorstep. It should be recognised, however, that interaction with a sales person of the business establishment significantly influences whether or not the customer would be willing to buy in the present or in the future and how much the customer would be willing to pay (Elder-Vass, 2010 p.171).

Consumer researchers found that people are willing to buy more from sales people that they like and trust (Kalat, 2010 p.475). Sales staff who are good at making customers feel important are nearly always more successful as many people cannot resist paying when their ego is being raised (Stanley, 2013 p.178). Customers are also more likely to buy or tip sales staff from he/she receives a perceived act of kindness. Psychological researchers found that people feel obliged to reciprocate acts of kindness and are willing to pay more when sales staff are kind and helpful (Nelson & Quick, 2010 p.120).

General mood can also affect the buying behaviour of customers. Whereas emotions reflect responses to particular short-term situations, moods can be more stable and reflect how people feel over a longer-term period such as a few days or weeks (Morgan & Summers, 2005 p.94). It has been found that people who have experienced a sad mood over a period of time will buy more at a shop than some people who experience a positive mood (Chandler & Heinzerling, 1999 p.175).

Fung Business Intelligence Centre [FBIC] (2015) states that the retail market in China is approaching a tipping point wherein various factors are dictating the success or failure of business enterprises. Among these factors that impact the industry of retail, particularly the grocery store business, are the rising popularity of online purchasing, changes in the behaviour and preferences of customers, intense market competition, and increasing costs of employee compensation and rental fees (p.1). Understandably, the combination of these factors makes it difficult for grocery stores, especially large international enterprises like Walmart, to achieve sales growth.

In contrast, small local grocery stores: (1) can engage in online selling at little cost and just as effectively as the big players; (2) are very familiar with the purchasing behaviour of the local populace because they are locals themselves; (3) are collectively generating large sales from loyal customers, thus keeping business away from the large supermarkets and hypermarkets, and; (4) spend little on rental fees and salaries since their business is small. Such adverse impact of small grocery stores on the growth of big, foreign players is reflected in a previous survey done by China Chain Store and Franchise Association [CCFA] and PricewaterhouseCoopers where it was found that overall, there has been a declining trend since 2008; despite positive developments for the period of 2009 to 2011, sales growth for hypermarkets and supermarkets reached a low 6.2 percent in 2013, from a previous 19 percent five years earlier (FBIC, 2015 p.2).

 

 

 

 

 

 

 

 

 

 

 

CCFA and PricewaterhouseCoopers further presented a breakdown of the required costs for hypermarkets and supermarkets in China for 2012 and 2013 wherein eighty-three establishments were included, as shown in Figure 2 below. It can be observed that these large store chains were impacted the most by expenditures for employee salaries which represented 55.9 percent of their expenses; rental fees comprised 30.9 percent, and; 13.2 percent was allotted to expenditures for utilities (FBIC, 2015 p.4).

		Figure 2: Cost structure for hypermarkets and supermarkets in China, 2012-2013 (FBIC, 2015 p.4).

 

 

 

 

 

 

 

 

 

 

 

In the past years, the largest hypermarket and supermarket firms in China have maintained focus on national expansion, hoping that the extension of their operational coverage would equate to a favourable market position in the retail industry of the country.

“While most top players in the hypermarket and supermarket sector are nationally focused, many smaller domestic supermarkets and hypermarkets operate regionally. Most foreign players tend to adopt a national approach when expanding, whereas domestic players generally focus on regional rollouts. Exhibit 6 summarises the advantages and disadvantages for the two most frequently adopted expansion strategies by supermarket and hypermarket operators” (FBIC, 2015 p.6).

“Domestic retailers continue to grow while foreign retailers struggle. Over recent years, domestic retailers have increasingly become the dominant force, while foreign retailers have been struggling. Several foreign hypermarket and supermarket operators have seen customer footfall shrinking and many existing stores continue to experience sales slowdowns. For example, sales performance of Carrefour in Asia is the weakest among all other regions in FY14, with sales dropping 6.4% in China alone3. Some operators have slowed their pace of expansion while others have reduced operating areas or even closed poorly-performing stores” (FBIC, 2015 p.6).

 

 

 

 

 

 

 

 

 

 

“Hypermarket and supermarket closures soar. The pace of hypermarket and supermarket store openings has been reducing significantly over recent years; growth in the number of new store openings fell from 11% yoy in 2008 to 5% yoy in 2012 according to the NBS. Many undertook store revamps and closed unprofitable stores. According to Linkshop6, as many as 178 hypermarkets and supermarkets closed in 2014” (FBIC, 2015 p.7).

 

“The most common reasons included lease expiries, structural adjustments, weak profits, organisational restructuring and poor management. For example, Renrenle, a domestic supermarket chain, reportedly closed 18 stores in 2014 and shifted its focus to opening community outlets – with smaller-sized supermarkets launched in local communities to serve specific neighbourhoods” (FBIC, 2015 p.7).

“Trend #1: Community stores or smaller formats become popular. Consumers’ changing expectations of convenience have greatly impacted China’s retail sector. Smaller retail configurations are becoming popular, especially for grocers. Supermarket players are offering more services targeting single people and smaller households, especially young adults and the elderly, who find smaller and more accessible stores more suitable for them. Also, as the growth of huge hypermarkets slows due to over-expansion, reducing redundant store space has become the prime focus for some players” (FBIC, 2015 p.8).

Trend #5: Industry consolidation via M&A is limited; home-grown retailers take the lead. Underperforming foreign hypermarket and supermarket players have provided excellent merger and acquisition (M&A) opportunities for local retailers over the past few years. To expand market share, some of the more competitive domestic operators have chosen to acquire foreign counterparts, while a number of foreign retailers are actively seeking cooperation with local players. As one example, Tesco formed a joint venture with China Resources Enterprise in October 201331. Tesco has a 20% stake and China Resources Enterprise 80% of the venture, after the deal was completed in May 2014. A lack of knowledge about local consumers and neglect of food safety issues are among the key reasons why foreign operators underperform. Domestic players continue to seize their opportunity to gain market share by optimising product offerings and pricing, while enhancing their customers’ shopping experience” (FBIC, 2015 p.12).

“Some foreign companies are also aiming to enter the China market – or create better operations – by leveraging partnerships with leading domestic players. For instance, Dairy Farm Co., Ltd. agreed to acquire a 19.9% stake in Yonghui Superstores for 5.69 billion yuan, making its entry into the mainland supermarket business in August 201435. The two companies aim to collaborate in areas such as procurement, private label development and fresh food processing” (FBIC, 2015 p.12).

“Trend #6: Foreign hypermarkets and supermarkets tap the China market via online platforms, without setting up physical stores. An increasing number of foreign hypermarket and supermarket operators sell to Chinese consumers by opening stores on “Haitao” – business-to-consumer (B2C) platforms which sell imported products to Chinese mainland consumers. Indeed, over recent years, the Chinese government has introduced several regulations to promote cross-border e-commerce. One such initiative is the establishment of pilot zones to facilitate this business. Brands that are sold on “Haitao” platforms and are imported through these pilot zones can enjoy lower import duties at rates applicable to personal items, which are usually set lower than tax rates for general trade. Costco, a leading members-only warehouse club in the U.S., tapped into the China market in October 2014 via Tmall Global, Alibaba’s B2C platform focused on selling imported goods. During Alibaba’s Singles’ Day shopping festival, Costco reportedly sold 22 million yuan (US$3.5 million) of merchandise” (FBIC, 2015 p.12).

Trend #8: Grocery players explore other retail formats for risk diversification. Carrefour opened its first convenience store named “Easy Carrefour” in Shanghai in November 2014, while Metro Cash & Carry, a Germany-based self-service wholesale chain, also opened a convenience store in Shanghai in 2014” (FBIC, 2015 p.14).

4. Research Methods
5. Results/Findings

The contents of the following will be utilised for the Results/findings section and the Discussion section.

Name of grocery store: Grocery 1

Address: Address 1

Website: Website 1

Name of owner: Owner 1

1. Tell me about the overall business performance of your grocery store for the past five years

Business has been very good in the last five years, just as it has always been good ever since I started this business 7 years ago. At first, I was wary about the presence of big, foreign hypermarkets but according to my experience, those big stores are more afraid of small stores like me because we are many and a lot of the local people want to come to us more.

1. What business strategy do you use or maintain to be competitive in the market?

I treat all customers like I want to be treated myself if I were in his or her place. That means I understand that customers want the best quality, the best prices available in the market, and the most convenient way to buy groceries.

 

1. What new strategies have you adopted and how often have you made such strategies in response to the strategies of competitors?

Many of the new things that I do are based on what the competitors are currently doing, especially those that are nearest to my store. For example, I have some of my people going around to see what promotions my competitors are having, and so I check my inventory if I can do the same promotion. If not, maintaining low prices all-year-round ensures that the prices my goods are not too far behind the promotional prices of my competitors. Besides, my competitors cannot always do the same promotions as mine at the same time so we are more or less even in that aspect.

1. Why did you choose to adopt such business strategies?

Here in China, there is no other way to do it if I want to succeed in business. I don’t know what’s happening in other countries but here in China, big foreign supermarkets are trying to get rid of small businesses like mine by building large stores in all places all over the country. If I don’t closely observe what my competitors are doing at the present, I won’t know when and how to act so that other stores can’t take away my customers. That applies to both small and big business rivals.

2. What do you do to ensure that your physical store and your online shopping platform continuously attract customers?

First of all, my actual [physical] store is always clean. I make sure that the cleaner is always checking all the aisles and the shelves for dirt or dust. I also regularly have someone in charge to check all the overhead air conditioning water pipes so that leaks can be avoided or repaired immediately. The clean and tidy appearance of the store is very important to customers. Second, all my employees are helpful to customers. Third, I maintain low prices all of the time. Customers always know how much the same items are sold at other grocery stores and that makes them decide which stores to go to. Also, I make sure that I have all the fast-moving items [items in high demand] at all times because I don’t want customers to go to other stores to buy items that I don’t have. Sooner or later, they might go directly to other shops instead of mine and that’s bad for business. Fourth, I make sure that all my goods are sold long before the expiry date. For items that are 2 months near the expiry, I sell them at promotional prices and customers look forward to it. Fifth, I apply all of the above to my online store and I make sure that the platform is very easy to use, even to a child. I personally check it several times a day for technical problems and I update it as often as necessary. I also have a staff that is assigned to it at all times so that orders can immediately be taken and delivered as soon as possible.

1. What types of people are your most loyal customers, both online and visiting?

I have customers of all ages but the most loyal visiting customers are the older ones. For my online store, many of the most loyal customers are probably in the age group of 20 to 40 years old, perhaps mostly office people and housewives.

1. Could you explain more about it?

I think my older visiting customers come to me because I have good prices, we have known each other for some time, and we have good and friendly relationships. For my online customers, they come to me because they know that they can place orders more easily and follow-up on them if necessary without any hassle. One of my customers told me that he doesn’t want to order from the big stores because his order could more easily get lost or delayed as compared to my smaller operation.

 

3. What times of the day [or days of the week] are the busiest for your business?

The busiest days of the week are during weekends when people are at home, and orders come in at all hours. The busiest hours of the weekdays are from 5pm to 9pm when the people come home from work although Friday night is busier than any other weekday.

1. Are there specific times of the day [or days of the week] when visiting customers come the most?

Visiting customers come the most after working hours during weekdays. During weekends, they come the most before lunch and from 4pm to 8pm.

1. Are there specific times of the day [or days of the week] when visiting customers come the least?

Visiting customers come the least from Monday to Thursday although the older customers who are retired come in at any day or hour that they want, I guess because they have no work schedule to follow.

1. Are there specific times of the day [or days of the week] when online customers order the most?

Online customers order the most after working hours during weekdays. During weekends, they order the most before lunch and from 4pm to 8pm.

1. Are there specific times of the day [or days of the week] when online customers order the least?

Online customers order the least from Monday to Thursday, particularly from the store’s opening hour at 9am until 5pm.

4. What do you think is the most important thing about having an online shopping platform for your business?

I think the younger people of today, those that have busy schedules, have set a trend in retail selling [through online shopping] that will continue for the coming generations. If a small brick-and-mortar store like mine does not have an online platform, it will not survive very long, especially with the presence of big, foreign hypermarkets/supermarkets who seem to have unlimited capital for marketing and business expansion. Online grocery-buying began in China from the small stores and it is only in recent years that big stores have begun using the same online strategy because the smaller shops have become a big problem for them, forcing them to close many of their big supermarkets around the country in the past few years. I believe that even if they use the same online strategy, they won’t be able to take business away from small operators like me because the local people like us better.

Name of grocery store: Grocery 2

Address: Address 2

Website: Website 2

Name of owner: Owner 2

1. Tell me about the overall business performance of your grocery store for the past five years

My small grocery store continues to have the most number of customers in the vicinity. From 2010 and onwards, people have preferred to buy from my store instead of other grocery shops so I know that my business is performing better than others. Despite the presence of a rival hypermarket near my store, my business continues to do well.

1. What business strategy do you use or maintain to be competitive in the market?

I focus more on selling grocery goods that are in demand among the local customers. In the past, I included more imported items in my inventory than I do now but through experience, I learned that foreigners prefer to buy from the hypermarkets like Walmart because they are more familiar with them.

1. What new strategies have you adopted and how often have you made such strategies in response to the strategies of competitors?

I do not normally discuss my strategies but I will reveal one that I have adopted in response to competition. As I mentioned above, I sold more imported goods before than I do now as a response to the presence of foreign competitors.

1. Why did you choose to adopt such business strategies?

The said strategy that I have adopted is due to the fact that because big foreign stores order foreign products from suppliers by large volumes and thus at a lower wholesale cost, they have more wiggle room to competitively lower their selling prices. In contrast, I cannot decrease my selling prices lower than the amount I have bought the goods from the suppliers. This means that I can’t compete with hypermarkets when it comes to foreign goods. However, I have an advantage when it comes to local products because I am familiar with the sources of these local goods and where I can buy them cheaper. As such, I sell more local goods now and this strategy has kept me at a competitive edge when it comes to maintaining my local customers.

2. What do you do to ensure that your physical store and your online shopping platform continuously attract customers?

Nowadays, I suppose that all retail stores are aware of the importance of treating customers well and providing them with quality products, so that is beside the point. To ensure that my physical store and online store continuously attract customers, I offer goods at the lowest possible prices that I can offer without my business suffering. Most customers are very knowledgeable about prices because they go around and compare prices before they actually buy. Sometimes, they know more about the prices of my competitors than I do. I appreciate it when they tell me whenever a competitor is selling goods at lower prices than mine because it helps me monitor what my rivals are doing and I can act accordingly. Especially with the economy creating frequent fluctuations in market prices, it can be difficult to always monitor how much my competitors are currently selling their merchandise. Because my customers at the store and at the online platform keep coming back, I know that I am doing a good job at managing my prices.

1. What types of people are your most loyal customers, both online and visiting?

At the online store, my most loyal customers are locals and majority of them are younger people. This is understandable because my goods are mostly locally-produced and they are my target market after all. For my physical store, my most loyal customers are also the locals, and they are a combination of older and younger people.

1. Could you explain more about it?

For my online store, I notice that younger people are more attracted to it than the physical store, probably because of their lifestyle and busy schedules. For my physical store, it is very near to some residential buildings and I guess many customers just prefer to drop by my store after their work and walk a short distance to their homes. That way, they don’t have to go online and wait for their grocery orders.

3. What times of the day [or days of the week] are the busiest for your business?

I have a lot of customers from around 4pm to around 8pm during weekdays. Usually, the busiest days are Fridays, Saturdays, and Sundays because customers walk in or order online at any time of the day, as compared to weekdays when they mostly come after working hours.

1. Are there specific times of the day [or days of the week] when visiting customers come the most?

There are many visiting customers every day and they mostly arrive during the times that I mentioned above.

1. Are there specific times of the day [or days of the week] when visiting customers come the least?

There are fewer visiting customers during the working hours of weekdays.

1. Are there specific times of the day [or days of the week] when online customers order the most?

As I mentioned, there are more online orders during weekends and they come at any time of the day. During weekdays, I get more online orders during Friday nights and these orders come from customers who are living near my shop and wants their orders delivered at the same hour.

1. Are there specific times of the day [or days of the week] when online customers order the least?

Like the customers who visit the store, I have fewer online customers during weekdays except Friday night.

4. What do you think is the most important thing about having an online shopping platform for your business?

I think having an online presence can’t be avoided. If you don’t have an online platform, you won’t have many customers. Besides, an online platform is like a having a business card that goes around the community. It is like advertising your business and you don’t want to miss out on the opportunity to tell people that you have the best prices in town.

Name of grocery store: Grocery 3

Address: Address 3

Website: Website 3

Name of owner: Owner 3

1. Tell me about the overall business performance of your grocery store for the past five years

My store has been doing good for the past five years. It peaked in 2015 and the business continues to do well although the presence of some new stores has taken away some of my customers who live near those locations. Having a small grocery store near places where there is a concentration of residential buildings is a good business idea these days and more of the local entrepreneurs are realizing this so there is greater competition nowadays. If you want your business to succeed, you must have very competitive prices and the customers should like you.

1. What business strategy do you use or maintain to be competitive in the market?

I have a very extensive inventory and I only sell brands that are either popular or cheaper so that customers can have more options. I understand that they have different purchasing capacities and I want to capture a larger market than my competitors. For those with a tighter budget, cheaper brands are good enough and so they keep buying those brands.

1. What new strategies have you adopted and how often have you made such strategies in response to the strategies of competitors?

I consider this a trade secret but since you guarantee that this interview will be confidential, I will tell you one technique that I use to adopt new strategies in response to the competition. We live in a world where businesses must have an online presence. For grocery stores, promotional sales are almost always announced online, complete with the discounted prices and the promo period. I keep tabs on these announcements because they tell me where customers are going and why they are going there. In response, I do promotional sales myself to attract attention, especially if I can offer my goods at even lower prices than my business rivals. Normally, I adopt these new strategies every quarter, or four times annually.

1. Why did you choose to adopt such business strategies?

I never do promotional sales before my competitors do because I want to have a benchmark price on each of their promo items. In this way, rival businesses help me to get more customers because they tell me how much I should offer the goods at lower prices so that the customers will come to me instead.

2. What do you do to ensure that your physical store and your online shopping platform continuously attract customers?

All grocery store owners like me are expert business people and they know how to observe proper pricing, maintain quality, etc. I believe that attracting customers depend on the ability of the store personnel to become friends with the customers. Of course, not all customers are open to friendly relationships because some people may be more reserved. This is why I tell my people to just be kind and helpful, and the friendly relations can soon follow. Nonetheless, there are customers who want to be treated royally and so we treat them as such. The point is to make customers feel good about visiting the store or making an online purchase. They keep coming back so I know that I’m doing the right thing.

1. What types of people are your most loyal customers, both online and visiting?

My most loyal customers are those that have become my friends after years of good relationships. Practically all their grocery needs come from me, most of which are sent to them regularly without their need to order online because I have come to know how often they need them. Otherwise, they give me a call to tell me if I should not deliver some items because they still have them. Some of these loyal online customers are retired and a lot older than me and I suppose they find it helpful not to have to carry all the shopping bags from the store to their homes.

1. Could you explain more about it?

Some loyal customers are in the age group of probably 30 to 40 years old and they prefer to order online but not all of them are close friends like some of my customers. We merely maintain working relationships and that’s also fine with me because although I’m a naturally friendly person, I don’t really want to intrude into the privacy of customers. For some of my older customers, I try to deliver their orders personally whenever I can because they say that they enjoy having small chat over some home-brewed tea.

3. What times of the day [or days of the week] are the busiest for your business?

At any time of the day or day of the week, you won’t find the store without customers but the days are busiest from 4 in the afternoon and onwards, all the way until closing time at 10pm, both for the online store and the physical store. The busiest days are Saturdays and Sundays, again both for the online store and the physical store.

1. Are there specific times of the day [or days of the week] when visiting customers come the most?

Already answered above.

1. Are there specific times of the day [or days of the week] when visiting customers come the least?

Already answered above.

1. Are there specific times of the day [or days of the week] when online customers order the most?

Already answered above.

1. Are there specific times of the day [or days of the week] when online customers order the least?

Already answered above.

4. What do you think is the most important thing about having an online shopping platform for your business?

I should mention that most of my socializing is done online through social media sites like WeChat, RenRen, Youku Tudou, Weibo, and even Douban and DianPing. These sites are where many of my customers become good friends and where they encourage their own friends to visit my website, as well. In fact, many first-time visitors of the online store place orders on the spot just to try out the service. Together, we have created an online community where any topic under the sun is discussed, not just buying or selling. You might be surprised to find that many times, my customers sell items to me, instead of the other way around. It can be very interesting whenever I get to meet my new online friends in person. If I didn’t have an online platform for my business, I would have missed the opportunity to attract a lot of customers who have now become loyal patrons. With all my social media friends, it would be unwise for me not to have an online store, at least from a business perspective.

Name of grocery store: Grocery 4

Address: Address 4

Website: Website 4

Name of owner: Owner 4

1. Tell me about the overall business performance of your grocery store for the past five years

I can say that the business performance of my grocery store for the past five years has been steadily improving, even with the arrival of other small and big grocery stores in the community. My business suffered in 2012 because of a fire that destroyed several businesses along the street where my store is located but because I had loyal customers, sales continued after I rebuilt my business from the insurance money that I got. Since then, sales have been steadily improving, especially with the online store which was least affected by the fire.

1. What business strategy do you use or maintain to be competitive in the market?

I suppose that all small grocery stores are able to stay in business because they are all supported by loyal customers. This means that we are all at the same footing, more or less. When it comes to the large supermarket chains, I find it more difficult to compete against them because they carry both local and imported goods which they can afford to sell at very low prices since they order in bulk from suppliers. To address this problem, I have learned that the best business strategy is to develop closer relationships with my customers. Thankfully, the locals are inclined to support the businesses of their fellow-Chinese and it is easy to sense a feeling of disapproval with regards to the presence of many foreign businesses that want to dominate the retail industry.

1. What new strategies have you adopted and how often have you made such strategies in response to the strategies of competitors?

One new strategy that I have adopted is to sell more brands that are favoured by health enthusiasts and brands that are eco-friendly. This is the first time that I am diverging a bit from the sale of the usual grocery items. The plan is to continually sell groceries while testing market acceptability of the healthy and eco-friendly products. If all goes well, it is possible that I may establish a new store that caters exclusively to it or I may shift the focus of my business altogether.

1. Why did you choose to adopt such business strategies?

In response to the presence of more competitors offering the same products and services as everyone else, I believe that I need to stand out among the competition by specialising in the sale of healthy and eco-friendly products at very competitive prices. This strategy came about after I successfully tapped into sources where I can purchase the goods from the suppliers at very low wholesale prices. I conducted research with the help of a market analysis firm and I think the new venture will succeed, especially because there are no nearby store outlets for healthy and eco-friendly products. I have always carried both imported and local goods and so my customers are a combination of locals and foreign expats. Because healthy and eco-friendly products have become very popular in many other countries, I believe that my new venture in the retail business will attract many more foreign customers than I presently have. I expect to do better business because the market will not be saturated by too much competition.

2. What do you do to ensure that your physical store and your online shopping platform continuously attract customers?

Common business sense guides me. I make sure that all the goods on the shelves are of good quality, which means that there should be no expired products on display. I have always sold my merchandise at competitive prices, otherwise I would not have stayed in business for so long as the customers could easily get their groceries at cheaper prices from nearby competitors. Also, both my online store and physical store are manned by experienced staff who are very professional and helpful and this has helped me sustain the business through the years.

1. What types of people are your most loyal customers, both online and visiting?

The store is frequently visited by people of all ages and different racial backgrounds. Aside from the more regular Chinese patrons, I also have other Asian customers, a few blacks, and several white people who come into the store on a daily basis. Almost all of them are working people although I also have loyal customers who are now retired. These different customers are basically the same people who frequently visit the online store.

1. Could you explain more about it?

My store attracts customers of different racial backgrounds because I offer both imported and local goods. In fact, I carry products made in America, Australia, Japan, and other Asian countries. Because I sell local products as effectively as I sell imported goods, I figured that creating a business that exclusively sold healthy and eco-friendly products, most of which are manufactured abroad, would have a good market. There would be less competition from the small grocery stores and the big hypermarkets which I have competed with for the past several years.

3. What times of the day [or days of the week] are the busiest for your business?

Basically, I can group my customers into two groups: (1) locally employed/working, and; (2) tourists. My locally employed customers, whether locals or foreign expats, do not actively visit either online store or physical store during working hours. Foreign tourists, on the other hand, come in at any day of the week and at any time of the day. As a result, both the online store and physical store are bustling with activity at all times within the store hours.

1. Are there specific times of the day [or days of the week] when visiting customers come the most?

No specific day or specific time. Customers come into the store every day and at all times during store hours.

1. Are there specific times of the day [or days of the week] when visiting customers come the least?

No. On the average, there are always people inside the grocery store during store hours regardless of the time or day.

1. Are there specific times of the day [or days of the week] when online customers order the most?

No specific day or specific time. Online customers place orders every day and at all times during store hours.

1. Are there specific times of the day [or days of the week] when online customers order the least?

No. On the average, there are always people ordering online during store hours regardless of the time or day.

4. What do you think is the most important thing about having an online shopping platform for your business?

It sometimes amuses me to find that sometimes, my online platform exceeds the daily sales of my physical store, especially during the holidays. Having an online store to support my brick-and-mortar grocery store is like having two different stores to reach out to customers. The great thing about an online store is that it can be built at a very cheap cost to the entrepreneur because majority of what it requires is simply good management of the supply chain. However, it should be recognised that it would be relatively easier for an online store to penetrate the market and succeed if a brick-and-mortar store exists because it sends a positive signal to the customer that such an online store can be trusted.

Name of grocery store: Grocery 5

Address: Address 5

Website: Website 5

Name of owner: Owner 5

1. Tell me about the overall business performance of your grocery store for the past five years

My business as an online and brick-and-mortar retailer has been doing great for last five years and it is projected that I can soon expand my business to other locations. Before 2012, there have been some ups and downs in the business, particularly during the years when I did not have a direct hand in managing the business because I hired the services of a close acquaintance. My first profession before I immersed myself in the grocery store business was in advertising where I have had many years of experience, and this background has helped me market my services more effectively than my competitors.

1. What business strategy do you use or maintain to be competitive in the market?

Rule Number One: Make my customers happy. Rule Number Two: See Rule Number One. You see, entrepreneurs should understand that the perception of customers is everything. Nothing else matters. A customer won’t be happy if you don’t give him value for his or her money. He/she won’t be happy if the sight of your business establishment makes him feel bad or your online site confuses him/her. He/she won’t be happy if your sales people make him angry. He/she won’t be happy if you keep him/her waiting. The success of a business is dictated by happy customers and it is the one and only strategy that I follow.

1. What new strategies have you adopted and how often have you made such strategies in response to the strategies of competitors?

I have recently added another ingredient to my recipe of happiness. This is what psychological researchers on buying behaviour call the ‘endowment effect’. However, this new strategy of mine is intended only for my online shopping site. Studies have found that a person is enticed or motivated towards ownership if he or she can touch the object of interest. This is quite impossible to do via the online platform, but with the use of sharp, high-definition images that look as close to the real thing as digital technology can manage, online customers can be further motivated to buy.

1. Why did you choose to adopt such business strategies?

I recently ventured into the sale of women’s clothes and accessories in my online store because it’s highly-profitable and it expands my coverage to other demographic populations in the market. I mean, women professionals spend a lot of money on clothes, cosmetics, etc. on a yearly basis, right? Why not capitalise on it? And aren’t most of them also mothers and wives who need to make sure that the groceries don’t run out at home? Even young, unmarried women need groceries. I especially want them to be happy too.

2. What do you do to ensure that your physical store and your online shopping platform continuously attract customers?

I always observe Rule Number Two.

1. What types of people are your most loyal customers, both online and visiting?

My youngest loyal customer is a chubby three-year-old girl and her name is Baozhai. She lives next door with her mother and she always manages to shout out my name every morning as she enters the store to demand milk. Sometimes, I even see Baozhai in my online store. My oldest loyal customer is seventy-three years old according to her online store account, that is. Maybe she’s older but doesn’t want to admit it. She really looks older but of course I don’t tell her that. Instead, I tell her that she looks as fresh as the morning dew on a beautiful glorious day every time I see her. I won’t tell you her name. In between my youngest and oldest customers, I have many other loyal customers of all ages. I don’t know how many, I lost count many years ago.

1. Could you explain more about it?

I couldn’t explain it. They just keep coming back.

3. What times of the day [or days of the week] are the busiest for your business?

More loyal customers keep me very busy during Saturdays and Sundays. I like to think of them as friends because once they enter my shop and pay for their groceries, some of them want to stay on to talk about their week, or their lives sometimes. It gives the impression that my store is the best in town because it’s so crowded in there, when in fact it’s just my friends crowding up the place for no other reason but to throw the latest jokes they heard somewhere.

1. Are there specific times of the day [or days of the week] when visiting customers come the most?

The whole day on Saturdays and the whole day on Sundays.

1. Are there specific times of the day [or days of the week] when visiting customers come the least?

If it’s not Saturday and it’s not Sunday, then fewer customers are at my shop. However, people come to my store after work or office every day so it gets busier for an hour or two but not as busy during weekends.

1. Are there specific times of the day [or days of the week] when online customers order the most?

Because I have the same customers for my brick-and-mortar store and my online shop, the busy hours at the store are the same busy hours online. I don’t know how my customers manage to divide themselves equally between the online store and the physical store. Sometimes I suspect that they just want to make my life more difficult by keeping me busy at both fronts. Just kidding.

1. Are there specific times of the day [or days of the week] when online customers order the least?

If it’s not Saturday and it’s not Sunday, then fewer customers are at my online shop. However, people come to my online store after work or office every day so it gets busier for an hour or two but not as busy during weekends.

4. What do you think is the most important thing about having an online shopping platform for your business?

You can’t do without it if you’re into the grocery business. I mean, why would anyone want to exclude themselves from free advertising. Aside from the fact that customers can place orders online and receive the goods ASAP, an online store advertises its merchandise to the public. Once I was surprised that an online customer was ordering from India. I respectfully declined. An online store reaches everybody, and I mean everybody on the planet who knows how to go online. Why wouldn’t you want to be seen and noticed? That’s odd. And it violates Rule Number Two.

6. Discussion

Part of the information presented above will be included in this section.

7. Conclusion

This will include future direction. Summary of the main contributions to filling in gaps in knowledge and a re-emphasis of why this study has been an important one.

Consider:

• What were my research objectives?
• Can I answer my research question?
• What are the main findings of my research?
• What conclusions and implications can I draw from my research?
• What is my contribution, if any, to knowledge?
• What limitations were there to my research?
• What recommendations can I make? Are these supported by my results?

The Conclusion will:
• Remind the reader of the aim and objectives of the research;
• Summarise the key findings (from literature review and empirical research);
• Summarise the conclusions and their importance;
• Outline the limitations of the research, and;
• Make recommendations for further/future research (ensure these directly relate to the conclusions).

 

 

 

 

 

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