The purpose of this paper is to explore consumer patronage of extreme value retailers in the USA.
The paper employs a sample generated from Retail Forward panel data (n=1,107) to explore consumer patronage of extreme value retailers. Descriptive statistics and decision tree analysis chi‐square automatic interaction detector is used to evaluate the data.
The paper examines extreme value shoppers based on patronage frequency, expenditures, and primary reason for shopping in the extreme value format. Results suggest that although patronage frequency of extreme value stores is not increasing, expenditures for food/household essentials are increasing. Demographic characteristics (income and age) are revealed as predictors of the primary reason for patronizing the format.
Generalizations of the findings of this paper to markets outside the USA are limited due to the differences in consumers and retail formats available in various countries. Future research could investigate additional patronage motives of extreme value shoppers, predict propensity to shop in the format, and compare changes in the customer base over time as a response to changing economic conditions.
The findings of this paper provide extreme value retailers with information on patronage frequency, expenditure, and patronage motivations among extreme value shoppers. The results offer support for the development of competitive strategies within the extreme value segment. As competition in the retail industry continues to evolve and new retail formats emerge, understanding shoppers' reasons for patronizing extreme value retailers will be critical to performance.
This paper is unique because of the lack of attention to extreme value shoppers in the extant literature.
