Community-involved retailers profit from it, study says

Sep 17, 2013

Getting immersed in the community and fostering a community atmosphere among customers aids a retailer's bottom line, whether the business is small and locally owned or a large global chain, according to research co-authored by a University of Alabama in Huntsville associate professor of marketing.

The lead article in the summer issue of the Journal of Marketing Theory and Practice demonstrates how retailers benefit from employment of four social functions associated with development of community - socialization, mutual support, and social control. ("The Development of Core Retailer Community Functions"; Todd J. Arnold, Elten Briggs, Timothy D. Landry, Tracy Suter; Journal of Marketing Theory and Practice, Vol. 21, No. 3, Summer 2013) And fostering community is a huge chunk of the retail equation.

Retailers who want to reap the benefits of heightened loyalty and attract consumers who don't mind paying a bit more should actively build those kinds of community connections with their customers, according to Dr. Tim Landry of UAH's College of Business Administration.

"In these types of studies we can show that as much as 40 percent of retailers' support is due to these sociological factors," said Dr. Landry. "You're willing to pay more at a retailer if they are actively supporting the community."

Larger retailers seem to have adopted community-building practices more quickly than the small stores, which would appear to have greater need for the benefits of community because they are at a disadvantage to larger stores in terms of the traditional marketing strategies of product, price, place and promotion.

"If you are going to be local, you have got to understand what it is to be local," said Dr. Landry. "But I see increasingly that it's the big guys who understand this, not the little guys."

Dr. Landry and his collaborators surveyed over 200 non-student adult respondents in a large Midwestern city. They asked respondents to report on how a favorite retailer they chose, one they felt "connected" to, rated on the four community social functions, using a seven-point Likert scale that ranged from strongly agree to strongly disagree. Researchers probed how much each function affected the respondents' likelihood to be loyal to that store and to pay more for products.

They found that business practices that encourage socialization by appreciating the core values and norms of a target group and making sure those are reflected in products and services are strongly influential in generating both loyalty and willingness to pay more.

"If you want to be a retailer that people feel really attached to, then your retail stores should reach out to the community through socialization," Dr. Landry said. "It tremendously affects your bottom line."

The concept of mutual support, in which a retailer supports organizations and activities that are viewed as part of a shared-interest community, was also positively associated in the research with customers' willingness to pay more. Examples include sponsoring a Little League team or a communitywide event. Loyalty is also a reward of retailer social participation, where the retailer facilitates interactions or gatherings between community members.

"The more of these you can do, the better off you are," said Dr. Landry.

Only social control, where a retailer establishes a structure of standards and rules that allow either the retailer or its consumers to enforce community norms for others, did not result in greater loyalty or willingness to pay more. An example of social control would be a larger retailer requiring censorship of certain musical lyrics on compact discs it sells.

Dr. Landry's interest in community and retailing began with questions about how small mom-and-pop stores could manage to survive and even thrive in smaller communities once large mass retailers moved into town. "They didn't compete, and yet they thrived," he said. "Once we learned more about what they did to thrive, we began to study whether the functions they played were unique to smaller retailers, or could larger retailers also play these roles."

Follow-up research is focusing on online and how the community-building functions affect them. It's part of Dr. Landry's exploration of how businesses can create community by assuming some of the roles of past societal structures that are diminishing or changing in today's society. He said he believes that business has that responsibility in the communities that it serves.

"My research is headed toward answering the question, how do businesses play a role in supporting and bettering a community?"

Explore further: Being rewarded for loyalty is important

add to favorites email to friend print save as pdf

Related Stories

Hate group formation associated with big-box stores

Apr 11, 2012

The presence of big-box retailers, such as Wal-Mart, K-Mart and Target, may alter a community's social and economic fabric enough to promote the creation of hate groups, according to economists.

New study shows it pays to shop around online

Nov 24, 2008

Holiday shopping season has arrived, and tough financial times mean that more people will probably be shopping around for the best price. But a new study co-authored by North Carolina State University's Dr. Jonathan D. Bohlmann ...

Study: Store layout an important variable for retailers

Jan 24, 2013

A retailer's optimal store layout is the result of balancing the interests of two different types of markets – consumers and suppliers, says new research co-written by a University of Illinois business ...

At-risk women can promote health through social networks

Sep 12, 2013

(HealthDay)—Women at risk for or living with HIV can, with some guidance, carry out health promotion messages through their informal social networks, according to a study published online Aug. 29 in the ...

Recommended for you

Which foods may cost you more due to Calif. drought

Apr 17, 2014

With California experiencing one of its worst droughts on record, grocery shoppers across the country can expect to see a short supply of certain fruits and vegetables in stores, and to pay higher prices ...

Performance measures for CEOs vary greatly, study finds

Apr 16, 2014

As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have ...

Investment helps keep transport up to speed

Apr 16, 2014

Greater investment in education and training for employees will be required to meet the future needs of the transport and logistics industry, according to recent reports by Monash University researchers.

User comments : 0

More news stories

Egypt archaeologists find ancient writer's tomb

Egypt's minister of antiquities says a team of Spanish archaeologists has discovered two tombs in the southern part of the country, one of them belonging to a writer and containing a trove of artifacts including reed pens ...

UAE reports 12 new cases of MERS

Health authorities in the United Arab Emirates have announced 12 new cases of infection by the MERS coronavirus, but insisted the patients would be cured within two weeks.