Exploring Small Area Demand for Grocery Retailers in Tourist Areas

Abstract

This paper uses data from a major loyalty card scheme to draw insights about the characteristics of grocery expenditure by tourists. The authors explore the volume, value and composition of storebased visitor expenditure using consumer data from the loyalty card scheme. They focus on grocery spending at selected stores in Cornwall, a popular tourist destination in South West England. The loyalty card data provide a valuable source rarely available for academic investigations. The authors are able to analyse visitor spend by socio-economic and geodemographic characteristics, drawing a range of comparisons with residential demand from within the store catchment areas. They demonstrate that visitor grocery expenditure is complex and varies by store, destination and type of customer. The paper presents evidence to suggest that the current approaches used to estimate sales uplift and local-level economic impact from visitor demand are unable to account for the complexities of this form of expenditure. Based on these insights, the authors recommend that sophisticated modelling is employed to estimate the impact of visitor expenditure.

Developing and Applying a Disaggregated Retail Location Model with Extended Retail Demand Estimations

“…Occupancy rates for commercially operated accommodation are routinely collected and reported (see White 2010) and have been used to determine seasonal patterns of accomodation utilization. No nationally representative survey of visitor spend on groceries exists in the United Kingdom (although key headline surveys such as the United Kingdom Tourism Survey contain broader spending categories); however, surveys by key trade organizations such as the British Holiday and Home Parks Association (BH & HPA 2012) provide an excellent indication of grocery spend associated with visitors and have been used, in conjunction with loyalty card analysis (reported fully in Newing et al 2014) to apply seasonal visitor grocery expenditure rates to the occupied accomodation stock.…”

Visitor expenditure estimation for grocery store location planning: a case study of Cornwall

“…This represents a total visitor spend on groceries in any given week of £3.57m, distributed across the county. Newing et al (2012;2014) strongly argued that this approach was misleading and suggested that it failed to account for a number of characteristics of visitor demand -most notably the spatial distribution of visitor accommodation, differences in the volume and value of visitor expenditure compared to residential expenditure, and seasonal variations in visitor demand, none of which are accurately handled in the estimations based on the simple up-scaling of residential demand.…”

“…In common with Newing et al (2012;2014) we have store trading data for four supermarkets operated by a major grocery retailer within Cornwall. We are therefore able to compare the estimated store revenue using the SIM with the actual revenue recorded in store by the company, although to preserve confidentiality we are unable to reveal the retailer or location of the stores themselves.…”

“…Nonetheless, Newing et al (2012;2014) demonstrated that visitor expenditure makes up a considerable proportion of sales within some grocery stores, yet grocery retailers have very limited knowledge of the drivers behind this form of expenditure. Location planning teams working within major grocery retailers have a long-established and important role in estimating revenue for proposed new stores and in managing the existing store portfolio by monitoring store performance against predicted revenue (Bennison et al, 1995; see also Wood and Reynolds (2011) for a detailed discussion of the role, scope and influence of location planning within a range of UK retailers ).…”

“…Cornwall, a coastal peninsula in south west England, forms our study area as the considerable seasonal impact of visitor spend on grocery stores in this area has been demonstrated (Newing et al, 2012;2014). Cornwall is thought to attract around 25% of all tourist expenditure in the South West (South West Tourism, 2010b), and was awarded 'top UK holiday destination' in the 2010 British Travel Awards, also winning awards for 'Best UK Seaside Town' (St Ives), along with 'Best UK Day out Experience' for the Eden Project (Visit Cornwall, 2010).…”