A Study on Store Choice Behavior of Consumers in South Korea

This dissertation investigates the store choice behavior of consumers in South Korea, examining the factors that influence their decisions. It explores the importance of understanding consumer behavior for retail owners to develop effective marketing strategies. The study delves into primary and image-based factors, considering the unique context of South Korea's retail landscape, where consumers may have fewer choices and prioritize convenience. The research analyzes how location, brand recognition, socio-economic background, and personal attributes impact store selection. It differentiates between organized and unorganized retail formats, considering the cognitive process involved in store choice, which mirrors brand selection but is heavily influenced by location. The dissertation also considers the role of shopping tasks, situational factors, and the interplay of fixed and variable costs in shaping consumer behavior. Ultimately, the study aims to provide insights into the perceptions and tangible attributes that drive consumer preferences, offering valuable information for retailers seeking to attract and retain customers.

A STUDY ON STORE CHOICE BEHAVIOR OF CONSUMERS in SOUTH KOREA
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A STUDY ON STORE CHOICE BEHAVIOR OF CONSUMERS in SOUTH KOREA 1
Abstract
The shoppers are fairly involved in the decision related to the choice of the store. The retail owners find
it important and necessary to understand the store choice behavior of the consumers because they use
this information to develop the appropriate marketing strategies so that the people are attracted
towards the store and the retailers are able to maintain their clientele. The study attempts to inquire
about the factors that pull the consumers in South Korea towards a particular retail store. The study
aims to determine this in general and then the findings are based on the particular attributes of the
consumers. The study is theoretical and descriptive in nature. Therefore, the research is descriptive. The
study aims to give an insight to the people and the consumers regarding the factors on the basis of
which they chose a particular retail store.

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Contents
Chapter 1: Introduction..............................................................................................................................2
Chapter 2: Literature Review.....................................................................................................................10
Chapter 3: Research Methodology............................................................................................................11
Chapter 4: FINDINGS AND ANALYSIS.........................................................................................................16
Chapter 6: CONCLUSIONS..........................................................................................................................30
QUESTIONNAIRE........................................................................................................................................32
References.................................................................................................................................................36

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Chapter 1: Introduction
The shoppers are fairly involved in the decision related to the choice of the store. The retail
owners find it important and necessary to understand the store choice behavior of the consumers
because they use this information to develop the appropriate marketing strategies so that the
people are attracted towards the store and the retailers are able to maintain their clientele (Coe,
2006). The major factors on which the buyers base their choice of store are the primary factors
and the image based factors. But, the factors depend on the type of store that the customer is
visiting. In a place like South Korea, the shoppers do not have a variety of choices to choose
from, so they simply like to go to a store which is recognized and sells many different products
(Coe, 2013). Also, the people here like to travel less, so they visit the store which is nearby to
their residence. But, different people have different choices and preferences; therefore, the study
tries to understand the behavior of different buyers regarding the retail setup in the country. The
buyers are explored in this study and the primary aim for that are the reasons due to which they
chose a particular store. All over the world, the store choice and the patronage is studied by the
researchers. With the growth of the stores and the retail setups in South Korea, this phenomenon
has gained significance in the market. New stores chains are being set up and they provide new
options to the buyers and leave them with new experiences (Neilson, 2014). The evaluation
phase is going on with the retailers and the buyers in this place and there is no clear verdict as to
what drives a person towards a particular store. Unfortunately, due to this, there is increase in the
footfall in the stores, but there is less purchases that happen in the stores. The conversion rate of
the actual purchases is very less which leads to high costs of giving service to the customers and
reduction in the level of profitability of the buyers. The small shops are the hallmark of this place

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and this has held back the people to the traditional ways of shopping (Bronnenberg, 2015). Many
people still believe that the new formats of the retail shops are not effective in adding any value
to them; it is just a concept of novelty. There are many popular retail chains that are holding back
the new expansions. Therefore, the current study aims to understand the behavior of the people
regarding the choice of stores.
Basically, the process of choosing the relevant store is quite cognitive. It is very similar with the
choice of brand. When the consumers chose a particular brand, they, do not consider the
geographical limitations which is not the case with choosing the stores (Chkanikova, 2015). In
case of the store choice by the customers, the location of the store plays a major role. It is
believed that the cost of traveling while shopping is counted by the customers when they
determine their total cost of shopping from a retail outlet. Therefore, they regard the distance of
the store from their residence as an important factor while selecting the store (Cho, 2015).
It has been observed that the socio-economic background of the consumers, their personality and
the way they have made the shopping decisions in the past have influenced the store choice
behavior of the consumers (Shin, 2013). Apart from this, the shoppers have been observed to
consider the brand that is being sold in the various stores. Since the consumers regard the brand
and consider it for shopping, therefore, they also see that which of their favorite brands is sold in
which of the retail setup. Thus, the brand and the location have a strong link with the choice of
stores (Chkanikova, 2015). Apart from this, the age of people in South Korea, the age group of
people, the size of their family and the occupation in which they are involved are also a factor
that helps them in deciding that which store they must visit to shop from (Cho, 2015). Thus, the

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personal attributes of the people are also connected to the factors that influence the choice of the
format of the retail stores i.e. the organized retail and the unorganized retail.
Organized retail is that retail setup where all the trading activities are undertaken by those
retailers who have the license to do that, and who have registered their retail outlets for the
payment of the sales tax; income tax; etc. (Yi, 2013). But, the unorganized retail is those low
cost retailing shops that follow the traditional formats. In South Korea, there are roadside
vendors who sell the food items and in some places, the clothes too. These all are the
unorganized ones. But, the shops that are located in the popular supermarkets, or the famous
retail chains, form a part of the organized retail in South Korea.
The choice of store is a major decision problem because this decision is very dynamic and it can
be conceptualized as an issue which is related to the decision of when to shop and from where to
shop. The shoppers have to decide about the location of the traditional store and then they have
to decide that how many shopping trips they require for getting their things collected from the
traditional stores (Bell, 1998). There is a relation between both of these problems. The choice of
the store depends on the timing of the trips of shopping because many shoppers generally visit
the local stores as filling in trips and for regular shopping, they go to the distant grocery shops
(Aaker, 1971). These two decisions are based on the characteristics of the shoppers and the
patterns of their consumption.
Also, the shopping tasks determine the choice of the store formats. The shopping can be planned
where the people prepare a list of things that they have to buy and shop according to that list.
Then, the shopping can be emergency too for example when the family member has fallen ill and
the medicines are required urgently. Or the shopping can be unplanned, where the ‘mood’ of the

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shoppers plays a very important role. Thus, the stores that the consumers choose differ in the
salience rating as per the tasks that the shoppers intends to perform (Van Kenhove, 1999). The
situational factors like purchasing the necessity goods affect the salience of the stores. It is
important that the consumers evaluate the situational factors at their each visit and the choices of
the shoppers may get changed because of the situation-specific drivers (Van Kenhove, 1999).
All the situations may be evaluated by the shoppers on the basis of the cost that they incur and
the utilities that they get from the shopping. The costs that are associated with shopping are both
fixed and variable. When the size of the basket and the list of the items gets changed with the
trips of the customers, it is the variable cost and when the list remains same in regard to the
location of the store or the price format, then the cost is fixed (Darley, 1993). Broadly, it can be
concluded that when the buyers talk about their store choices, they carry an image and a
perception of the stores which has an influence on the final outcomes that they intend to achieve.
The tangible attributes of the stores drives the perceptions of the people for that store. The format
of the store, its distance from the main market or from the house of the consumers etc. is all
attributes that determine the choice of the stores by the consumers. Also, it has been observed
that the type of the product is related to the nature of stores (Malhotra, 1983).
The factors that affect the choice of format of the consumers
There are different ways in which the demography of the people and the socio-economic factors
has an impact on the choice of the retail format (Tang, 2001). Either these factors directly
influence the choices of the consumers, or they simply affect their buying behavior by affecting
the shopping basket of the consumers, or by altering the shopping trips of the consumers
(Fotheringham, 1988). Thus, the demography of the people and the socio-economic factors

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impact the choice of the retail format in both direct and indirect ways. Apart from this, there are
several other factors that affect the choice of format of the consumers.
1. One factor is the gender of the shoppers. There has been difference in the shopping
behavior of males and females from the very beginning. The main reason behind this is
the differences in the occupation of the males and females, the distinction in their
preferences and the family responsibilities that they have. It has been on old practice by
the males that they are not the common and regular market visitors and they do not have
a practice of searching the market much (Dash, 1976). Thus, the marketers of the retail
shops place most of their marketing strategies in consideration of the females in the
market, rather than the males.
2. Another factor that affects the choice of store format is the age group of people, the
people of different age groups go for shopping for different things (Leszczyc, 2000). For
example, the children and the teenagers do not go to buy the furniture. So the buying
behavior differs as per the age groups of people. This is because, the requirements of the
people in different age groups in different from each other. For example, whether elderly
people go for shopping, they look for the things that will make their life easier and at that
time, they do not consider the price as a very important factor. Also, they tend to get
attracted towards the offers that the retailers are offering.
3. Then, the shopping also depends on the number of members who are present in a
particular family. When the size of the family is big, the consumption of that family is
high. So, the shopping has to be done on large scale. Also, when the size of the family is
big, the consumers look for a wider variety of the product range (Briesch, 2009). Their

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behavior is channelized towards stocking the products so that they can meet the
consumption requirements of their families.
4. The employments status of the shoppers matters too. When the people are working, they
spend their income for shopping and thus, the size of their basket is dependent on the
income that they earn (Carpenter, 2006). Then the number of working people increase,
the consumption also increases in two ways. One is, that they start spending more, and
the other is, that the demand for the products rise which helps the country in earning a
higher level of GDP.
All these factors were important while studying the format of the stores. It helps in determining
that whether the consumers will go and shop from the organized retail or the unorganized retail.
Apart from this, there are other factors that have an impact on the choice of the stores by the
consumers. These factors include:
• price
• offers
• location from home
• variety
• services
• self service
• quality
• home delivery

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• ambience
• all under one roof
• parking facility
• transfer mechanism
We have tried to analyze the effect of these factors in store choice behavior of consumers.
The rate of formation of the new formats of the retail stores in South Korea is very fast and rapid.
Thus, it is imperative for the country to understand that what impacts the behavior of the
consumers towards the choice of the retail formats and they also have to understand the changing
shopping behavior of the consumers with regard to the preferred points of their purchase. Since
the disposable incomes of the people are good and the infrastructure is also improved, therefore,
they have a large choice from where they can chose the products and they can shop from. It is
therefore, necessary for the owners of the retail shops to understand that what motivates the
people for buying from a particular showroom. To understand and study this, the following
objectives have been formulated.
Objectives:
The study attempts to inquire about the factors that pull the consumers in South Korea towards a
particular retail store. The study aims to determine this in general and then the findings are based
on the particular attributes of the consumers. The objectives for the current study are as follows:

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1. To study the factors that make people chose a particular format of the retail store i.e. the
organized or the unorganized retail store.
2. To determine the attitude and the perceptions of the consumers towards the formats of the
retail store.
3. To find out the type of goods that the consumers look for in the organized and
unorganized retail setup.
4. To analyze the impact of consumers attributes on their choice of retail store.
5. To understand the various factors and their relative importance in determining the buying
behavior of the shoppers.
6. To find the level of consumer satisfaction from their choice of retail format and to ask for
the type of improvements that they are looking for in that particular format.

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Chapter 2: Literature Review