Consumers’ preferences regarding department stores
Conference Contributionvan Laarhoven, W., Borgers, A.W.J. & van den Berg, P.E.W. (2017). Consumers’ preferences regarding department stores. 24th Annual Conference of the European Real Estate Society (ERES)
The main reason for this research was the bankruptcy of one the Dutch oldest and largest chain of department stores at the end of 2015. The main goal of this research is to find what, from a consumers’ perspective, a department store should look like. A four storey (1500 m2 each) building was assumed to be vacant in the shopping areas of the large and medium sized Dutch cities. In addition, it was assumed that each floor would accommodate only one department. The two main research questions were: 1) as department stores may offer more than four departments, which are the four most preferred departments, and 2) to which floor should each of the most preferred departments be allocated.
This study measured consumers’ preferences by means of a survey among approximately 500 respondents. Six different departments were selected to be part of a department store: 1) Fashion, 2) Food, 3) Beauty, 4) Living, 5) Electronics, and 6) Active/outdoor. To familiarize the respondents with these departments, each respondent was asked to pick a number of sub-departments and services from a predefined list to fill each department. The floor area of each sub-department and service was provided. The sum of the floor areas per department had to be within the 1250-1750 m2 range.
To answer the first research question, a stated choice approach was used. Each respondent was presented a number of pairs of the 15 possible combinations of four out of six departments. The multinomial logit (MNL) model was used to estimate the utility of each department. The order of preference appeared to be: 1) Fashion, 2) Living, 3) Food, 4) Beauty, 5) Active/outdoor, and 6) Electronics for females and 1) Electronics, 2) Fashion, 3) Food, 4) Living, 5) Active/outdoor and 6) Beauty for males.
The second research question was answered by having respondents allocating departments to floors of the building. Per respondent, this was repeated three times with three randomly picked combinations of 4 departments. Again, the MNL model was used to estimate the utility of each floor for each department. Building on the results for the most preferred combinations of departments, the preferred composition for females is Food at the ground floor, Fashion at the 1st floor, Living at the 2nd floor and Beauty at the 3rd floor. For males, the third floor should contain Electronics.