New research co-authored by the University of Alabama in Huntsville not so surprisingly finds that that as much as 40 percent of retailers' consumer support comes from community-building factors. The surprise was that larger retailers had more readily embraced these community practices and sponsorships than smaller stores.
"If you are going to be local, you have got to understand what it is to be local," said UAH's Dr. Timothy Landry in a press release. "But I see increasingly that it's the big guys who understand this, not the little guys."
Over 200 non-student adults in a large Midwestern city were asked which retailers were their favorite and probed how they felt "connected" to them. Researchers rated those connections based on four community social functions: socialization, mutual support, social participation and social control.
Overall, the study found consumers were more loyal and willing to pay more at a retailer actively supporting the community.
Among the four community social functions, the research found socialization "strongly influential" in generating both loyalty and willingness to pay more. Socialization involves "appreciating the core values and norms of a target group and making sure those are reflected in products and services."
Mutual support, in which a retailer supports local organizations and activities such as a Little League team or communitywide event, was also positively associated with customers' willingness to pay more. Also beneficial for a retailer is social participation, where the retailer facilitates interactions or gatherings between community members.
Only social control, where a retailer establishes standards to enforce community norms for others, did not result in greater loyalty or willingness to pay more. An example would be a store censoring certain music lyrics on compact discs it sells.
While the study showed that larger retailers seem to have adopted community-building practices more quickly than the small stores, the study was inspired by instances of small mom-and-pop stores thriving with the aid of community-based efforts despite mass retailers opening nearby.
The study, which appears in the Journal of Marketing Theory and Practice, was co-authored by researchers at Oklahoma State University and the University of Texas-Arlington.
How important is local community outreach to retail store performance?