Fundamental Basket Size Patterns and Their Relation to Retailer Performance

33 Pages Posted: 13 Jun 2019

See all articles by James Martin

James Martin

University of South Australia - Ehrenberg Bass Institute of Marketing Science

Magda Nenycz-Thiel

University of South Australia - Ehrenberg Bass Institute of Marketing Science

John Dawes

University of South Australia - Ehrenberg-Bass Institute

Arry Tanusondjaja

University of South Australia - Ehrenberg-Bass Institute

Justin Cohen

University of South Australia - Ehrenberg-Bass Institute

Bruce McColl

University of South Australia - Ehrenberg Bass Institute of Marketing Science

Date Written: June 31, 2019

Abstract

This paper uses a sample of approximately 60,000 US households to document fundamental basket size patterns across a range of retailer types (e.g. grocery stores, convenience stores, and warehouse clubs), and studies them in relation to retailer performance metrics (unit sales and dollar revenue). This research examines 1) how patterns in basket size (distribution, means, and medians) differ by retailer type, and 2) how the Pareto principle extends to shopping baskets across different retail types. The results show that basket size patterns in retailers are predictable. Shoppers purchase more items on average in retailers that offer a greater variety of items, and the distribution of basket sizes follows the Poisson lognormal model. The results also show that the largest 20% of shopping baskets on average generate 50% of unit sales, and 40% of dollar revenue. These patterns provide marketing academics with more knowledge about how people behave when they go shopping, and set additional benchmarks of what patterns can be expected on a basket-level. This research also offers support to marketing practitioners by showing the importance of different shopping basket characteristics (e.g. frequency of light buyers), which can guide more informed decision making to better manage their brands

Keywords: Shopper Behavior, Shopping Baskets, Retailing

JEL Classification: M31

Suggested Citation

Martin, James and Nenycz-Thiel, Magda and Dawes, John and Tanusondjaja, Arry and Cohen, Justin and McColl, Bruce, Fundamental Basket Size Patterns and Their Relation to Retailer Performance (June 31, 2019). Available at SSRN: https://ssrn.com/abstract=3396827 or http://dx.doi.org/10.2139/ssrn.3396827

James Martin (Contact Author)

University of South Australia - Ehrenberg Bass Institute of Marketing Science ( email )

GPO Box 2471
Adelaide, 5001
Australia

Magda Nenycz-Thiel

University of South Australia - Ehrenberg Bass Institute of Marketing Science ( email )

GPO Box 2471
Adelaide, 5001
Australia

John Dawes

University of South Australia - Ehrenberg-Bass Institute ( email )

GPO Box 2471
Adelaide, 5001
Australia

HOME PAGE: http://www.johndawes.info

Arry Tanusondjaja

University of South Australia - Ehrenberg-Bass Institute ( email )

GPO Box 2471
Adelaide, 5001
Australia

Justin Cohen

University of South Australia - Ehrenberg-Bass Institute ( email )

GPO Box 2471
Adelaide, 5001
Australia

Bruce McColl

University of South Australia - Ehrenberg Bass Institute of Marketing Science ( email )

37-44 North Terrace, City West Campus
Adelaide, South Australia 5001
Australia

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