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University of Arkansas, Fayetteville ScholarWorks@UARK Accounting Undergraduate Honors Theses Accounting 5-2015 The Appeal of the "Shop Local" Initiative to the Millennial Generation Elisha Cummins University of Arkansas, Fayetteville Follow this and additional works at: http://scholarworks.uark.edu/acctuht Part of the Marketing Commons Recommended Citation Cummins, Elisha, "The Appeal of the "Shop Local" Initiative to the Millennial Generation" (2015). Accounting Undergraduate Honors Theses. 15. http://scholarworks.uark.edu/acctuht/15 This Thesis is brought to you for free and open access by the Accounting at ScholarWorks@UARK. It has been accepted for inclusion in Accounting Undergraduate Honors Theses by an authorized administrator of ScholarWorks@UARK. For more information, please contact scholar@uark.edu, ccmiddle@uark.edu. The Appeal of the “Shop Local” Initiative to the Millennial Generation By: Elisha Michelle Cummins Advisor: Dr. Ronn Smith An Honors Thesis in partial fulfillment of the requirements for the degree Bachelor of Science in Business Administration Sam M. Walton College of Business University of Arkansas Fayetteville, Arkansas May 9, 2015 Table of Contents Introduction .....................................................................................................................................3 Literature Review.............................................................................................................................3 Theme 1: Shop Local Initiative and Anti Big Box Movement..............................................3 Theme 2: Retail Shopping and Consumer Behavior............................................................4 Theme 3: The Millennial Generation and their Values.......................................................4 Research Methods............................................................................................................................5 Research Results..............................................................................................................................5 Theme 1: Shop Local vs. Big Box Retailer..........................................................................5 Theme 2: Retail Shopping...................................................................................................8 Theme 3: The Millennial Generation and their Values......................................................9 Limitations of Research.................................................................................................................11 Conclusion/Recommendations......................................................................................................11 References.....................................................................................................................................13 Appendix.......................................................................................................................................14 Appendix 1: Thesis Research Questions................................................................................14 Appendix 2: IRB Approval Form………................................................................................15 2 Introduction Understanding the changing values and beliefs of consumers is crucial to surviving and flourishing as a retailer, supplier, or manufacturer today. It is important for businesses to adjust their focuses and strategies to meet the needs and wants of the current consumer. New generations of consumers create different trends, shopping behaviors, and concerns. Today, the shop local initiative is growing. With this in mind, I seek to determine the reasons why consumers shop locally and how millennials respond to the initiative. The goal of this research is to determine the extent to which millennials’ values align with the shop local initiative and if businesses should change their methods and strategies when it comes to shopping local. With this goal in mind, my research examines three themes: (1) local stores and big box retailers, (2) retail shopping, and (3) the millennial generation and values. For the purpose of this research, the term “shopping local” refers to shopping at locally owned retail stores in your community. These types of stores can be known as “mom and pop” stores. They are “small, independent, and family-owned business” usually in a one location or few locations (Investopedia). A big box retailer refers to franchises and large corporations that have multiple operations in various locations such as Wal-Mart or Dillard’s. These store formats are explored to gain depth about why consumers choose to shop at these types of retailers. By comparing local stores and big box retailers, a greater understanding of the positives and negatives of the two formats can be observed. On top of these particular store formats, additional research on retail shopping in general was conducted to understand consumers’ needs and wants while shopping and on the millennial generation to determine their values and concerns. The research conducted about the three themes began with a literature review. Literature Review Theme 1: Shop Local Initiative and Anti Big Box Movement Shop Local Initiative The ‘shop local’ initiative is growing fiercely and changing the way consumers shop. The research of Mitchell provides insights into the reasons why consumers have adopted the initiative and continue to shop local. Consumers want to promote local character and prosperity, community well-being, local decision-making, keeping dollars in the local economy, local jobs, entrepreneurship, public benefits and costs, environmental stability, competition, and product diversity (Mitchell, 2012). Local businesses can provide one-of a- kind products and services. This helps consumers feel a personal connection and bond more with local businesses because they understand the local audience (American Express, 2011 & Fugere, 2014). Also, a recent study found that local businesses are more likely to donate to charity organizations (Mitchell, 2011). Consumers are starting to realize the benefits and value local businesses can bring to the economy and their communities (American Express, 2011). The American Express OPEN Small Business Saturday Consumer Pulse survey found that 89% of consumers believe small businesses contribute to the local community, and 87% responded that small business success is critical for the health of the US economy. Not only are consumers stating their love for shopping local, they are acting on their statements. The survey also found that consumers spend an average of 33% of their discretionary income on local business (American Express, 2011). 3 Anti Big Box Movement Consumers increasingly view the once-welcomed big box retailers with negativity and complaints (Mitchell, 2011). There are many disadvantages that come along with shopping at big box retailers including traffic, city costs, and prices (Mitchell, 2011). Big box stores have more traffic in the store, in parking lots, and on the roads around the location. This traffic can cause higher costs for the city. More road maintenance may be required around the area. Also, consumers are not always satisfied with the prices at these retailers. Not only were consumers not satisfied with the prices of the products, but they criticized the product selection. Big box retailers do not carry a unique product selection and seem to carry “the same old products across the same old stores” (Gustafson, 2014). Theme 2: Retail Shopping and Consumer Behavior Retail shopping continues to change daily due to the ever-changing needs and wants of consumers. Much of this change is due to technology and attitudes. Consumers demand multiplicity, hyper efficiency, new industrial revolution, escape, mindfulness, and superpersonalization. Consumers want more interactive experiences (Barkworth, 2014). They want something bigger than a product. They want experiences and opportunities that allow them to collaborate with brands and capture their imaginations (O’Toole, 2014). Not only do consumers want experience, they want an environment that allows them to use every last bit of space and time to solve problems such as “keeping fit, lack of space, and limited resources” (Barkworth, 2014). They crave products that are sleeker, quicker, and use things that have been previously ignored. Advances in technology, such as 3D printing, have enabled people to create. “Soon, everyone will be a manufacturer” and will be able to create their wants and needs (Barkworth, 2014 ). Also, consumers want to escape from their grownup lives and indulge in every type of experience. People want to let go of their responsibilities and embrace silliness and hedonism. Along with this craving, people are “seeking depth and meaningfulness” (Barkworth, 2014). They are encouraged to take responsibility for their ethical statuses and the things they do, buy, and support. Lastly, people want personalization. With technology advances, companies are able to track consumers’ information and develop and select products to meet their demands and expectations (Barkworth, 2014). Theme 3: The Millennial Generation and their Values The third theme examines the values and concerns of millennials. Although the exact age range of millennials is contested, most agree that millennials are the generation born between 1980 and 2000 (Sandeen, 2008). This age group consists of people in different stages of life. It ranges from people in their careers and to teens in high school. Therefore, there are people in this generation that are shopping more than others. Today, there are roughly 77.5 million millennials, and they have $1.7 billion in spending power (FedEx, 2014). Therefore, this group of consumers could determine the future of the shop local trend and the way consumers shop. Millennials value entrepreneurship, trust, quality, health, individuality, customization, and a focus on community. The generation values work less than these other characteristics, but they still desire money and status (Baute, 2010). This generation is moving away from the traditional career. They want careers with more vacation time, freedom, and flexibility (Belz, 2014). Three-fourths of millennials want to own their own business and want to support those with like minds. This generation grew up during the recession and developed distrust for “Big Business.” Millennials are interested in investing in companies that they trust. Also, the 4 recession led this generation to have less disposable income than generations in the past. However, the generation is willing to spend more on local products and services (Henderson, 2012). Millennials are not attached to the one-stop-shop concept. 40% of millennials prefer to shop local because they have a bigger connection with the products (FedEx, 2014). Local companies can offer more unique products and services that allow consumers to express themselves which allows millennials to achieve their goal of individuality. Research Methods Through in-depth interview research, I explored the themes covered in the literature review. The literature review encompassed popular business, general press, and scholarly sources. The information collected from these sources helped develop the themes investigated for my in-depth interviews targeted to the millennial generation, ages 11-34, with various genders, ethnic backgrounds, employment status, and income levels. I used a convenience sample of eight millennials to gather data. In order to have a smooth interview process, I assembled a one-page document to guide me (see Appendix 1). I developed pre-questions to get the interview started and to briefly explain the topic of research. I followed up with the definitions of shopping local and a big box retailer that were relevant for this study. After this explanation, I began with a series of 11 interview questions divided into three categories; shop local vs. big box retailers, retail shopping, and values and generations. The goal in targeting this generation was to try to better understand the reasons why consumers shop locally and if the values of millennials align with this initiative. After my interviews, I was able to categorize the data I collected into the specific research themes. Through my interview results, I have developed insights and recommendations for practitioners. Research Results Theme 1: Shop Local vs. Big Box Retailer The review of the literature suggested a growing shop local initiative and an anti big box movement. Along with this came the positives of shopping local and the negatives of big box retailers. With this in mind, I explored these topics in my first theme and first round of interview questions in order to better understand consumers’ opinions and attitudes toward the topics. The findings indicated that all of the consumers interviewed participated in shopping at local stores. After this realization, I wanted to see why consumers were attracted and not attracted to shopping local and if there was a difference between what attracts consumers to local stores versus big box retailers. The consumers were influenced by many aspects from store size, product selection, employee personality, store culture, and community support. They enjoyed the personable staff, unique and specialized products, and supporting the local community. However, there were some aspects that consumers did not like about shopping at local stores, such as the expense and limited product selection. 5 % of Participants Likes of Shopping Local 80% 70% 60% 50% 40% 30% 20% 10% 0% 75% 63% 50% Personable Staff Supporting Local People Unique/Specialized Products Dislikes of Shopping Local % of Participants 70% 63% 60% 50% 38% 40% 30% 20% 10% 0% Limited Product Selection More Expensive Consumers mentioned the difference in the product selection multiple times during the interview process. The main difference is that local stores offer more unique, specialized products that are catered to the population in the area. One participant stated that local stores accommodate the needs and desires of the local community unlike many big box retailers who have the same products in stores around the country. The local stores focus on the fashions and trends of the local community and pick products based on them. Along with the unique products, the participants enjoyed the personable employees that were interested in their daily lives and their shopping needs and wants. In order to decide if shopping local is an initiative that companies should pay particular attention to and invest time and money, I asked the interviewees if they believed shopping local was a trend that will only be popular for a few years or many years to come. As you can see in the graph below, the majority of the interviewees believed the shop local initiative would continue to grow. Consumers would increasingly gain a desire for local atmosphere and the products within it. Then, three of the eight participants stated that the shop local initiative would never completely go away because of peoples’ desires to support the community, but consumers would move on to new trends and focus less on shopping local. Therefore, shopping local would not be the focus but a new way to support the community would evolve. 6 The Future of the Shop Local Intiative 70% 60% 50% 40% 30% 20% 10% 0% Continue for Years Less Focus on the Iniative Supporting the local community is important to many of the participants involved. Also, past research states that consumers want to support local stores because they are starting to realize the benefits they bring to the economy and community. I asked the participants, “Who do you think contributes more to the local community: big box retailers or local stores?” in order to see if the past research matched up with the millennial generation today. The answers varied widely. As you can see in the graph below, three of the eight interviewees did not give a definite answer to the type of retailer they believed contributed more to the community. Each of these three participants used Walmart as an example. They stated that Walmart contributed a lot to the community. However, they could not define Walmart as a big box retailer or local retailer. As mentioned above the interviewees in the interview process were convenience samples of millennials living in Northwest Arkansas. Walmart was founded in this area. Therefore, it is difficult to determine whether or not people in this area perceive Walmart as a big box retailer or local retailer in this area. One participant stated that Walmart gives back more to the Northwest Arkansas area than to other communities. 7 Who Contributes More to the Community? 40% 35% 30% 25% 20% 15% 10% 5% 0% Local Stores Big Box Retailers Both Theme 2: Retail Shopping After finding consumers opinions and attitudes toward local stores and big box retailers, I moved to my second theme, retail shopping. During this section in the interview process, I gathered information about the retailers the participants shopped at and why. This gave me a better understanding about what attracts consumers to certain retailers. Where Consumers shop? 100% 100% 88% 90% 75% 80% 70% 63% 60% 50% 50% Local Retailers 40% Big Box Retailer 30% 25% 20% 10% 0% Produce Clothing Services As you can see in the graphs above, most consumers preferred to shop for produce at the big box retailer, Wal-Mart, while two consumers preferred to shop at local grocery stores. When it came to shopping for clothing, consumers’ answers were very different. In this category, seven of the eight consumers admitted to shopping at big box retailers, while five of the eight stated that they shopped at both local stores and big box retailers for clothing. When I asked consumers where they went for services, the answers varied widely. The type of retailer depended on the service. 8 Most of the interviewees stated that they would use a local store for hair and beauty services. However, consumers answers were about half and half when asked where they got their car serviced. After learning about where the interviewees shopped, I gathered information about why they were attracted to these retailers. The top three reasons were convenience, product selection, and money. Other reasons were the friendly staff and atmosphere. Why are Consumers Attracted to Retailers? 70% 63% 63% 60% 50% 50% 38% 38% Personable Staff Atmosphere 40% 30% 20% 10% 0% Convenience Product Selection Money Theme3: The Millennial Generation and their Values Lastly, I wanted to examine the values of the millennials that participated in the interview process. Through this information I gained a better idea of how millennials’ values align with their wants and desires while shopping. The eight participants had a wide range of values. However, the top values of the participants were friends, family, loyalty, and honesty. Participant Values 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 9