Media Briefings

HOW SHOPPING HABITS VARY AMONG DIFFERENT AGE GROUPS IN THE UK

  • Published Date: April 2014

People in their fifties and above go shopping more often and end up paying slightly higher prices than their younger counterparts. These are among the findings of research by Kun Tian, presented at the Royal Economic Society’s 2014 annual conference. Analysing data on 30 million goods for over 11,000 households in the UK, the study finds that:

· Young and middle age households pay the same price for the same basket of goods. Older households tend to pay higher prices for the same basket of goods, and this cost increases with age.

· Shoppers aged 25-29 make around five shopping trips per month. The older the age group above that, the more shopping trips they make per month.

· Households without children go shopping 30% more often and pay higher prices than those with children.

· Shoppers who visit more stores tend to pay higher prices. Doubling the number of stores visited will raise the prices paid by 2%.

Kun Tian comments:

‘My findings suggest that store-loyal customers are more profitable, and visiting more stores results in higher store-switching costs and paying higher prices.

‘Consumers pay higher prices even if they shop more often because they end up visiting a wider variety of stores.’

More…

This study examines the relationship between shopping frequency and price and provides behavioural explanations for why each household’s shopping pattern elicits different price levels. It simply wants to answer these questions: ‘Do older people pay lower price than their younger counterpart? If so (not), why?’

The analysis uses TNS Home-scan data in the UK. The dataset includes information about an entire range of fast moving consumer goods for 156 weeks from Oct 2002 to Dec 2005. The dataset comprises 21 categories products as main product group, 15 for food and 6 for non-food. Within 21 main groups of products, there are 189 product categories and 185,495 brands in total.

There are over 30 million observations from 11,247 households across 10 regions in the UK. Furthermore, the data characterise consumers’ heterogeneity in terms of their shopping preference, costs, and efficiency.

The author reports the main findings:

First, households in their young and middle age stage pay the same price for the constant basket of goods. But households in their late fifties pay prices that are 1% higher for the same basket of goods. While households in their early sixties and late sixties/early seventies pay prices that are 1.2% and 1.5% higher respectively. Moreover, these differences are all statistically significant.

Second, older shoppers make more shopping trips per month than younger shoppers. Shoppers aged 25-29 make 5.2 shopping trips per month. Shoppers in the early part of the lifecycle remain the same shopping frequency. But older shoppers make more shopping trips per month than younger shoppers. Specifically, compared with shoppers in their late forties, shoppers in their early fifties are 14.5% higher in shopping frequency. Relative to shoppers aged 45-49, shoppers aged 55-59, 60-64 and 65-74 are 22.5%, 27.7% and 45.2% higher in shopping frequency respectively.

Third, we also find that households without children visit stores more often and pay higher prices than those with children. The ‘couple no child’ households pay about 1.1% higher prices than the ‘couple with child’ households conditional on same basket of goods. The ‘couple no child’ households shop 30% more frequently than the ‘couple with child’.

Fourth, we split the information conveyed in shopping frequency into two: trips per store and number of stores visited. We find that the biggest difference between households who pay higher prices and those who pay lower prices is that those who face higher prices visit more stores instead of shopping intensively in one store, and vice versa. Specifically, our estimates show that doubling the number of stores visited will raise the price paid by 2%.

Fifth, our empirical finding suggests that store-loyal customers are more profitable, and visiting more stores results in higher store-switching costs and paying higher prices. Consumers pay higher prices even if they shop more often due to visiting a wide variety of stores.

ENDS

Notes for editors:

‘Lifecycle Price and Shopping Frequency’ by Kun Tian

For further information, contact:

Kun Tian (email: tiank1@Cardiff.ac.uk; mobile: +44-7584-296986)

Romesh Vaitilingam: romesh@vaitilingam.com, +44 7768 661095