Dissertation

‘Online Food Shopping:
Consumer perception and retailers market approach,
contrasting the markets UK and Germany’

By

Marie von Breitenbuch

Master of Arts in International Business
Administration
The Business School
Bournemouth University
April 2004

Abstract

The research’s aim was to contrast the retailers’ market approach and consumer perception of online food shopping in the markets Germany and UK.

The first part of the research project was the review of existing literature to build up knowledge about the history and definition of the Internet and to give a market overview of Germany and the UK. The next areas investigated within the literature review were consumers’ online shopping behaviour and the food retail market. The last part was concerned with specific companies from both countries and their market approach. 

Research questions developed in the literature review were concerned with the food shopping behaviour and the perception of online food shopping. Additional questions were if payment security has an influence on online shopping and what other market sectors are of interest.

The first part of the survey collecting quantitative data was carried out within a sample of 100 food shoppers from the UK and 100 from Germany. Questionnaires were distributed using the snowball sampling method – a method where each respondent passes the questionnaire to a number of further contacts. Interviews built the second survey part where two participants from each country were questioned in-depth about their food shopping behaviour and perceptions. The interviews backed findings from the questionnaire survey and gave further information.

Quantitative data was gained and analysed by using the program SPSS. SPSS is a tool that provides the possibility to run statistical correlations between variables and provides graphical outputs to illustrate the findings.

The findings show great differences in consumer perception and retailers’ market approach between Germany and the UK.

While in the UK online food shopping is popular with consumers and some retailers found a way of establishing themselves in this market, German companies do not offer the service nationwide and consumers seem to have limited interest. Main reasons identified in the research lie in the differences within the economical markets and culture of the countries.

The outlook in the future shows an ongoing increase in online food shopping in the UK but less activities in Germany.

Acknowledgements

The final step to complete a Masters degree is the Dissertation. Writing a Dissertation is a time consuming and demanding process which I would not have been able to accomplish without the support and help of several people whom I want to thank here.

My first thanks belong to my parents who supported me not only financially but also with a never ending patience on my educational way. Starting with 13 long years of school in Germany they supported a further 5 years of under and postgraduate studies. I hope the future outcome lives up to their expectations.

For all the help over the last year I would like to thank my partner Chris who has shown amazing strength throughout very difficult times. I look very much forward to a hopefully healthy and less stressful future together.

My supervisor Mr. James Knight was always willing to give me immediate response to any questions regarding my work. The fact that he is based in London was not interfering with his role as supervisor at Bournemouth University. He supported the research project with insightful knowledge and dedicated large amounts of his time towards it. Therefore I would like to thank him very much.

The companies Blue Level and InfraNet-Dynamics sponsored the research with the set up and hosting of the online survey. All support in this area was very professional and the dedicated time is gratefully accepted.

Special thanks go to all the survey respondents whom I can not thank personally due to the anonymous nature of the research. The time and thoughts were much appreciated and without their help this research would not have been successful. 

Finally my thanks go to all the new friends I met within the last year at Bournemouth University. Special thoughts go to Hannah, Clare, Jenni and Jouni with whom it was mostly good fun to live with, Lara & Mike which are a great couple and Rita who is a lovely girl. I hope to be able to stay in contact with all these great friends in the future.

Table of Contents
Abstract ... i
Acknowledgements ... iii
Table of Contents ... iv
Tables ... vi
Charts  ... vii

1 Introduction ... 1
1.1 Background ... 1
1.2 Topic choice and justification ... 3
1.3 Research aim and objectives ... 3
1.4 Limitations of the research ... 4
1.5 Report outline ... 4

2 Literature Review ... 6
2.1 General definition and historic overview of the Internet  ... 6
2.2 General definition of electronic commerce ... 9
2.3 Market overview Germany and UK ... 10
2.4 Consumer’s online shopping behaviour ... 12
2.4.1 Online shopping population ... 12
2.4.2 Increasing online shopping  ... 13
2.4.3 Reasons for online shopping ... 15
2.4.4 Security concerns of online payments  ... 16
2.5 Overview food retail market  ... 17
2.5.1 Market approaches, business models ... 17
2.5.2 Food online shopping ... 19
2.6 UK and German Companies  ... 20
2.6.1 UK Companies ... 20
2.6.2 German Companies ... 25
2.7 Summary of the Literature Review and Research Questions  ... 29

3 Methodology ... 31
3.1 Research Perspective  ... 31
3.2 Research Approach  ... 32
3.2.1 Reliability ... 33
3.2.2 Validity  ... 34
3.2 3 Generalisability ... 34
3.3 Research Design ... 34
3.3.1 Snowball sampling ... 35
3.3.2 Purposive Sampling  ... 35
3.4 Research Strategy ... 36
3.4.1 Survey  ... 36
3.4.2 Interviews ... 37
3.5 Data collection  ... 38
3.5.1 Survey  ... 39
3.5.2 Interviews ... 42
3.6 Method of Data Analysis  ... 42

4 Data Analysis  ... 44
4.1 What population is interested in online food shopping?  ... 46
4.2 How is the food shopping behaviour in general?  ... 52
4.3 Perception of online food shopping?  ... 60
4.4 Do payment concerns effect online shopping?  ... 67
4.5 Do supermarkets do good advertising?  ... 68
4.6 What are the implications for the future?  ... 70
4.7 What other sectors are of interest?  ... 71
4.8 Summary Data Analysis  ... 74

5 Conclusions and Recommendations  ... 75
5.1 General definition and a historic overview of the Internet  ... 75
5.2 General knowledge about the German and UK market  ... 76
5.3 Different market approaches in the countries  ... 76
5.4 Consumer food shopping and online shopping behaviour ... 77
5.4.1 How is the food shopping behaviour in general?  ... 77
5.4.2 What population is interested in online food shopping?  ... 77
5.4.3 Perception of online food shopping?  ... 78
5.4.4 Do payment concerns effect online shopping?  ... 78
5.4.5 What are the implications for the future?  ... 78
5.4.6 What other sectors are of interest?  ... 79
5.5 Outlook in the future ... 79
5.6 Recommendations for further research ... 80

6 Bibliography  ... 81

Appendix 1 Questionnaire printout version English
Appendix 2 Questionnaire online version English
Appendix 3 Interview Notes: Interview 1
Appendix 4 Interview Notes: Interview 2
Appendix 5 Interview Notes: Interview 3
Appendix 6 Interview Notes: Interview 4

Tables
Table 1: Country Frequency  ... 44
Table 2: Country/Gender Frequency  ... 46
Table 3: Country/Age Frequency ... 47
Table 4: Country/Occupation Frequency ... 48
Table 5: Country/Hours Frequency  ... 49
Table 6: Country/People Frequency  ... 50
Table 7: Country/Internet Con. Frequency  ... 51
Table 8: Country/Supermarket Frequency ... 52
Table 9: Country/Transport Frequency ... 53
Table 10: Country/Time to S. Frequency  ... 54
Table 11: Country/Shopping time Frequency ... 55
Table 12: Country/ordered Food Frequency ... 56
Table 13: Country/Use Frequency ... 58
Table 14: Country/Start OS Frequency ... 59
Table 15: Country/Easiness Frequency  ... 60
Table 16: Country/Delivery Frequency  ... 61
Table 17: Country/Freshness Frequency  ... 63
Table 18: Country/Completeness Frequency ... 64
Table 19: Country/Reason Frequency  ... 65
Table 20: Country/Security Frequency ... 67
Table 21: Country/Provide OS Frequency ... 68
Table 22: Country/Homepage Frequency ... 69
Table 23: Country/Future Frequency ... 70
Table 24: Country/Clothing Frequency  ... 71
Table 25: Country/Books, CD Frequency  ... 72
Table 26: Country/Furniture Frequency  ... 72
Table 27: Country/Holiday Frequency  ... 73
Table 28: Country/Information Frequency  ... 73

Charts
Chart 1: Searches carried out in Oct. 2003 in the UK  ... 14
Chart 2: Country/Gender ... 46
Chart 3: Country/Age ... 47
Chart 4: Country/Occupation ... 48
Chart 5: Country/Hours ... 49
Chart 6: Country/People  ... 50
Chart 7: Country/Internet Connection  ... 51
Chart 8: Country/Transport ... 53
Chart 9: Country/Time to S ... 54
Chart 10: Country/Shopping time ... 55
Chart 11: Country/Ordered Food ... 56
Chart 12: Online shopping/Occupation  ... 57
Chart 13: Online shopping/Age  ... 57
Chart 14: Country/Use  ... 58
Chart 15: Country/Start OS ... 59
Chart 16: Country/Easiness ... 61
Chart 17: Country/Delivery  ... 62
Chart 18: Country/Freshness ... 63
Chart 19: Country/Delivery  ... 64
Chart 20: Country/Reason ... 66
Chart 21: Country/Security  ... 67
Chart 22: Country/Provide OS ... 68
Chart 23: Country/Homepage ... 69
Chart 24: Country/Future ... 70
Chart 25: Country/Clothing  ... 71
Chart 26: Country/Books, CD ... 72
Chart 27: Country/Furniture  ... 72
Chart 28: Country/Holiday  ... 73
Chart 29: Country/Information  ... 73

1 Introduction

1.1 Background

With the entrance into the new millennium we finally arrived in the information age. Both in the home and workplace, we are surrounded by an ever changing environment, full of new technologies. These technology based systems and devices are marketed at helping to improve our efficiency and enabling us to do traditional tasks in new and innovative ways. This further development in technology is now supporting companies and individuals to cope with day to day business, and for that matter to improve life style. 

One of the biggest steps in this technology innovation and movement towards the information age was the development of the Internet. Since the 1990’s the importance of the Internet for the broader public is continuing to grow. The development of the Internet started in 1968 with the aim to create a communication tool for military purposes (Leiner et al, no date). Some 25 years later the Internet was developed further and open standards were published. Companies discovered the advantages of the Net as a commercial tool. Nowadays it is common for businesses to place advertising on the Internet, contact consumers via email and have an online sales and ordering systems. Firms which do not adopt their strategies to this new market approaches are in danger to be overtaken by more innovative competitors.

The most famous person in this context is Sir Tim Berners-Lee who is known as the inventor of the Internet as we use it today. Sir Tim Berners-Lee was made a ‘Knight Commander in Order of the British Empire’ by Queen Elisabeth in early 2004 for his “services to the global development of the Internet” (W3C, 2003). Berners-Lee himself is amazed by the effects of the Internet. He told the British Broadcasting Company (BBC) (BBC, Web inventor…, 2003) that “he never expected his invention would lead to such an accolade”, he saw it as “just another program” at that time. How wrong he was with the underestimation of his invention is shown by today’s massive internet adoption rate throughout the world.

The Internet’s initial public adoption was primarily taken up by education institutes. This has now broadened significantly. Students now get lessons at school how to handle computers and today there are companies which offer their products and services over the Internet as their only route to market. This leads us to accept the Internet as a mature and proven environment for recreation, lifestyle and commercial purposes.

On one side, there is the advantage of technology and on the other, the changing lifestyle we all lead in this technology era. Since living in a technology driven world, people in the western countries have become used to take advantage of the services and devices which enable them to fulfil their duties faster and to enjoy more spare time. Individuals attempt to work hard and earn reasonable amounts of money which they, in turn, spend to increase their available spare time, e.g. cleaners, and to use this newly created time use for personal benefit, e.g. gym or wellness programmes.

The present research is concerned with finding out how food retailers are dealing with the trend to use the Internet as a commercial tool to reach customers. Food retailing is an industry with a well established traditional market approach. With increasing usage of the Internet in other industries, some key players in the food retail market have decided to change their approach and to provide so called “Online Shopping”.

1.2 Topic choice and justification

The idea for the research topic was developed due to experiences of different consumer behaviour in the two countries Germany and the UK. The question why the UK food retailers have a different market approach to German ones and if this is conforms to the consumer perception could not been answered by existing academic studies. 

The report outcome gives an overview of the major differences between the two markets UK and Germany and provides suggestions why these differences may occur. 

The findings of the research will give companies in Germany and the UK an overview if they are on track with their market approach or if they should rethink their strategies. 

1.3 Research aim and objectives

Aim
The research is aiming to find out what the differences in the retailer’s market approaches between the UK and Germany are and if the approaches conform to the actual consumer perception between these two different markets.

Objectives
The first objective of the report is to establish a general definition and a historic overview of the internet and electronic commerce. This is followed by an investigation about structure and development of the German and UK market in general.
The next objective is to understand the consumer behaviour concerning online shopping followed by food shopping perceptions. To find out about different market approaches of food retailers in Germany and the UK is the next objective.
At least this research will compare the online food shopping possibilities with the consumer perceptions in both countries and estamlish if they are in line.

1.4 Limitations of the research

This research aims to build general knowledge about food retail markets in Germany and the UK related to online shopping. The study investigates the consumer perception of food shopping with the focus to compare what consumers want and what supermarkets offer. The main limitation in this case is based in the sample size and structure. The information regarding consumer perception of online food shopping is based on a survey undertaken in Germany and the UK and including about 100 people in each country. The findings are relevant for this sample but it is assumed that they are applicable for a more general picture. Nevertheless there may be differences in findings if perceptions of another sample are taken.

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