Leaders in Local: Exploring Consumers‘ Purchase Intentions of Locally Produced Foods

1. Leaders in Local: Exploring Consumers‘ Purchase Intentions of Locally Produced Foods Dr Gary Mortimer QUT Business School |Z1058 - Queensland University of Technology | www.qut.edu.au/business Phone: + 61 7 3138 5084  | Mb: 0448 048 433  | Fax: +61 7 3138 1811  | Email: gary.mortimer@qut.edu.au | CRICOS No. 00213J

2. Table of contents • Project Background 3 • Methodology 6 • Sample Demographics 7 • Construct Validity 8 • Determining Local Food – Description 11 • Determining Local Food – Geographic, Size of Business and Location of Business 14 • Determining Local Food – Product Features 29 • Ethnocentrism 37 • Attitudes: Benefits of Buying Local 46 • Attitudes: Supporting Local and Small Business 59 • Awareness 80 • Subjective Norms 87 • Connectedness 94 • Intentions to Purchase 101 • Importance of ‘Local’ across Categories 108 • Factors that Influence the Purchase of Local Foods 115 • Conclusion and Summary 141

3. Project Background • Local foods are growing in importance in the mind set of the consumer – “the new organic” (McKenzie-Minifie, 2007) • Consumers are becoming more active in choosing alternative channels to purchase locally grown/produced foods • Growth of farmer’s markets, roadside stalls, community gardens and *CSA programs • Supermarkets and grocers continue to tailor their assortments to include, ethnic, organic, natural and local foods to meet changing consumer needs • Australian research is limited, although one early study has found ‘buying locally produced foods’ was considered an important attribute (Lea & Worsley, 2007) • International research has tended to focus on COO effects, rather than region or local effects. (Insch & Florek, 2009) • Emerging research is beginning to explore consumer interest in ‘local’ over simply ‘domestic’ – although not specifically in food. (Hustvedt, Carroll & Bernard, 2013) • One study has examined differences in attitudes, subjective norms and intentions toward the purchase of locally produced foods. (Campbell, 2013)

4. What do we know? • There is a continuing push to ‘buy local’ – governments, interest groups, etc • Growth in Farmers (alternative) Fresh Food Markets (www.daff.gov.au) • Doubling 2004 to 2011 to 150 nationally • 69% of markets reported increased stall holders • 64% of markets reported increased shopper numbers • Consumer Ethnocentric Tendencies (CET) has been used to explain consumer behaviour towards local products (Shimp & Sharma, 1987) • Ethnocentricity describes consumers who feel strongly about purchasing product from within the country or region. • Consumers are willing to pay (WTP) more for locally produced/grown foods (Darby, Bette, Ernst & Roe, 2008) • Consumers express a preference for locally produced/grown foods (Onken, Bernard & Pesek, 2011)

5. What remains unclear? • What is ‘local’ in the mind of the shopper? • Is it regionally bound or state bound? (Patterson et al., 1999; Darby et al. 2008) • Do differences between genders, education and generational cohorts on local food purchase intentions exist? • If they do, who should we be marketing to? • Creating one marketing message may be futile. • What salient factors influence the purchase of locally produced foods? • How do we best market ‘local’? • Do we focus on the ‘social family-friendly aspect (subjective norms) to connect with customers? Or, promotions and loyalty programs? • To what extent is ‘local’ and important attribute across categories? • Strategically, should product placement/layouts be adjusted to facilitate a ‘local’ message?

6. Methodology • An online survey questionnaire was distributed to 1065 respondents that reported to be the ‘primary grocery shopper’. • Respondents were EDR Card shoppers • The survey questionnaire screened and removed those respondents under the age of 18 years. • The online survey questionnaire was operationalised to ensure all responses were required before progressing, this aided in cleaning the data. • Data was exported to Excel for cleaning and then to SPSS Version 18 for analysis. • Analysis included descriptive, frequencies, t-tests, Analysis of Variation (ANOVA) and Multiple Regression

7. Sample Demographics Grocery shopperprofile (%) respondent HOUSEHOLD TYPE No kids 59% Have kids all the time 37% Have kids some of the time 5% LEVEL OF EDUCATION High School/Secondary 33% TAFE/Trade Certificate 29% Undergraduate 19% Postgraduate 19% GENDER Female 72% Male 28% AGE 18-24 yrs: 1% 25-35 yrs: 16% 36-45 yrs: 17% 46-55 yrs: 20% 56-65 yrs: 23% 65+ yrs: 23% RELATIONSHIP STATUS Single/Living alone 12% Married/De facto/ 77% Living together Separated/Divorced 8% Widowed 3% Source: QUT Local product shopping behaviour study, (June 2013) Base: All respondents who have purchased local products (n= 1,065).

8. ConstructValidation Construct Validity: Constructs are developed from multiple items to ensure a robust measure is defined. Constructs should produce a Cronbachs’ Alpha of over .60 to be considered valid.

9. ConstructValidation Construct Validation

10. ConstructValidation Construct Validation

11. Determining ‘Local’ Food • There is no legal stipulation of what constitutes ‘local food’, nor is there a widely accepted definition (Jones et al., 2004; Feagan, 2007). • The most commonly used approach defines ‘local food’ on the basis of the distance that the food travels from production to consumption. Distances vary between 30 miles (as used for Certified Farmer’s Markets, UK) and 100 miles (US). • Other descriptors include within a county (i.e.“Direct from Dorset” where Dorset is one of the 70 or so well recognised counties in the UK) or region (i.e. South East Qld) or sub-region (Sunshine Coast Hinterland, Qld) • Other groups have developed different approaches to describing the notion of ‘local food’ (i.e. Soil Association in the UK) considered ‘local food’ as a process, or aspiration, encouraging steps towards shortening the food supply chain. Pearson, D., Henryks, J., Trott, A., Jones, P., Parker, G., Dumaresq, D. & Dyball, R. (2011)

12. Determining ‘Local’ Food • A complication for ‘local food’ emerges with processed and multi-ingredient products. This raises the question of what percentage of all the ingredients and/or processing needs to be deemed ‘local’ for the final product to maintain its status as a local food. • Clarity surrounding what constitutes local food presents major difficulties, the most obvious of which is that the actual size of the ‘local food’ market is difficult to determine. • UK market size; • Using a purely geographic definition (i.e. food that is sold within 30 miles of where it is produced) the local food market has been estimated at around 1.5 per cent of the total food market (Brown & Geldard, 2008). • Using a broader geographic definition, such as food produced and consumed within a region, the local food market is much larger, with an estimate published in 2003 suggesting that it was around 6 per cent of the total food market (Defra, 2003).

13. Determining ‘Local’ Food • Considering the discord around a widely accepted definition of ‘local food’, this project captured responses from 1065 respondents on the following measures; • A determination of ‘local food’ based on; • Geographic nature of local food • Size of enterprise • Nature of business and location • Product features

14. Determining Local - Geographic When you think of the term ‘Local’ in relation to food and grocery, how would you describe local?

15. DeterminingLocal-Geographic When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 6-7 scale responses (%) ‘Statistically significant difference’ (p < .05) Females are more likely to define local products as products sourced from anywhere within Australia compared to males. There were no significant difference between gender and other measures; region, town or city, state or within 100klms.

16. Determining Local-Geographic When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 6-7 scale responses (%) ‘No statistically significant difference’(p > .05) Shoppers’ age group did not affect how they defined ‘Local’.

17. Determining Local-Geographic When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 1-7 scale responses (%)

18. Determining Local - Geographic • 88% of responses (agree/strongly agree) determined ‘local food’ to be food products sourced within their region, town or city. • 73% of responses (agree/strongly agree) determined ‘local food’ to be food products sourced within 100klms from their home region, town or city. • This suggest most people would rather food and products sourced within their provenance and three quarters of shoppers are willing to consider distances of at least 100klms. • There were no differences between age or gender in relation to determining ‘local food’ from a geographical perspective, however female respondents also considered ‘local food’ more broadly to be ‘Australian Made’.

19. Determining Local - Business • Other than geographic distances, this research sought to identify the type of business and the location of those businesses, mostly associated with ‘local foods’. • Respondents' (n=1065) were asked to identify business size and location.

20. Determining Local-Business When you think of the term ‘Local’ in relation to food and grocery, how would you describe local?

21. Determining Local-Business When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 6-7 scale responses (%) ‘No statistically significant difference’ ’ (p > .05) Shoppers’ gender did not affect how they defined local-business.

22. Determining Local-Business When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 6-7 scale responses (%) ‘No statistically significant difference’ (p > .05) Shoppers’ age group did not affect how they defined local-business.

23. Determining Local-Business When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 1-7 scale responses (%)

24. Determining Local-Business & Location When you think of the term ‘Local’ in relation to food and grocery, how would you describe local?

25. Determining Local-Business & Location When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 6-7 scale responses (%) ‘No statistically significant difference’ ’ (p > .05) Shoppers’ gender did not affect how they defined local-business & location.

26. Determining Local-Business & Location When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 6-7 scale responses (%) ‘No statistically significant difference’ (p > .05) Shoppers’ age group did not affect how they defined local-business & location.

27. Determining Local-Business & Location When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 1-7 scale responses (%)

28. Determining Local – Business & Location • Analysis was conducted on responses (Agree/Strongly Agree). Most responses identified that ‘local food’ would be sourced from a small businesses. • However, attitudes towards this measure were not strong; 19% of respondents had no opinion/didn’t care, 21% only somewhat agreed. • This suggests that other factors influence a determination of ‘local food’ other than size of business. • There were no differences identified between age or gender in relation to this measure. • When location of business was added, responses (Agree/Strongly Agree) were more pronounced. • 84% of responses indicated ‘local food’ should be sourced from small, family owned businesses within their own region, town or city. • Once again, there were no differences between gender and age in relation to this measure. • Accordingly, marketing messages should highlight links with well known, small local, family own businesses.

29. Determining Local – Product Features • In contrast to previous research that had tended to focus on geographic location to determine ‘local food’, this research explored product features and attributes. • This research sought to identify if product aspects, attributes or aesthetics, effected shoppers’ perceptions of ‘local foods’.

30. Determining Local-Product Features When you think of the term ‘Local’ in relation to food and grocery, how would you describe local?

31. Determining Local-Product Features When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 6-7 scale responses (%) ‘No statistically significant difference’ ’ (p > .05) Shoppers’ gender did not affect how they defined ‘local’ in relation to food and grocery products.

32. Determining Local-Product Features When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 6-7 scale responses (%) ‘No statistically significant difference’ ’ (p > .05) Shoppers’ age group did not affect how they defined ‘local’ in relation to food and grocery products.

33. Determining Local-Product Features When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 1-7 scale responses (%)

34. Determining Local-Product Features When you think of the term ‘Local’ in relation to food and grocery, how would you describe local? 1-7 scale responses (%)

35. Determining Local – Product Features • Two themes emerge from the data; Health & Wellbeing and Aesthetics. • Measuring only strong responses (Agree/Strongly Agree); • Health & Wellbeing - Quality (42%) and Good For You (37%) • Aesthetics – Crafty/Homely Packaging (41%) and Gourmet (32%) • There were no significant statistical differences between age or gender in relation to these measures. • Respondents reported that ‘local food’ products should meet these parameters. • These findings will inform suppliers of ‘local food’ products, Local Purchasing Managers and Category Managers to enable successful product implementation and launch. • Aesthetically, packaging and printed information should be ‘imperfect, rustic, home-made style and hand written’, such as one may find with a simple ‘white chalk on blackboard’ image. • Marketing appeals should convey messages like; organic, pesticide-free, ‘from your local area’, ‘I’m a Local’. • These findings may also influence POS imagery decisions. • Further test marketing of treatments would be required.

36. How do Australian Shoppers determine local? • Our sample of 1065 respondents determined ‘local food’ in several ways; • Geographically – the product should be sourced from within a well known region or sub-region linked to their provenance (i.e. Gippsland Region, Adelaide Hills, Margaret River, Sunshine Coast Hinterland) • WOW Marketing would need to identify and isolate significantly well known areas and strategically source products from those areas. • Distance – to a lesser extent, shoppers accepted products sourced within 100klms to still be considered locally. • This is an important consideration for WOW stores that are not located close to well know and easily identified regions, and therefore are not able to identify closely with these areas. • Size of business was not important, however, ‘business & location’ was. Shoppers do not consider the size of enterprise that produces the local product, but the connection between the supplier (producer) and the region was vital. • This finding is important for Local Purchasing Managers when selecting appropriate suppliers. Such suppliers need to demonstrate strong links and brand equity with their community, region or sub-region. • Local products and POS should appear aesthetically authentic, not necessarily perfect . Home-style, rustic and convey a message of product integrity, health and wellbeing.

37. Ethnocentrism • As a factor in consumer behaviour, the construct of consumer ethnocentrism has been empirically established through the development and use of the CETSCALE instrument (Shimp & Sharma, 1987) • In times of severe competition, firms are highly interested in consolidating their position in their domestic market (Porter, 1990) • While consumer ethnocentrism, national identity and economic nationalism all reflect a level of discrimination against foreign products, the underlying reason is a domestic preference rather than negativity towards any country in particular (Josiassen, Assaf & Karpen, 2011) • Academic research has discovered important differences in consumer cognitive processes and behaviour of three demographic characteristics ; age, gender and income (Cooilet al., 2007; Lambert-Pandraudet al., 2005)

38. Ethnocentrism • Most recent research published in the International Marketing Review in 2011 identified the following; • Older consumers are more ethnocentric than younger consumers • Female consumers are more ethnocentric than male consumers • Level of income has no effect on consumer ethnocentric tendencies • Effect of consumer ethnocentric tendencies on willingness to buy is not significantly influenced by income • The relationship between consumer ethnocentric tendencies and willingness to buy is stronger for younger consumers

39. Ethnocentrism ‘Statistically significant difference’ (p <.01) Shoppers aged 46 and over are more likely to feel strongly about purchasing local products compared to those under 46 years of age.

40. Ethnocentrism ‘Statistically significant difference’ (p <.01) Females are more likely to feel strongly about purchasing local products compared to males.

41. Ethnocentrism ‘Statistically significant difference’ (p <.01) Shoppers with low levels of education (high school/secondary and TAFE/Trade Certificate) are more likely to feel strongly about purchasing local products compared to those with higher levels of education (undergraduate and postgraduate).

42. Ethnocentrism ‘No statistically significant difference’ (p >.05) Shoppers’ relationship status did not affect ethnocentrism.

43. Ethnocentrism ‘No statistically significant difference’ (p >.05) Shoppers’ household type did not affect ethnocentrism.

44. Ethnocentrism • Results provide managers with a detailed understanding of which consumer groups are the most consumer ethnocentric • Such knowledge will be essential for segmentation, targeting and product positioning efforts. • Not all domestic consumers express the same extent of ethnocentric tendencies • While measuring consumer ethnocentrism levels is important, it is not sufficient to understanding the impact of such ethnocentric tendencies on purchase behaviour. • For example, target segments should not just be selected based simply on levels of consumer ethnocentricity, as some groups may have a low willingness to let their consumer ethnocentric tendencies influence their willingness to purchase. • Research has found willingness to buy was stronger for younger consumers, although older consumers reported higher levels of ethnocentric tendencies. It is suggested older consumers are more experienced shoppers and are able to separate their ethnocentric views from their buying needs and wants.

45. Ethnocentrism • This research identifies the following; • Older consumers are more ethnocentric than younger consumers • Supported by international research (Josiassen, Assaf & Karpen, 2011) • Female consumers are more ethnocentric than male consumers • Supported by international research (Josiassen, Assaf & Karpen, 2011) • Shoppers with low levels of education are more likely to feel strongly about purchasing local products compared to those with higher levels of education • Supported by international research (Nisha, 1990) • Consumer status had no effect on level of consumer ethnocentric tendencies • Household type (kids/no kids) no effect on level of consumer ethnocentric tendencies

46. Attitudes: Benefits of Buying Local • Extant research has indicated that other than ethnocentric tendencies, consumers are motivated to choose ‘local food’ for other reasons, such as; • Economic factors • Environmental factors • Ethical factors (Supporting small and local businesses) • This research collected data pertaining to these constructs.

47. Attitudes: Benefits of Buying Local

48. Attitudes: Benefits of Buying Local ‘Statistically significant difference’ (p <.01) Females are more likely to think that it is important to support their local farmers and local business community compared to males.

49. Attitudes: Benefits of Buying Local ‘Statistically significant difference’ (p <.01) Shoppers aged 46 and over are more likely to think about benefits of buying local in terms of supporting the Australian economy compared to those aged less than 46 years.

50. Attitudes: Benefits of Buying Local ‘No statistically significant difference’ (p > .05) The education level of shoppers did not affect attitudes towards benefits of buying local.