ABSTRACT
In May 2017, Costco opened a superstore in Iceland. Costco is one of the largest retailers in the world, and the opening of the store was expected to have a major impact on Iceland's grocery market. This paper focuses on the image of Costco in Iceland and its impact on the grocery store market. The results are based on 2,891 responses to a survey conducted in September and October 2017. The grocery stores or chains evaluated in the survey were Fjarðarkaup, Nettó, Hagkaup, Víðir, Bónus, Iceland, Costco and Krónan. Before Costco opened its store, Bónus and Krónan were the largest grocery stores in Iceland, together accounting for approximately 55% of the market share. Hagkaup and Fjarðarkaup are classified as quality stores with relatively high prices.
A perceptual mapping methodology was used to examine store image. The image attributes considered have been used previously in several other surveys and are as follows: “freshness,” “low price,” “great product range,” “boring,” “different,” “high price,” “quality,” “opening hours” and “fun.” The participants evaluated each store on all attributes using a nine-point scale, on which 1 denotes “applies very poorly to this store” and 9 “applies very well to this store.”
The findings are robust as scores for the attributes “low price” and “high price,” as well as “boring” and “fun,” tend in opposite directions. Costco was found to have the strongest image and this is closely associated with the attribute “low price” along with several other positive attributes. Bónus is closely associated with the attribute “low price” but also with the negative attribute “boring”. Hagkaup, which, prior to Costco’s opening, was closely associated with several positive attributes, is now associated with the attribute “high price” and has much weaker associations with the positive attributes assigned to it prior to Costco’s market entry. Other stores have market positions similar to those they occupied before Costco entered the market.
Keywords
Costco; Brand image, Grocery store market, Perceptual mapping, Iceland