Segmentation of Food Retailers according to the Considered Factors in Demand Forecasting

Abstract

The process of demand forecasting in retail is usually connected with three key activities – choice of a suitable forecasting method, choice of resources of data and information about the consumer demand, and identification of the factors having significant impacts on the behaviour of consumers in retail. The current surveys show that Czech retailers consider a wide range of factors when forecasting the demand. However, opinions of individual retailers concerning the fact which factors are relevant on consumer markets differ in relation to the type of retail store (its size, affiliation with a retail chain, etc.). This paper aims to identify the basic groups of factors that are considered in demand forecasting by Czech food retailers, and to segment the market of Czech retailers according to the fact which groups of factors are preferred by retailers when making forecasts. A quantitative survey conducted in 75 Czech retail stores was the basis for factor and cluster analysis of the data, which resulted in identification of 3 basic groups of considered factors and 3 segments of retail stores on the Czech market. Compilation of the profile of segments resulted in surprising conclusions. Basically, the segments of retail stores do not differ in the floor space size. What has a more significant influence on the way of demand forecasting in the context of the type of considered factors is affiliation of the store with a retail chain, the predominant way of selling (self-service or over-the-counter sale), the access to the sources of data and information about the consumer demand, and used forecasting methods.