The Impact of Consumer Behaviour on the Supply Chains in the United Kingdom

The proposed study will elucidate the impact of consumer behaviour on the supply chains through a survey conducted in different corporations in the United Kingdom. A total of 210 respondents derived from academia and industry will be interviewed during the data collection process. Based on the literature view, it was noted that current changes in consumer behaviours were mediated by technological progress, which in turn, influenced supply chain processes. For instance, the growth in online purchases had enhanced the demand for individualised delivery services. Alternatively, some consumers preferred to make higher purchases at the end of the year. Such inconsistencies in purchase behaviours influenced the supply chains. Therefore, it was necessary for stakeholders in the supply chain to adopt proactive measures to address consumer demands and expectations.

Keywords: Consumer behaviour, supply chain, United Kingdom

Table of Contents

Abstract 2

Chapter One: Introduction. 3

Thesis Statement 3

Definition of Terms and Variables. 3

Research Brief. 4

Research Questions. 4

Research Objectives. 5

Rationale. 5

Originality. 6

Chapter Two: Literature Reviews. 6

Consumer Behavior 6

Theoretical Framework. 8

Chapter Three: Methodology. 10

Data Collection. 11

Data Analysis. 12

Ethical Concerns. 12

Chapter One: Introduction

Thesis Statement

The proposed study intends to review the influence of millennial consumer behaviour on the supply chains (SC) in the United Kingdom with the aim of drawing new insights that would inform supply chain practices in the future.

Definition of Terms and Variables

The term supply chain refers to the system and set of activities that facilitate the production and delivery of products to the consumer; it also encompassed the human resources involved in the distribution processes. Currently, supply chains are viewed in the context of sustainability; sustainable supply chains are defined by cost reduction, efficient design and judicious use of resources in the supply channels (Carter and Liane Easton 2011, p. 49). On the other hand, consumer behaviour included all aspects of end user actions and expectations (purchase preferences, budget, and satisfaction) which had an impact on the supply chain. The variables in the data analysis section will include consumer behaviours (dependent variable), supply chain management, mobile commerce and online advertising as independent variables.

Research Brief

The focus on consumer behaviour in the supply chain was informed by the research gaps in the literature regarding the subject. Besides, the growing demand for sustainability in the supply chain had made it mandatory for corporations to understand the consumer needs beyond the conventional purchase cycles. Such requirements could only be satisfied if companies had comprehensive information regarding their clientele. Carter & Liane Easton (2011, p. 48) observed that sustainable supply chain management encompassed economic, social, and environmental performance; it was of note that the social facet covered organisational citizenship, values and ethics among other elements that had a direct impact on the consumers.

Research Questions

1. What is the effect of consumer behaviours on the modern SC?

2. Does the transition to mobile electronic commerce have a positive or adverse impact on the supply chains?

3. Do advertising and online reviews influence consumer purchase preferences?

4. What are the feasible solutions to the dynamics of consumer behaviours in the supply chain?

Research Objectives

1. To analyse the influence of modern consumer behaviours on the SCs

2. To evaluate the changes in the supply chain attributed to the adoption of mobile electronic commerce

3. To determine if online reviews and advertising had an impact on consumers behaviours in the supply chain

4. To recommend sustainable solutions to the challenges facing companies within the supply chains

Rationale

The focus on consumer behaviours and their effect on the supply chains was justified based on multiple considerations. The first consideration was the fact that the consumer behaviours of the millennial generations were markedly different from those of the earlier generations (Vries and Humphries 2009, p. 761; Griskevicius and Kenrick 2013, p. 372; Maity and Dass 2014, p. 34). The variation was attributed to advances in technology, paradigm shifts in the worldviews and disparities in economic growth had contributed to the changes in the consumer behaviours. Despite the new dynamics enumerated above, it was noted that there was a paucity of relevant literature concerning the impact of consumer behaviours on the supply chains in the UK. The available literature had only addressed consumer behaviours in the peripheries such as food waste (Young et al. 2018). Besides, the available body of research evidence was fragmented given that there was no detailed investigation of the impact of the consumer behaviours on modern supply chains. The inability by various stakeholders to appreciate the factors that motivated certain consumer behaviours had contributed to retail shrinkage and losses in the industry (Beck 2016, p. 21); such losses had an adverse impact on the long-term profitability of the affected corporations. Given the scope of the industry, it was not possible to accurately quantify the number of losses attributed to the inefficiencies in the supply chain. Therefore, the proposed study will address the limitations in the current literature.

Originality

The ingenuity of the proposed study lies in its empirical focus on the underlying factors that influence consumer behaviour and their impact on the supply chains – a research theme that has not been exhaustively explored.

Chapter Two: Literature Reviews

The core objective of the present research methodology was to provide a theoretical basis for the proposed study through the review of the previous body of research evidence and the findings reported by previous researchers.

Consumer Behavior

In contrast to the traditional consumers, the modern consumers well sophisticated – a quality that had been nurtured and sustained by the availability of computing devices, internet of things and the knowledge economy. The internet had had an impact on the consumer purchase intentions given that a significant proportion of the current consumer expectations were mediated by online reviews or electronic word of mouth (Trusov, Bucklin and Pauwels 2009, p. 90). Besides, computing devices had contributed to the growth of mobile electronic commerce (Einav et al. 2014, p. 489). Such dynamics had introduced new changes to the supply chains given that retailers were obliged to make deliveries to the consumer; therefore, they had to factor in the additional costs for delivery. Besides, online sales had shifted the engagement between the sales personnel and the companies’ physical interactions that defined sales at the retail store to online spaces.

The transition to online spaces provided additional benefits to the corporations in the supply chain given that the physical locations did not constrain their operations. Besides, the companies were able to record lower operational costs given that they did not have to rent large retail spaces or maintain large inventories in physical stores (Richards 2015, p. 8) – a factor that contributed to lower profitability.

A recent report by Barclays PLC had alluded to the need for sustainability and cost-effectiveness the supply chain to enable companies to remain profitable despite the inconsistencies in the consumer behaviours (Gilmartin 2016, p. 3). One of the fascinating aspects of modern consumers included their preference to shop towards the end of the year (Su & Zhang 2008, p. 1762). Therefore, suppliers of goods had to find alternate strategies for driving sales in the first, second and third quarters of the year. Such policies included the provision of additional discounts that were eroding the profit margins of the companies in the supply chain. Besides, the new regulations implemented in the supply chains had resulted in the adoption of a free-return policy, returning unsold items, and money back guarantees – a system that allowed consumers to return items that did not satisfy their expectations (Xiao, Shi and Yang 2010, p. 171).

The new return policy had introduced new challenges at the end of the supply chains given that they had to coordinate the return of the items to the manufacturers at their costs (Ding and Chen 2008, p. 865). The new changes in the supply chain segment had informed the adoption of new approaches such as sustainable retailing (Young et al. 2018, p. 1) and consumer-driven supply chains (IBM 2008, p. 1). Besides, consumers in the lower segment of the market had exhibited a higher preference for bargain hunting – a factor that suppressed the sale of higher priced items. The new dynamics in the market had necessitated the manufacturers and retailers to adopt new approaches such as cooperative advertising. Zhang et al. (2013, p. 345) noted that reference pricing mediated specific forms of consumer behaviours such as the focus on the reference price of products. In an attempt to address the new dynamics in the SC and the losses associated with the inconstancies, companies had adopted new measures such as regulation of secondary production processes, restricting of the logistical systems, streamlining the primary distribution system and the employment of the quick responses approach. The above-listed procedures helped to address the complexities of the extended lead times (Fernie et al. 2016, p. 895).

Theoretical Framework

Various theories have been advanced in an attempt to elucidate the underlying elements that continue to define consumer behaviours. Such theories include the motivation-behaviour theory, theory of planned behaviour, and theory of reasoned action (TRA) (Shumaila, Foxall and Pallister 2010, p. 1173). According to the TRA, consumer behaviours are primarily mediated by behavioural intentions. Additionally, the reaction of the consumer is mediated by the subjective norms and attitudes as illustrated in Figure 1. The variability of the human intentions is judged based on time and context.

Figure 1 Theory of reasoned action (TRA) (Shumaila, Foxall and Pallister 2010, p. 1174)

Similar to the TRA, the theory of planned behaviour posited that control, normative and behavioural beliefs guided consumer actions. For instance, it was noted that consumer behaviours towards halal foods were guided by the normative beliefs that the foods were in line with the requirements of the Islamic religion (Alam and Sayuti 2011, p. 12). Therefore, the desire to comply with religious considerations motivated the consumers to purchase halal certified foods. Therefore, all purchase decisions are expected to be in line with the consumer's purchase decisions. However, it was noted that both theories had core limitations given they assumed that intention mediated consumer behaviour. In an attempt to address this limitation and to elucidate the factors that mediated modern consumers to employ new technologies, the technology acceptance model (TAM) was postulated. The primary construct of the TAM was that the adoption of new processes by end-users was guided by the beliefs concerning the user-friendliness and the capability of the system to improve the quality of life (Shumaila, Foxall and Pallister 2010, p. 1177).

The operational processes of companies in the SC were elucidated using the resource-based view (RBV). The primary hypothesis advanced by the theory was that the competitiveness of companies was contingent on their abilities to efficiently use rare resources (Kraaijenbrink, Spender and Groe 2009, p. 6). Therefore, according to the resource-based theory, companies in the supply chain would only be able to sustain their operations if they were in a position to absorb new technologies and processes that would help them to address the requirements of the consumers. Such processes included demand forecasting for inventories in the SC (Shin and Tunca 2010, p. 1592).

Chapter Three: Methodology

The methodology section outlined the approach that will be employed in data collection. As noted in the previous subsection, the research objectives would be addressed through an empirical study. The proposed sample population will comprise of millennial consumers in the UK residing in London – the choice of London was informed by the fact that the city was the financial nerve centre of Europe and therefore observations made among respondents in the capital would be representative of the nation in general. The age of the respondents will be between 20 and 35 because this was the most significant population segment in the United Kingdom – a report by KPMG noted that there were approximately 13.8 million UK residents in this category (KPMG 2017, p. 5); this represented about 25 percent of the population. Such a large population could not be ignored; besides, millennial had the most variable purchase patterns compared to other generations (Ordun 2015, p. 2).

After considering the time and resources constraints, the present study will work with a sample population of 240 respondents sampled from eight leading corporations and a university in London. The sample population would comprise of both consumers and stakeholders in the supply chain (managers and team leaders of corporations in the UK supply chain). The random sampling approach was chosen to minimise the bias associated with other sampling techniques. Besides, the validity of the method in business research had been validated by other researchers such as (Njenga 2014, p. 20; Lengnick-hall et al. 2009, p. 67). The specific institutions and industry segments that the respondents would be derived from were depicted in Table 1, based on the proposed sampling approach, it was evident that the study population would be representative of the general retail segment in the UK given that all core industries were included in the sample population.

Table 1 Sampling approach

Name of Corporation

Industry

Proposed number of respondents

Tesco

Retail

30

GSK

Pharmaceuticals

30

University College London

Higher education

30

First Group or DHL

Logistics

30

Unilever

Consumer products

30

Nestle

Food and Beverages

30

Hilton Hotels

Hospitality

30

Virgin Atlantic

Aviation

30

Data Collection

Questionnaires will be employed in the data collection process; however, two forms of questionnaires will be developed. One set of questionnaires will feature a set of items that were unique to the consumers while the second questionnaires will feature questions that were unique to the stakeholders in the supply chain. The respondents would be recruited through insider assistance given that the researcher could not individually secure the commitment of the respondents. The researcher will adopt both face-to-face interviews and online interviews depending on the availability of the respondents. If the respondents are not available for the physical interview, the questionnaires will be emailed to the respondents, and they will be provided with a one week window to respond to the questions. Following the completion of the interview process, the respondents will be debriefed.

Data Analysis

The questionnaire responses derived from the study will be coded to facilitate statistical data analysis. The data will be analysed using SPSS statistical package; descriptive and inferential statistics will be employed to draw relations between the demographic variables, consumer behaviours and the success of the supply chains. The data analysis techniques will include, ANOVA, regression, Pearson correlation, and t-test. Additionally, the validity and reliability of the study findings will be affirmed using the Cronbach’s alpha test; higher scores would be an indicator of the reliability of the study findings.

Ethical Concerns

The hypothesised study would be conducted in line with the ethical research best practices. The sampled subjects would be briefed before the start of the interviews, following which they will be required to provide an informed consent indicating that they had agreed to take part in the survey. The questionnaires would only be provided to the respondents after receiving his or her consent form. The confidentiality of the respondents will be guaranteed; the respondents will not be required to divulge personal information. Besides, the respondents will have the latitude of participating in the interviews or not, without any form of coercion. Besides, the sanctity of the data will be maintained - no alterations will be made to the original data collected from the respondents.

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consumers.

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UNDP- Somalia. The University of Nairobi.

Ordun, G. (2015) ‘Millennial (Gen Y) Consumer Behavior Their Shopping Preferences and

Perceptual Maps Associated With Brand Loyalty’, Canadian Social Science, vol. 11, no. 4, pp. 1–16.

Richards, M. (2015) Supply Chain Implications In Regards To Consumer Behavior In Online

Retail: Site-To-Store Versus Direct Shipping. Texas Christian University

Shin, H. and Tunca, T. I. (2010) ‘Do Firms Invest in Forecasting Efficiently? The Effect of

Competition on Demand Forecast Investments and Supply Chain Coordination’, Operations Research, vol. 58, no. 6, pp. 1592–1610.

Shumaila, Y., Foxall, G. R. and Pallister, J. G. (2010) ‘Explaining internet banking behaviour:

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Su, X. and Zhang, F. (2008) ‘Strategic Customer Behavior, Commitment, and Supply Chain

Performance’, Management Science, vol. 54, no. 10, pp. 1759–1773.

Trusov, M., Bucklin, R. E. and Pauwels, K. (2009) ‘Effects of Word of Mouth versus Traditional

Marketing: Findings from an Internet Social Networking Site’, Journal of Marketing, vol. 73, no.

5, pp. 90–102.

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Household Economy, 1650 to the Present’, Economic history review, vol. 62, no. 3, pp. 761–763.

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