Can Culture Affect Prices? A Cross-Cultural Study of Shopping and Retail Prices
David Ackerman and Gerard Tellis
Cultural orientation can affect many parts of our lives, especially those that are social in nature such as family and friendships. This article examines how culture can influence an often overlooked but important social activity, shopping. We found cross-cultural differences in consumer shopping that correspond to substantial differences in retail prices. We argue that cultural differences between consumer groups lead to differences in shopping, which in turn influence the prices offered by stores that cater to the different groups.
This study compares recent Chinese immigrant and mainstream American cultural groups within Southern California. Chinese and American cultural systems are important, influential and grounder) in different values. Southern California is a multi-cultural society, with large populations of recent immigrants. It is an ideal laboratory to study cross-cultural differences within the same economic, political and legal systems.
Differences in money spent on consumer goods in Chinese and American cultures can be traced to differences in specific values and norms. We expect that Chinese search more before they purchase for two reasons. First, there is a social norm of frugality and sophistication in money handling among Chinese that contributes to greater concern for money spent in the purchase of all goods. Second, concern for others in collectivist societies may lead consumers to spend more money on public goods such as gifts, than do consumers raised in individualist cultures. However, the former consumers are likely to be more pragmatic in the purchase of products for private use. Since Chinese society is more collectivist than American society, we expected that Chinese would be more pragmatic and value-conscious in the purchase of grocery goods.
Consistent with these predictions, we found that these two cultural groups differ dramatically in their shopping patterns. Chinese inspect many more items and take much more time to shop than Americans do. They also use multiple senses when examining unpackaged food, and do so far more than American shoppers.
There were also differences between the way men and women shopped between the two cultures. For Chinese shoppers, women took more time to shop and considered more items before making a selection than men. For American shoppers, the reverse was true. Men took more time to shop and considered more selections before making a choice than women. These results suggest that there are dramatic differences in shopping behaviors between Chinese and American cultures.
The demographics of the two samples, such as education, income and family size were similar. Also, shoppers in both samples were in retail stores that provided familiar foods by employees who spoke their first languages. The results of both studies are consistent across a span of five years. The only difference between the two samples of consumers was culture. Thus, these differences cannot easily be explained by factors other than cultural orientation.
The differences in shopping correspond to clear differences in prices between grocery stores serving the two cultural groups. Prices were compared on food products that are commonly consumed in both cultures. Chinese supermarkets have substantially lower prices across a range of food products than do mainstream American supermarkets. These differences ranged from 37% for packaged goods of the same brand and size to more than 100% for meats and seafood of the same type and description. Both types of stores were in similar cities, serving clientele from similar education and economic levels. Operational costs between the two types of stores were similar, and thus did not provide an explanation for the differences in prices. Cultural differences in shoppers appear to be the most likely explanation for the differences in prices between Chinese supermarkets and non-ethnic regional supermarket chains.
Why should retailers care about shopping differences across cultures? Retailers that plan to enter foreign markets or those that target domestic markets with large proportion of ethnic or immigrant consumer, face substantially different cultural environments. This study suggests that differences in culture do affect firth behavior. In particular, certain cultural differences can lead to substantial difference in equilibrium prices in similar markets. Thus when planning strategy, retailers may have to offer a different marketing mix to attract each group of consumers.
Shopping behavior may also influence the type of retailers preferred by consumers. For example, fussy shoppers who take time to shop are not as likely to purchase food products over the Internet or at convenience stores. It is interesting to note that the Chinese supermarkets in this study were large but they were not one-stop shopping stores. The variety of non-food related categories was less than that of the mainstream supermarkets. But the depth of choices in food related categories was greater than in mainstream supermarkets. 
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