Factors influencing the purchase of bread in a retail store in

Perth, Western Australia
Peter J. Batt and Bella Butler, Curtin University

KEY MESSAGES
Results suggest that multigrain and wholegrain breads are increasing in popularity as consumers seek more healthy
and nutritious food. While taste and texture and value for money are the major criteria consumers use in making their
decision to purchase bread in a retail store, interest in fair trade and sustainability is important to a significant number
of consumers. The majority of consumers (86%) indicate that they may be willing to pay up to 10% more to purchase
bread that has been derived from wheat that has been grown in a more sustainable manner. With more than 38% of
consumers showing a strong interest in promoting more sustainable practices, for grain growers, the potential to
extract a significant price premium from the greater adoption of environmental management systems at the farm level
may exist in high value niche markets.

BACKGROUND
As consumers become more affluent and more aware of the manner in which their food has been produced, food
safety, environmental sustainability, fair trade and equity are becoming more important in the consumers decision to
purchase.

Within the WA grains industry, numerous on-farm quality assurance systems including SQF 1000 and Better Farm IQ
have been introduced in an effort to not only improve food safety, but also to enhance productivity and profitability.
With major concerns about environmental and natural resource management including the degradation of terrestrial
and aquatic ecosystems, increasing soil erosion, atmospheric pollution and the projected increase in extreme climate
events and frequency, some grain producers have attempted to differentiate their product in the market through the
implementation of environmental management systems (EMS).

However, the adoption of EMS on-farm has been rather low, primarily because the majority of overseas customers
seem unwilling to pay any price premium. Similarly in the domestic market, Seymour (2007) and Pahl (2007) have
demonstrated that consumers are generally unwilling to pay a premium price. Furthermore, most consumers over-
estimate their desire to purchase “environmentally friendly” products because of a strong social pressure for them to
support the environment, even although very few consumers trust or understand what “environmentally friendly”
actually means (Pahl 2007).

While environmental considerations are currently a primary motivation for only small groups of highly committed
consumers, with an increasing awareness of climate change, carbon footprints and sustainability, consumers’ attitudes
may be slowly changing and becoming more mainstream. Industry, therefore, needs to be aware of the extent to which
these issues are gaining greater prominence within the consumers’ mindset and be ready to explore the opportunities
that may arise in a timely manner.

AIMS
This preliminary research project sought to explore consumers’ perceptions and attitudes towards the holistic quality of
the bread that they purchase and consume. Of particular interest was the importance of environmental sustainability,
fair trade and equity, as measured by the consumer’s willingness to pay a price premium for bread products that were
derived from more sustainable farming practices.

METHOD
Some 250 consumer intercept surveys were conducted across the Perth metropolitan area to evaluate consumer
awareness and attitudes towards food safety, environmental sustainability, fair trade and equity.

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Data was collected using a structured questionnaire. To participate, respondents had to answer two qualifying
questions whereby: (1) the respondent had to be personally involved in the decision to purchase bread; and (2) they
must have purchased bread for home consumption within the last 3 months.

Initial questions focused on the place of purchase, the frequency of purchase, the quantity purchased and the type of
bread purchased. In the questions that followed, respondents were asked to identify the criteria that they used in their
decision to purchase bread and the relative importance that they placed upon these attributes. This subsequently led
to an exploration of the respondents’ understanding of sustainable farming practices and their willingness to pay a
premium for bread that had been produced under an EMS.

As data collection in the majority of metropolitan shopping malls is not permitted, interviews were done at suburban
IGA stores and selected bakeries across the Perth metropolitan area. Interviews were conducted on different days of
the week and at different times of the week to ensure a random and representative sample was obtained.

Data was analysed using the statistical package, SPSS, version 17.0.

RESULTS
A total of 225 respondents participated in the study. Not unexpectedly, as women continue to do the majority of food
shopping for the household, most of the respondents (64%) were female. On average, there were at least three people
residing in the household. The gross household income for over 75% of the households ranged from $30,000 to
$150,000 per annum.

While some 20% of respondents baked some of the bread that was consumed in the household, on average, home
baked bread accounted for just 6% of the bread consumed in the household. The majority of the bread consumed in
Perth was purchased from a retail outlet (90%), with the three major supermarkets responsible for over 77% of sales.
Some 15% of the bread consumed was purchased from a retail bakery.

Sliced, mixed grain bread (41%) was the most popular style of bread purchased, followed by white and fibre enhanced
white bread (38%) and wholemeal (27%). To cater to the different tastes of household members it was not unusual for
the respondent to purchase two or more different types of bread.

In response to an open-ended question regarding their decision to purchase bread from a retail store, good value and
a competitive price (55%) were the variables most frequently cited by respondents, followed by freshness (26%),
quality (18%) and taste (17%). Health and nutrition (11%), the brand (11%), the type of grain (10%) and convenience
(10%) were the other most frequently cited responses. Issues such as natural, organic, low chemical or sustainable
were cited by less than 2% of respondents.

Respondents were then asked to indicate on a scale of 1 to 6 were 1 was “not at all important” and 6 was “very
important”, how important 20 variables selected from the literature were to them in making their decision to purchase
bread from a retail store. Principal component analysis revealed four factors that explained 69.3% of the variance.
Factor Four (taste and texture)(4.83) was the most important factor (Table 1).

Not unexpectedly, Factor Three (4.73), which was comprised of a competitive price, value for money and price
discounts/specials was the second most important factor. This would suggest that although many respondents had a
preferred brand, at the time of purchase, the choice was made from within a set of preferred brands, depending on
that which was perceived to offer the best value.

In the context of this study, it was encouraging to see that Factor Two captured two dimensions often associated with
sustainability: fair trade and equity and produced in a sustainable manner. However, the importance that consumers
attached to this factor (3.02) indicated that it was very much a secondary consideration behind price and taste and
texture.

Factor One (sales promotion) captured the various means for the promotion of the product. With a factor mean of just
2.15, this factor was of very little importance in the consumers’ decision to purchase bread in a retail store.

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 Table 1: Rotated factor matrix

Factor
1 2 3 4
Product information in-store 0.782
Advice from sales assistants 0.755
In-store tastings and demonstrations 0.739
Advertising on radio/tv/newspapers 0.650
Fair trade and equity 0.912
Produced in a sustainable manner 0.864
Competitive price 0.812
Value for money 0.786
Price discounts/specials 0.684
Texture 0.859
Taste 0.819

Eigenvalue 2.32 1.98 1.79 1.55

Per cent variance 21.04 17.95 16.27 14.08
Cumulative per cent variance 21.04 38.99 55.26 69.34
Cronbach’s alpha 0.842 0.936 0.800 0.850
Factor mean1 2.15 3.02 4.73 4.83

1
where 1 is “not at all important” and 6 is “very important”

Assuming that a loaf of bread cost $4.50 to purchase in a retail store, respondents were then asked what additional
price, if any, they would be willing to pay to support more sustainable farming practices. The majority of respondents
(86%) indicated that they would be willing to pay at least 10% more (Table 2).

Table 2: Propensity to pay

Number of respondents %
No more ($4.50) 32 14.4
10% more ($4.95) 109 49.1
15% more ($5.17) 41 18.5
20% more ($5.40) 27 12.1
25% more ($5.63) 7 3.1
30% more ($5.85) 6 2.8

However, within marketing circles, it is widely accepted that not all consumers are alike. Variables such as the
consumer’s demographics, socio-economic background, place of residence, values, attitudes and lifestyles are known
to influence purchase behaviour and consumption. Utilising a number of questions that included health and nutrition,
sustainability and animal welfare, convenience and taste, three unique clusters were identified based on the extent to
which respondents agreed or disagreed with the statements. A two stage clustering approach was utilised whereby
hierarchal cluster analysis was employed to identify the number of clusters and the K means clustering algorithm was
employed to identify the characteristics of each cluster.

Cluster One, the mainstream consumers, which comprised 48% of the sample, took a moderate position for most of
the variables under consideration, whereas those in Cluster Two (15%) showed little if any interest. Conversely, those
in Cluster Three (38%) showed a genuine interest in supporting more ethical and sustainable methods of food
production (Table 3).

Not unexpectedly, the members of Cluster 3 placed significantly more importance on purchasing bread that had been
produced in a more sustainable manner (Factor 2). Furthermore, they were more willing to pay a higher price premium
to purchase bread that had been produced in a more sustainable manner (Table 4).

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 Table 3: Consumer clusters

Cluster mean
1 2 3
I have a great interest in supporting more sustainable food production 3.70 2.39 5.02
I support those food businesses that are concerned about animal welfare 4.19 2.91 5.25
Good health and nutrition are more important than taste 3.90 2.61 5.11
I support local WA businesses 4.39 2.73 5.39
I am concerned about the welfare of others 4.48 2.67 5.42
I am opposed to the use of GMO in food 3.72 2.76 4.86
Purchasing healthy and nutritious food is more important than convenience 4.39 3.27 5.35
I am always willing to pay a premium to secure the best tasting food 3.58 2.82 4.60

where 1 is “I disagree a lot” and 6 is “I agree a lot”

Table 4: Propensity to pay by cluster

Cluster
1 2 3
No more ($4.50) 19 8 5
10% more ($4.95) 57 23 27
15% more ($5.17) 14 2 24
20% more ($5.40) 9 0 17
25% more ($5.63) 2 0 5
30% more ($5.85) 1 0 5
102 33 83

CONCLUSION
With the expansion of sales in both multigrain and wholemeal bread (Wahlquist 2010), it is evident that consumer
preferences are shifting towards the consumption of more healthy and nutritious food. It is also evident that consumers
are taking a greater interest in the holistic quality of the food that they consume, with over 38% of the population in the
Perth metropolitan area expressing a strong desire to purchase bread that had been produced in a more ethical and
sustainable manner. Fortuitously, assuming that the cost of an average loaf of bread is $4.50, the desire to support
more sustainable production systems is also reflected in the consumers’ willingness to pay a price premium.
For grain producers, it may now be an appropriate time to reconsider opportunities to differentiate their product in the
market through the adoption of EMS. However, for a price premium to be realized, the grain will need to be segregated
and subsequently sold to millers who produce and supply flour to customers in high value niche markets. As more
than 77% of the bread produced is currently sold through supermarkets, with all three major supermarkets
endeavouring to compete by offering lower prices and strong price competition between the major bakeries to gain
market share, opportunities to differentiate product on the basis of more ethical and sustainable production are more
likely to exist within one or more of the fresh bread franchises and specialist bakeries.

KEY WORDS
sustainability, equitable trade, price premiums

ACKNOWLEDGMENTS
This research was funded by the School of Management, Curtin Business School

Paper reviewed by: Janet Bornman, Chris Carter

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