Title: Assortment, Price, and Convenience: Modeling the Determinants of Store Choice Discipline: Marketing Date: 09/2004 Download: DOWNLOAD PAPER Executive Summary: We study the impact on consumers store choice decisions of three key determinants convenience, price and product assortment.  Extending recent store choice research, we have  added assortment as a predictor, specified a more general structure for heterogeneity, and  estimated the store choice and hierarchical shopping list equations in a single stage to ensure  efficiency in parameter estimation.  Using household-level market basket data, we find  assortment to be a significant and generally positive predictor of store choice, though there is  much more heterogeneity across households in response to assortment than either convenience or  price.  These findings imply that larger assortments are not always better; optimal assortment  levels depend on the heterogeneous preferences of each retailers customers.  In fact, we estimate  a negative assortment elasticity for one of the four retailers in our dataset, suggesting that it  could increase market share by reducing assortments.  Examination of switching patterns  between high-, medium- and low-assortment retailers shows that there is far less switching  between the high- and low-assortment retailers than between retailers with more similar  assortment levels. This finding suggests the existence of assortment tiers (similar to the brand  quality tiers of Blattberg and Wisniewski, 1989), which price format (EDLP vs. HiLo)  designations do not capture.  Finally, we find a substantial positive correlation in household-level  response to assortment and price, with shoppers preferring either larger assortments to low prices  or vice versa.