The only way is up: retail format saturation and the demise of the American five and dime store, 1914-1941

We examine a classic ‘wheel of retailing’ episode – the abandonment of the five and dime pricing formula by American variety chains. These switched from a conventional product lifecycle, focusing on cost reduction through standardisation, to a reverse path up the ‘service cost - unit value’ continuum. We show that, rather than reflecting deteriorating managerial acumen, this was a response to the continued imperative for growth following retail format saturation. Firm-specific (rather than format-specific) competitive advantages were too weak for any chain to be confident it could win a within-format price war, making inter-format competition through raising price points more attractive.

The impact of big-boxes on local retail : What happens when IKEA comes to town?

The development of large discount retailers, or big-boxes as they are sometimes referred to, are often subject to heated debate and their entry on a market is greeted with either great enthusiasm or dread. For instance, the world’s largest retailer Wal-Mart (Forbes 2014) has a number of anti- and pro-groups dedicated to its being and the event of a Wal-Mart entry tends to be met with protests and campaigns (Decamme 2013) but also welcomed by, for instance, consumers (Davis & DeBonis 2013). Also in Sweden, the entry of a big box is a hot topic and before IKEA’s opening i Borlänge 2013, the first in Sweden in more than five years, great expectations were mixed with worry (Västerbottens-Kuriren 2011).The presence of large scale discount retailers is not, however, a novel phenomenon but a part of a long-term change in retailing that has taken place globally over the past couple of decades (Taylor & Smalling, 2005). As noted by Dawson (2006), the trend in Europe has over the past few decades gone towards an increasing concentration of large firms along with a decrease of smaller firms.This trend is also detectable in the Swedish retail industry. Over the past decade, the retailing industry in Sweden has increased by around 190 Billion SEK, and its share of GDP has risen from 2,7% to 2,9%, while the number of employees have increased from 200 000 to 250 000 (HUI 2013). This growth, however, has not been distributed evenly but rather it has been oriented mainly towards out-of-town retail clusters. Parallel to this development, the number of large retailers has risen at the expense of market shares of smaller independent firms (Rämme et al 2010). Thereby, the presence of large scale retailers is simply part of a changing retail landscape.The effects of this development, where large scale retailing agents relocate shopping to out-of-town shopping areas, have been heavily debated. On the one hand, the big-boxes are accused of displacing independent small retail businesses in the city-centers and the residential areas, resulting in, to some extent, reduced employment opportunities and less availability for the consumers - especially the elderly (Ljungberg et al 2006). In addition, as access to shopping now tends to require some sort of a motorized vehicle, environmental aspects to the discussion have emerged. Ultimately these types of concerns have resulted in calls for regulations against this development (Olsson 2010). On the other hand, the proponents of the new shopping landscape argue that this evolution implies productivity gains, the benefits of lower prices and an increased variety of products (Maican & Orth 2012). Moreover it is argued that it leads to, for instance, better services (such as longer opening hours) and a creative destruction transformation pressure on retailers, which brings about a renewal of city-centerIIretail and services, increasing their attractivity (Bergström 2010). The belief in benefits of a big box entry can be exemplified by the attractivity of IKEA, and the fact that municipalities are prepared to commit to expenses amounting up to hundreds of millions in order to attract the entry of this big-box. Borlänge municipality, for instance, agreed to expenses of about 350 million SEK in order to secure the entry of IKEA, which opened in 2013 (Blomgren 2009).Against this backdrop, the overall effects of large discount retailers become important: Are the economic benefits enough to warrant subsidies or are there, on the contrary, some very compelling grounds for regulations against these types of establishments? In other words; how is overall retail in a region where a store like IKEA enters affected? And how are local retail firms affected?In order to answer these questions, the purpose of this thesis is to study how entry of a big-box retailer affects the entry region. The object of this study is IKEA - one of the world’s largest retailers, with 345 stores, active in over 40 countries and with profits of about 3.3 billion (IKEA 2013; IKEA 2014). By studying the effects of IKEA-entry, both on an aggregated level and on firm level, this thesis intends to find indications of how large discount retail establishments in general can be expected to affect the economic development both in a region overall, but also on the local firm level, something which is of interest to both policymakers as well as the retailing industry in general.The first paper examines the effects of IKEA on retail revenues and employment in the municipalities that IKEA chose to enter between 2000 and 2011; Gothenburg, Haparanda, Kalmar and Karlstad. By means of a matching method we first identify non-entry municipalities that have a similar probability of IKEA entry as the true entry municipalities. Then, using these non-entry municipalities as a control group, the causal effects of IKEA entry can be estimated using a treatment-control approach. We also extend the analysis to examine the spatial impact of IKEA by estimating the effects on retail in neighboring municipalities. It is found that a new IKEA store increases revenues in durable goods trade with 20% in the entry municipality and the number of employees with 17%. Only small, and in most cases statistically insignificant, negative effects were found in neighboring municipalities.It appears that there is a positive net effect on durables retail sales and employment in the entry municipality. However, the analysis is based on data on an aggregated municipality level and thereby it remains unclear if and how the effects vary within the entry municipalities. In addition, the data used in the first study includes the sales and employment of IKEA itself, which could account for the majority of the increases in employment and retail. Thereby the potential spillover effects on incumbent retailers in the entry municipalities cannot be discerned in the first study.IIITo examine effects of IKEA entry on incumbent retail firms, the second paper in this thesis analyses how IKEA entry affects the revenues and employment of local retail firms in three municipalities; Haparanda, Kalmar and Karlstad, which experienced entry by IKEA between 2000 and 2010. In this second study, we exclude Gothenburg due to the fact that big-box entry appears to have weaker effects in metropolitan areas (as indicated by Artz & Stone 2006). By excluding Gothenburg we aim to reduce the geographical heterogeneity in our study. We obtain control municipalities that are as similar as possible to the three entry municipalities using the same method as in the previous study, but including a slightly different set of variables in the selection equation. Using similar retail firms in the control municipalities as our comparison group, we estimate the impact of IKEA entry on revenues and employment for retail firms located at varying distances from the IKEA entry site.The results generated in this study imply that entry by IKEA increases revenues in incumbent retail firms by, on average, 11% in the entry municipalities. In addition, we do not find any significant impact on retail revenues in the city centers of the entry municipalities. However, we do find that retail firms within 1 km of the IKEA experience increases in revenues of about 26%, which indicates large spillover effects in the area nearby the entry site. As expected, this impact decreases as we expand the buffer zone: firms located between 0-2 km experiences a 14% increase and firms in 2-5 km experiences an increase of 10%. We do not find any significant impacts on retail employment.

Optimal retail location and CO2 emissions

In this paper, the p-median model is used to find the location of retail stores that minimizes CO2 emissions from consumer travel. The optimal location is then compared with the existing retail location,and the excess CO2 emissions compared with the optimal solution is calculated. The results show that by using the environmentally optimal location, CO2 emissions from consumer travel could be reduced by approximately 25percent. 

Part-time employment within the Swedish retail business : – A study of part-time employment from a management perspective

Research question: How has the presence of PT employees affected the role of managers in the Swedish food retail business? Research purpose: The purpose of this paper was to describe the change that accompanies part-time employment from a management perspective, and particularly, describe how the presence of part-time employment has influenced the role of the manager within the Swedish food retail business. Conceptual framework: The main focused in this chapter is directed towards the role of managers. The basis of the conceptual framework consist of the model developed by Mintzberg including the ten managerial roles and Quinn's eight leadership roles and how the presence of PT employments might affect these roles. Methodology: In this paper, the authors adopted a qualitative design and used narrative inquiry as a research strategy in order to gain a deep understanding of the context. Semi- structured interviews have been collected through a self-selection sampling and the total number of participants was ten. Conclusions: Based on the findings of this paper the presence of PT employees have not influenced and changed the role of managers. The changes that have influenced and caused the change of the role of the managers constitutes of the increased workload, the delegations of tasks and responsibilities, changed positions, the change of the organisational structure of the individual store, and the increased workforce.

Pricing and competition in the Swedish retail market for electricity

Sweden, together with Norway, Finland and Denmark, have created a multi-national electricity market called NordPool. In this market, producers and retailers of electricity can buy and sell electricity, and the retailers then offers this electricity to end consumers such as households and industries. Previous studies have shown that pricing at the NordPool market is functioning quite well, but no other study has to my knowledge studied if pricing in the retail market to consumers in Sweden is well functioning. If the market is well functioning, with competition and low transaction costs when changing electricity retailer, we would expect that a homogeneous good such as electricity would be sold at the approximately same price, and that price changes would be highly correlated, in this market. Thus, the aim of this study is to test whether the price of Vattenfall, the largest energy firm in the Swedish market, is highly correlated to the price of other firms in the Swedish retail market for electricity. Descriptive statistics indicate that the price offered by Vattenfall is quite similar to the price of other firms in the market. In addition, regression analysis show that the correlation between the price of Vattenfall and other firms is as high as 0.98.

Defining the links between retail price strategies and price tactics

Retailers tend to become trapped in a price-promotion war where price issues are dealt with on a short-term basis, indicating almost solely tactical choices. Since price is the only part of the marketing mix providing direct revenues to the organisation, it should also be of strategic importance for the retailer. Not only in practice are price tactics often separated from pricing strategies, it is also the case in research where these are often studied in isolation from each other probably due to their individual complexity. This paper contributes to both the research area and practice by discussing these two complex areas together, and the essence of both strategy and tactics are defined. By considering the planning horizon for the retailer this paper further contributes by defining the links between price strategy and price tactic. The conclusion shows the importance of clearly establishing which analytical level is being analysed.

Assumptions of retail price strategy and price tactic decisions

This licentiate thesis sets out to analyse how a retail price decision frame can be understood. It is argued that it is possible to view price determination within retailing by determining the level of rationality and using behavioural theories. In this way, it is possible to use assumptions derived from economics and marketing to establish a decision frame. By taking a management perspective, it is possible to take into consideration how it is assumed that the retailer should strategically manage price decisions, which decisions might be assumed to be price decisions, and which decisions can be assumed to be under the control of the retailer. Theoretically, this licentiate thesis has its foundations in different assumptions about decision frames regarding the level of information collected, the goal of the decisions, and the outcomes of the decisions. Since the concepts that are to be analysed within this thesis are price decisions, the latter part of the theory discusses price decision in specific: sequential price decisions, at the point of the decision, and trade-offs when making a decision. Here, it is evident that a conceptual decision frame that is intended to illustrate price decisions includes several aspects: several decision alternatives and what assumptions of rationality that can be made in relation to the decision frame. A semi-structured literature review was conducted. As a result, it became apparent that two important things in the decision frame were unclear: time assumptions regarding the decisions and the amount of information that is assumed in relation to the different decision alternatives. By using the same articles that were used to adjust the decision frame, a topical study was made in order to determine the time specific assumptions, as well as the analytical level based on the assumed information necessary for individual decision alternatives. This, together with an experimental study, was necessary to be able to discuss the consequences of the rationality assumption. When the retail literature is analysed for the level of rationality and consequences of assuming certain assumptions of rationality, three main things becomes apparent. First, the level of rationality or the assumptions of rationality are seldom made or accounted for in the literature. In fact, there are indications that perfect and bounded rationality assumptions are used simultaneously within studies. Second, although bounded rationality is a recognised theoretical perspective, very few articles seem to use these assumptions. Third, since the outcome of a price decision seems to provide no incremental sale, it is questionable which assumptions of rationality that should be used. It might even be the case that no assumptions of rationality at all should be used. In a broader perspective, the findings from this licentiate thesis show that the assumptions of rationality within retail research is unclear. There is an imbalance between the perspectives used, where the main assumptions seem to be concentrated to perfect rationality. However, it is suggested that by clarifying which assumptions of rationality that is used and using bounded rationality assumptions within research would result in a clearer picture of the multifaceted price decisions that could be assumed within retailing. The theoretical contribution of this thesis mainly surround the identification of how the level of rationality provides limiting assumptions within retail research. Furthermore, since indications show that learning might not occur within this specific context it is questioned whether the basic learning assumption within bounded rationality should be used in this context.

The effects of Ikea and external shopping centers on regional trade and retail growth : A comparative analysis of Ikea’s establishment in Kalmar and Karlstad

This paper examines the effects of Ikea store establishment in Kalmar and Karlstad on the trade and retail inside the two cities, and as well on the trade and retail in the close neighboring municipalities and in further peripheral municipalities in both regions. After the establishment of Ikea store, Kalmar and Karlstad have experienced significant growth in trade and retail. The question, however, is how big this growth is in both cities? And how different locations on different distances from Ikea have been affected? What impact there was on different segments of the retail? How different business branches have been affected? How large the catchment area for the emerging new large-scale retail locations is? These questions, in addition to few others, are investigated in this paper. The thesis starts with an introduction chapter containing a background of the topic, problem description, the investigated questions, the purpose, and the outline of the paper. The next chapter includes the frame of reference which consists of literature review and theoretical framework about the external shopping centers and their impact on retail and regional trade development. It includes also information gathered from previous studies technical reports and other available sources about the subject. The third chapter includes description for the methods used to collect the primary and secondary data needed for the purpose of this study. Then the empirical framework which demonstrates the results of the conducted research followed by analysis and concluded in discussion and conclusion. Mixed methods are used as research strategy in this thesis, and the method to conduct the research is based on telephone interviews for the primary (qualitative) data, and documents and desk research for the secondary (quantitative) data. The gathered data is analyzed and designed in a way that allows the usage of comparative analysis technique to present the findings and draw conclusions. The results showed that new established Ikea retail store outside the city boundaries results with many effects on the city center and on the neighboring municipalities as well. The city center seems not to be affected negatively, but on the contrary positive effects were witnessed in both regions, these positive effects are linked to the increase inflow of customers from the external retail area which is known as spillover effect. III On the other hand, the neighboring towns and municipalities are more negatively affected especially with the trade of con-convenience goods as the consumers in these towns and municipalities start to go to the area of Ikea and the large external retail center to do their purchasing, the substitution effect is then said to be occurred. Moreover, the further far municipalities do not seem to be significantly affected by the establishment of Ikea. These effects whether positive or negative could be monitored by looking to few trade parameters such as the turnover, the sales index, and the consumers’ expenditure, these parameters can be very useful to measure the developments and changes in the trade and retail in a given place. 

Um estudo de caso sobre a entrada da Petrobrás no retail norte americano

Esta dissertação objetiva compreender como a entrada da companhia no mercado de retail Norte Americano poderia contribuir com sua estratégia. Acredita-se que sendo o mercado Norte Americano o maior consumidor e também importador mundial de gasolina (derivado de petróleo de alto valor agregado) este seria um mercado relevante para a expansão dos negócios da Petrobras. Dentre as principais razões destacamos: o tamanho deste mercado consumidor, vantagens logísticas, margens atrativas, diversificação do portfólio da companhia e; um posicionamento estratégico no sentido de ser reconhecida internacionalmente. Dentre os resultados desta dissertação pode-se destacar que o mercado de downstream norte americano é atrativo e, assim sendo, a Petrobras, como companhia de petróleo regional objetivando tornar-se uma grande empresa internacional de petróleo, deva estudar a possibilidade de entrar no mercado de retail norte americano. Não foram detectadas barreiras suficientemente fortes no que tange ao comportamento predatório nem custos afundados ou integração vertical que impeça a entrada de novos competidores. Finalmente, ao observar-se os resultados da fronteira eficiente, tem-se que não existe uma “melhor” opção de carteira e, caberá a companhia definir o quão exposto ao risco deseja estar e, ao mesmo tempo, qual o retorno mínimo aceitável.

Retail competition and shelf space allocation

We develop a model to study shelf space allocation in retail. Retailers compete for consumers not only choosing prices but also by the space allocated to each product on shelves. Our approach depart from the existing literature on shelf allocation, as we model the problem of price setting and shelf allocation in an oligopolistic retail market. We present a simple model of retail competition in which prices are dispersed in the crosssection of stores but shelf allocation is not.

The internationalization of the cosmetic retail industry: a history of success?

O setor de varejo foi cada vez mais global ao longo das últimas décadas, ilustrando visualmente a globalização dos negócios. Muitos varejistas estão apostando em expandir, as atividades ao nível internacional, a fim de evitar a saturação da atividade no país de origem deles (Alexander, 1990), de aumentar os lucros ou de imitar os concorrentes (Williams, 1992). Portanto, eles tornaram-se competidores globais consideráveis: eles fornecem novos produtos no mercado, além de ser mais influentes na cadeia de abastecimento global (Williams, 1992). Em relação à internacionalização do varejo, a indústria cosmética oferece com exemplos de muitas realizações bem- sucedidas. O objetivo deste trabalho é analisar o processo de internacionalização de vários varejistas globais, especializados na venda de produtos cosméticos. Mesmo que o campo de internacionalização no varejo já foi no passado o objeto de vários estudos, este trabalho visa a compreender, por meio da utilização de um estudo de caso múltiplo, a estratégia de retalhistas cosméticos que entram nos mercados internacionais. Por meio de um estudo qualitativo, a questão principal que orienta este trabalho será a de compreender se o varejo de cosméticos segue as mesmas estratégias de negócio e estratégias de marketing para se tornar global. O estudo de casos múltiplos foi escolhido a fim de comparar quatro empresas, especializadas na venda de produtos de cosmética, com atividades no exterior. Os resultados claramente exibem diferenças entre os processos de internacionalização, baseado especialmente na nacionalidade das empresas sob analise.

The performance of open-end Brazilian fixed income mutual funds for retail clients

From a financial perspective, this dissertation analyzes the Brazilian mutual fund industry performance for an average retail client. The most representative funds for the local population, that are the fixed income open-end ones, will be selected and their performance will be measured aiming to answer if clients of this industry obtained a proper return over their investments in the period between August 2010 and August 2013. A proper return will be understood as the preservation of the purchasing power of the individual´s savings, what is achieved with a positive performance of a mutual fund after discounting taxes, administrative fees and inflation. After obtaining an answer for the previous question, this dissertation will explore a possible alternative solution: Tesouro Direto, that is an example of a financial approach that could foster the disintermediation between savings and investments through electronic channels. New electronic platforms, with a broader scope, could be utilized to increase the efficiency of funding productive investments through better remunerating Brazilian savings. Tesouro Direto may point towards a new paradigm.

Modified value stream mapping of airport check-in procedures

In June 2014 Brazil hosted the FIFA World Cup and in August 2016 Rio de Janeiro hosts the Summer Olympics. These two seminal sporting events will draw tens of thousands of air travelers through Brazil’s airports, airports that are currently in the midst of a national modernization program to address years of infrastructure neglect and insufficient capacity. Raising Brazil’s major airports up to the standards air travelers experience at major airports elsewhere in the world is more than just a case of building or remodeling facilities, processes must also be examined and reworked to enhance traveler experience and satisfaction. This research paper examines the key interface between airports and airline passengers—airport check-in procedures—according to how much value and waste there is associated with them. In particular, the paper makes use of a value stream mapping construct for services proposed by Martins, Cantanhede, and Jardim (2010). The uniqueness of this construct is that it attributes each activity with a certain percentage and magnitude of value or waste which can then be ordered and prioritized for improvement. Working against a fairly commonly expressed notion in Brazil that Brazil’s airports are inferior to the airports of economically advanced countries, the paper examines Rio’s two major airports, Galeão International and Santos Dumont in comparison to Washington D.C.’s Washington National and Dulles International airports. The paper seeks to accomplish three goals: - Determine whether there are differences in airport passenger check-in procedures between U.S. and Brazilian airports in terms of passenger value - Present options for Brazilian government or private sector authorities to consider adopting or implementing at Brazilian airports to maximize passenger value - Validate the Martins et al. construct for use in evaluating the airport check-in procedures Observations and analysis proved surprising in that all airports and service providers follow essentially the same check-in processes but execute them differently yet still result in similar overall performance in terms of value and waste. Although only a few activities are categorized as completely wasteful (and therefore removed in the revised value stream map of check-in activities), the weighting and categorization of individual activities according to their value (or waste) presents decision-makers a means to prioritize possible corrective actions. Various overall recommendations are presented based on this analysis. Most importantly, this paper demonstrates the viability of using the construct developed by Martins et al to examine airport operations, as well as its applicability to the study of other service industry processes.

De touch: extending service channels in an airport through touch technologies

This project aimed to create a communication and interaction channel between Madeira Airport and its passengers. We used the pre-existent touch enabled screens at the terminal since their potential was not being utilised to their full capacity. To achieve our goal, we have followed an agile strategy to create a testable prototype and take advantages of its results. The developed prototype is based on a plugin architecture turning it into a maintainable and highly customisable system. The collected usage data suggests that we have achieved the initially defined goals. There is no doubt that this new interaction channel is an improvement regarding the provided services and, supported by the usage data, there is an opportunity to explore additional developments to the channel.