Chain-store pricing and the structure of retail markets

This paper examines competition between chain-stores and independent retailers in the UK retail opticians' market. We demonstrate that the pricing policy adopted by chain-stores can determine the impact their entry has on independent retailers. Crucially, in this market the chain-store retailers set an identical national price across all local markets. Our results suggest that this pricing strategy lessens the detrimental effect competition from chain-stores has on independent retailers. © 2014 Springer Science+Business Media New York.

Singapore's online retail deviants:analyzing the rise of blogshops' power

Geography, retailing, and power are institutionally bound up together. Within these, the authors situate their research in Clegg's work on power. Online shopping offers a growing challenge to the apparent hegemony of traditional physical retail stores' format. While novel e-formats appear regularly, blogshops in Singapore are enjoying astonishing success that has taken the large retailers by surprise. Even though there are well-developed theoretical frameworks for understanding the role of institutional entrepreneurs and other major stakeholders in bringing about change and innovation, much less attention has been paid to the role of unorganized, nonstrategic actors-such as blogshops-in catalyzing retail change. The authors explore how blogshops are perceived by consumers and how they challenge the power of other shopping formats. They use Principal Components Analysis to analyze results from a survey of 349 blogshops users. While the results show that blogshops stay true to traditional online shopping attributes, deviations occur on the concept of value. Furthermore, consumer power is counter intuitively found to be strongly present in the areas related to cultural ties, excitement, and search for individualist novelty (as opposed to mass-production), thereby encouraging researchers to think critically about emerging power behavior in media practices.

How does personality affect trust in B2C e-commerce?

Trust is a critical component of successful e-Commerce. Given the impersonality, anonymity, and automation of transactions, online vendor trustworthiness cannot be assessed by means of body language and other environmental cues that consumers typically use when deciding to trust offline retailers. It is therefore essential that the design of e-Commerce websites compensate by incorporating circumstantial cues in the form of appropriate trust triggers. This paper presents and discusses the results of a study which took an initial look at whether consumers with different personality types (a) are generally more trusting and (b) rely on different trust cues during their assessment of first impression vendor trustworthiness in B2C e-Commerce.

Consumer trial, continuous use, and economic benefits of a retail service innovation:the case of the personal shopping assistant

Service innovations in retailing have the potential to benefit consumers as well as retailers. This research models key factors associated with the trial and continuous use of a specific self-service technology (SST), the personal shopping assistant (PSA), and estimates retailer benefits from implementing that innovation. Based on theoretical insights from prior SST studies, diffusion of innovation literature, and the technology acceptance model (TAM), this study develops specific hypotheses and tests them on a sample of 104 actual users of the PSA and 345 nonusers who shopped at the retail store offering the PSA device. Results indicate that factors affecting initial trial are different from those affecting continuous use. More specifically, consumers' trust toward the retailer, novelty seeking, and market mavenism are positively related to trial, while technology anxiety hinders the likelihood of trying the PSA. Perceived ease of use of the device positively impacts continuous use while consumers' need for interaction in shopping environments reduces the likelihood of continuous use. Importantly, there is evidence on retailer benefits from introducing the innovation since consumers using the PSA tend to spend more during each shopping trip. However, given the high costs of technology, the payback period for recovery of investments in innovation depends largely upon continued use of the innovation by consumers. Important implications are provided for retailers considering investments in new in-store service innovations. Incorporation of technology within physical stores affords opportunities for the retailer to reduce costs, while enhancing service provided to consumers. Therefore, service innovations in retailing have the potential to benefit consumers as well as retailers. This research models key factors associated with the trial and continuous use of a specific SST in the retail context, the PSA, and estimates retailer benefits from implementing that innovation. In so doing, the study contributes to the nascent area of research on SSTs in the retail sector. Based on theoretical insights from prior SST studies, diffusion of innovation literature, and the TAM, this study develops specific hypotheses regarding the (1) antecedent effects of technological anxiety, novelty seeking, market mavenism, and trust in the retailer on trial of the service innovation; (2) the effects of ease of use, perceived waiting time, and need for interaction on continuous use of the innovation; and (3) the effect of use of innovation on consumer spending at the store. The hypotheses were tested on a sample of 104 actual users of the PSA and 345 nonusers who shopped at the retail store offering the PSA device, one of the early adopters of PSA in Germany. Data were analyzed using logistic regression (antecedents of trial), multiple regression (antecedents of continuous use), and propensity score matching (assessing retailer benefits). Results indicate that factors affecting initial trial are different from those affecting continuous use. More specifically, consumers' trust toward the retailer, novelty seeking, and market mavenism are positively related to trial, while technology anxiety hinders the likelihood of trying the PSA. Perceived ease of use of the device positively impacts continuous use, while consumers' need for interaction in shopping environments reduces the likelihood of continuous use. Importantly, there is evidence on retailer benefits from introducing the innovation since consumers using the PSA tend to spend more during each shopping trip. However, given the high costs of technology, the payback period for recovery of investments in innovation depends largely upon continued use of the innovation by consumers. Important implications are provided for retailers considering investments in new in-store service innovations. The study contributes to the literature through its (1) simultaneous examination of antecedents of trial and continuous usage of a specific SST, (2) the demonstration of economic benefits of SST introduction for the retailer, and (3) contribution to the stream of research on service innovation, as against product innovation.

Optimising market share and profit margin:SMDP-based tariff pricing under the smart grid paradigm

Smart grid technologies have given rise to a liberalised and decentralised electricity market, enabling energy providers and retailers to have a better understanding of the demand side and its response to pricing signals. This paper puts forward a reinforcement-learning-powered tool aiding an electricity retailer to define the tariff prices it offers, in a bid to optimise its retail strategy. In a competitive market, an energy retailer aims to simultaneously increase the number of contracted customers and its profit margin. We have abstracted the problem of deciding on a tariff price as faced by a retailer, as a semi-Markov decision problem (SMDP). A hierarchical reinforcement learning approach, MaxQ value function decomposition, is applied to solve the SMDP through interactions with the market. To evaluate our trading strategy, we developed a retailer agent (termed AstonTAC) that uses the proposed SMDP framework to act in an open multi-agent simulation environment, the Power Trading Agent Competition (Power TAC). An evaluation and analysis of the 2013 Power TAC finals show that AstonTAC successfully selects sell prices that attract as many customers as necessary to maximise the profit margin. Moreover, during the competition, AstonTAC was the only retailer agent performing well across all retail market settings.

Decision support system for vendor managed inventory supply chain:a case study

Vendor-managed inventory (VMI) is a widely used collaborative inventory management policy in which manufacturers manages the inventory of retailers and takes responsibility for making decisions related to the timing and extent of inventory replenishment. VMI partnerships help organisations to reduce demand variability, inventory holding and distribution costs. This study provides empirical evidence that significant economic benefits can be achieved with the use of a genetic algorithm (GA)-based decision support system (DSS) in a VMI supply chain. A two-stage serial supply chain in which retailers and their supplier are operating VMI in an uncertain demand environment is studied. Performance was measured in terms of cost, profit, stockouts and service levels. The results generated from GA-based model were compared to traditional alternatives. The study found that the GA-based approach outperformed traditional methods and its use can be economically justified in small- and medium-sized enterprises (SMEs).

Making SENS:exploring the antecedents and impact of store environmental stewardship climate

Retailers increasingly recognize that environmental responsibility is a strategic imperative. However, little research has investigated or identified the factors that facilitate the successful implementation of environmentally responsible strategies across a network of customer-facing sales units (stores). We propose that a store manager’s ability to lead by example facilitates this process by fostering a supportive climate for store environmental stewardship (SENS-climate). By examining the influence of store managers’ actions on sales associates’ perceptions of the SENS-climate, as well as the subsequent impact on their performance—measured by margins, as well as sales of green and regular products—this study demonstrates that store managers can foster a SENS-climate by articulating their prioritization of environmental responsibility in their operational decisions. These positive effects are sustained by relational factors, such as the moderating effect of the store manager–sales associate dyadic tenure. In contrast, when store managers display high variability in their environmental orientation, it hinders the development of SENS-climate perceptions among sales associates. If sales associates perceive an enabling SENS-climate, they achieve higher margins and more green but fewer regular sales.

Influencing online grocery innovation:anti-choice as a trigger for activity fragmentation and multi-tasking

This paper reveals how activity fragmentation and multi-tasking become tools of consumer anti-choice in the online grocery sector: facilitated by new technology practices that positively encourage anti-choice. This is demonstrated through five long-term ethnographic case studies of households in the Portsmouth area of England. All the respondents made some form of conscious effort to minimize the amount of time they spent in ‘big box’ grocery stores. They spend more time at home in planning, searching, socializing online, cumulating and fulfilling internet orders than if they had visited a store: something that all could easily do. The findings suggest the need for constant innovation by internet grocers if they are to remain in tune with dynamic consumer lifestyles and advances in technology. Examples of upcoming technologies requiring retailers to re-think their internet strategies are discussed in view of the possibilities offered by activity fragmentation and multi-tasking.

Practitioner perspectives on supply chain management and logistics:a study from the United Kingdom

Purpose: The focus of this paper is the evolution of supply chain management (SCM) and logistics, as well as of the relationship between them. Its purpose is to generate deep insights into practice, particularly in relation to the fundamental issue of how practitioners define these key terms and phrases. Research approach: A largely qualitative study which involved in depth interviews with managers from two third party logistics providers (3PLs)/distributors, two retailers and two manufacturers from the United Kingdom. This interview protocol is based on the template used in a previous study published over a decade ago. Findings and originality: The data collected during the focussed interviews in the United Kingdom is contrasted with results from the earlier study. The findings suggest that there is variation between practitioners particularly in relation to what SCM is specifically concerned with. This variation mirrors to a large extent the differing orientations and emphases evident in the many theoretical definitions of SCM that have been proposed in recent decades. Research impact: The authors introduced the concept of refined replication in SCM research. This allows previous research to be built upon in order to test understanding of SCM theory and its practical implementation among SCM professionals in the United Kingdom. Practical impact: A profile of SCM understanding and adoption by firms in the United Kingdom is presented .

Asymmetric price transmission in EU petroleum markets

This research investigates the determinants of asymmetric price transmission (APT) in European petroleum markets. APT is the faster response of retail prices to cost increases than to cost decreases; resulting in a welfare transfer from consumers to fuel retailers. I investigate APT at 3 different levels: the EU, the UK and at the Birmingham level. First, I examine the incidence of asymmetries in the retail markets of six major EU countries; significant asymmetries are found in all countries except from the UK. The market share data suggest that asymmetries are more important in more concentrated markets; this finding supports the collusion theory. I extend the investigation to 12 EU countries and note that APT is greater in diesel markets. The cross-country analysis suggests that vertical and horizontal concentration at least partly explains the degree of asymmetry. I provide evidence justifying scrutiny over retail markets’ pricing and structure. Second daily data unveil the presence of APT in the UK fuel markets. I use break tests to identify segments with different pricing regimes. Two main types of periods are identified: periods of rising oil price exhibit significant asymmetries whilst periods of recession do not. Our results suggest that oligopolistic coordination between retailers generate excess rents during periods of rising oil price whilst the coordination fails due to price wars when oil prices are going downwards. Finally I investigate the pricing behaviour of petroleum retailers in the Birmingham (UK) area for 2008. Whilst the market structure data reveals that the horizontal concentration is higher than the national UK average, I find no evidence of APT. In contrast, I find that retail prices are sticky upwards and downwards and that firms with market power (majors and supermarkets) adjust their prices slower than other firms.

The influence of culture and market orientation on services brands:insights from Irish banking and retail firms

Purpose: This paper aims to examine the influence of the culture of the service firm on its interpretation of the role of the brand and on the development and implementation of its brand values. Design/methodology/approach: A grounded theory approach was used. Interviews were conducted with 20 managers within two leading banking firms in Ireland and two leading grocery retailers in Ireland. Findings: The development of the brand, and its role within the firm, is closely related to the firm's culture. The research shows obstacles and opportunities created by the cultural context of firms wishing to disseminate and embed a set of brand values. The paper presents an "involvement model" of brand values implementation and outlines changes required to implement brand values. Research limitations/implications: The study was bound by access to firms, and managers' availability. The authors sought an insight into the relationship between each firm's culture and its brands. They advocate quantitative research to further investigate the findings within these service sectors and to test proposed antecedents (transformational leadership, employee involvement) and outcomes (employee-based brand equity and consumer-based brand equity) of values adoption. Practical implications: The paper identifies aspects of retail and banking cultures which support or detract from brand development. In particular, it presents the learnings from successful brand values implementation in a clan culture, aspects of which are applicable across other cultures. Originality/value: The paper provides valuable insights into the role of the brand within the service firm and the positive and negative influence of context on brand values and their development and implementation. © Emerald Group Publishing Limited.

The Role of Price Floor in a Differentiated Product Retail Market

The ability of a manufacturer to enhance competition among its retailers by imposing a price floor was recently introduced in the literature. The purpose of this article is to revisit this anti-collusive explanation of the retail price maintenance in a more general model in which we introduce asymmetric retailers. We find that a manufacturer can amplify the retail market’s competition by imposing a price foor when retailers sell differentiated products. This result contradicts the prevailing concept of retail price maintenance.

Exclusive contracts in bilaterally duopolistic industries

The purpose of this article is to analyze the incentives of manufacturers to deal exclusively with retailers in bilaterally duopolistic industries with brand differentiation by manufacturers. With highly differentiated products exclusive contracts are shown to generate higher profits for manufacturers and retailers, who thus have an incentive to insist on exclusive contracting. However, if the products are close substitutes no exclusivity will emerge in equilibrium.

Strategic options of firms considering private label production

Private labels are a growing phenomenon globaly. Retailers become stronger and stronger by offering their own quality private label product for customers in all segments. Certainly they do not open factories to produce these items but rather search for dedicated private label producers or pressure branded goods manufacturers to produce it for them. The article deals with the strategic choices manufacturers can have and suggest the necessary factors that need to be evaluated to decide on the winning business model- in considering wether or not to enter in private label production- through literature and a case study on the ice cream market in Hungary.

Exclusive contracts with vertically differentiated products

In this paper we develop a simple model to analyze the effects of exclusive contracts in vertically integrated markets where both the upstream and the downstream market are characterized as oligopolies and manufacturers produce vertically differentiated products. We find that firms prefer to deal exclusively with retailers. If the extent of consumers' heterogeneity is small, manufacturers offer exclusive contracts unilaterally. On the other hand, if consumers' valuations differ significantly both manufacturers engage in exclusive contracting.