Efficiency determinants in retail stores: a Bayesian framework

This paper analyzes the impact of vertical integration, age, geographic expansion, and low price strategy on the cost efficiency of retail stores. We test our hypotheses using the innovative Bayesian frontier methodology. The data involve a sample of Spanish retail stores that operate in a highly competitive and dynamic environment. From the results, it is clear that cost efficiency is higher for stores that have: longer years in business, stronger geographical presence, and lower price offerings. Vertical integration, on the other hand, is negatively related to efficiency. Further discussions of these findings and related managerial implications are provided in the paper.     

Impact of customer loyalty and service operations on customer behaviour and firm performance: empirical evidence from UK retail sector

Abstract

Retail networks are striving to achieve competitive advantage by increasing value through loyalty and efficiency with a focus on service operations. As sales promotions have become an integral part of the retail supply chain planning, customer behavioural aspects based on loyalty and service operations have been challenged greatly. Subsequently, management capabilities, such as planning and timely replenishment, have become complicated tasks for many retail store managers. This study develops a model integrating retail network value and efficiencies with customer behaviour and performance. We validate the model using survey data from prominent U.K. retail store customers. Our data analysis shows that both loyalty and service operation attributes have positive significant impact on customer behaviour, while the service operation mediates the relationship between loyalty and customer behaviour. This result gives a new outlook to build managerial capability based on customer loyalty and service operations. Our results specifically show that the service operation attributes will indirectly influence the customers’ buying behaviour even in the presence of loyalty attribute such as promotion schemes. This result sends a strong signal to retail supply chain managers to offer customised promotions considering local community rather than having uniform sales promotion nationwide.     

Self‐Service Operations at Retail Stores: The Role of Inter‐Customer Interactions

Inter‐customer interactions are important to the operation of self‐services in retail settings. More specifically, when self‐service terminals are used as part of customers’ checkout processes in retail operations without the explicit involvement of retailers as the direct service providers, inter‐customer interactions become a significant managerial issue. In this article, we examine the impact of inter‐customer interactions at retail self‐service terminals on customers’ service quality perceptions and repeat purchase intentions at retail stores. We conduct a scenario‐based experimental design (N = 674) using a 2 × 2 factorial design in which inter‐customer interactions are divided into “positive” vs. “negative” and occur during the “waiting” or during the actual “transaction” stages of self‐services at a retail store. We use attribution theory to develop the hypotheses. The results demonstrate that, through their interactions, fellow customers can exert influences on a focal customer's quality perceptions and repeat purchasing intentions toward a retail store. Furthermore, these influences were impacted by how customers attribute blame or assign responsibility toward the retail store. Service operations managers should leverage these interactions by designing into self‐service settings the capacities and interfaces that are best suited for customers’ co‐production of their self‐service experiences.     

What Happens When Manufacturers Perform The Retailing Functions?

This study examines the effects of a relatively new channel structure on prices and sales in a large department store, which in recent years has switched the management of many of its product categories from a traditional retailer‐managed system to a manufacturer‐managed system. We find that the change caused overall retail prices to decrease. However, there was significant heterogeneity in the response across brands. In the cell phone category, brands with high market shares and inelastic demand did not change prices. In the watch category, the retail prices of relatively low‐end brands decreased while the prices of premium brands increased substantially after the switch. In addition to sales increases due to lower prices, we find that the channel structure change further caused sales to increase by 9–10% in the cell phone category and by 11–17% in the watch category. These results are consistent with previous theoretical predictions. We believe that our results provide important academic and managerial implications due to the increasing prevalence of manufacturer‐managed systems in the retail industry.     

The Backroom Effect in Retail Operations

Traditional inventory models fail to take into account the dynamics between the retail sales floor and the backroom, commonly used by retailers for extra storage. When a replenishment order for a given item arrives at a retail store, it may not fit on the allocated shelf space, making backroom storage necessary. In this article, we introduce the backroom effect (BRE) as a consequence of misalignment of case pack size, shelf space, and reorder point. This misalignment results from the fragmented nature of inventory policy decision making in the retail industry and affects basic trade‐offs in inventory models. We specify conditions under which the BRE exists, quantify the expected amount of backroom inventory, derive an optimal short‐term inventory policy, and assess the impact of the BRE on the optimal inventory policy and total costs. Our results indicate that ignoring the BRE leads to artificially high reorder points and higher total costs. The paper concludes with a discussion of theoretical and managerial implications.     

The Retail Planning Problem Under Demand Uncertainty

We consider the retail planning problem in which the retailer chooses suppliers and determines the production, distribution, and inventory planning for products with uncertain demand to minimize total expected costs. This problem is often faced by large retail chains that carry private‐label products. We formulate this problem as a convex‐mixed integer program and show that it is strongly NP‐hard. We determine a lower bound by applying a Lagrangian relaxation and show that this bound outperforms the standard convex programming relaxation while being computationally efficient. We also establish a worst‐case error bound for the Lagrangian relaxation. We then develop heuristics to generate feasible solutions. Our computational results indicate that our convex programming heuristic yields feasible solutions that are close to optimal with an average suboptimality gap at 3.4%. We also develop managerial insights for practitioners who choose suppliers and make production, distribution, and inventory decisions in the supply chain.     

An Examination of How Supervisors Influence Their Subordinates to Engage in Environmental Behaviors

Employee engagement in environmental behaviors is an important topic in operations management. Drawing upon stakeholder, commitment, and organizational support theories, this study creates and tests an empirical model of how store managers (i.e., supervisors) influence their direct reports (i.e., subordinates) to become engaged in environmental behaviors. Based on a dataset derived from supervisors and their subordinates who are employed at the same grocery store location across a large retail grocery chain, we test our study's nomological model and find support for the linkages proposed. Key research and managerial implications are discussed.     

Integrated retail decisions with multiple selling periods and customer segments: Optimization and insights

Integrating retail decisions on such aspects as assortment, pricing, and inventory greatly improves profitability. We examine a multi-period selling horizon where a retailer jointly optimizes assortment planning, pricing, and inventory decisions for a product line of substitutable products, in a market with multiple customer segments. Focusing on fast-moving retail products, the problem is modeled as a mixed-integer nonlinear program where demand is driven by exogenous consumer reservation prices and endogenous assortment and pricing decisions. A mixed-integer linear reformulation is developed, which enables an exact solution to large problem instances (with up to a hundred products) in manageable times. Empirical evidence is provided in support of a classical deterministic maximum-surplus consumer choice model. Computational results and managerial insights are discussed. We find that the optimal assortment and pricing decisions do not exhibit a simple, intuitive structure that could be analytically characterized, which reflects the usefulness of optimization approaches to numerically identify attractive trade-offs for the decision-maker. We also observe that suboptimal inventory policies significantly decrease profitability, which highlights the importance of integrated decision-making. Finally, we find that the seasonality of consumer preferences and supply costs present an opportunity for boosting the profit via higher inventory levels and wider assortments.     

Motivating Retail Marketing Effort: Optimal Contract Design

We study a distribution channel where a manufacturer relies on a sales agent for selling the product, and for investing in the most appropriate marketing effort. The agent's effort is hard to monitor. In addition, the cost of effort is the agent's private information. These impose challenges to the manufacturer in its endeavor to influence the agent's marketing effort provisions and to allocate profit between the two parties. We propose two contract forms. The franchise fee contract is a two‐part price schedule specifying a variable wholesale price and a fixed franchise fee. The retail price maintenance contract links the allowed retail price that the agent charges customers with total payment to the manufacturer and sales level. Under information asymmetry, for implementing either contract form, the manufacturer needs to offer a menu of contracts, hoping to invoke the “revelation principle” when the agent picks a certain contract from that menu. We show that the two contract forms perform differently, and each party's preference toward a particular contract form is linked with the total reservation profit level and/or the sales agent's cost type. We provide managerial guidelines for the manufacturer in selecting a better contract form under different conditions.     

French and British Top Managers' Understanding of the Structure and the Dynamics of Their Industries: a Cognitive Analysis and Comparison

This paper presents the findings of an exploratory study of the content of and differences between managerial frames of references with regard to the structure and dynamics of competitive environments. These frames of references are examined and compared at both the industry level and the country level; and the paper shows the influences of both industry and institutional structures and national culture on managerial thinking. It therefore contributes to the field of comparative management, as well as the growing interest in cognitive analysis in the field of management. The study is particularly significant since (a) its context is the rapidly changing industry environment of Europe, and (b) the managers are all involved in the development of strategies for their firms. Thirty three top managers (16 English and 17 French) were interviewed in four industries (brewing, car manufacturing, retail banking and book publishing) on their understanding of their industry and the strategy of their company. Content analysis of the transcribed interviews surfaces cognitive constructs which facilitate the identification of similarities and differences between managers, (a) within industries, (b) across industries, (c) within countries, (d) between countries and (e) between countries within the different industries. The analysis also provides means whereby the constructs can be represented in the form of cognitive maps.     

What help do you need for your fashion shopping? A typology of curated fashion shoppers based on shopping motivations

With the increasing digitalization of traditional retailing, omnichannel retailing has become a growing global phenomenon. The result is the emergence of a new type of shopper who expects a seamless shopping experience across digital and physical channels. As a hybrid between offline and online, the retail innovation curated retailing combines the advantages of these channels, particularly in the fashion and apparel industry. In curated fashion retailing, stylists assist consumers in their online shopping by providing product recommendations tailor-made to their personal preferences. Because consumer demands differ and most curated retailers still struggle with commercial and market performance, a thorough understanding of these shopper segments is vital for retailers. Therefore, this research develops a typology based on shopping motivations for adopting curated retailing in fashion and apparel. Applying cluster analysis to survey data from a main sample of 388 German consumers, four segments are identified: store-oriented online customizers, fashion-conscious changers, choice support seekers and independent apathetics. Using chi-square analysis and analysis of variance, the segments are profiled in terms of their demographic characteristics and actual purchase data. A validation sample consisting of 218 consumers in four European countries provides evidence for the predictive power of the study's results. This study extends the shopping motivation literature to the context of curated retailing and enhances knowledge about online shopper typologies in consulting-intensive retail sectors. The paper concludes with managerial recommendations.     

关系营销中客户回报计划对客户品牌选择行为的影响研究

本研究在考虑客户间异质偏好性的基础上,利用一组客户的纵贯交易数据建立消费者离散选择模型研究了回报计划对客户个体层面品牌选择行为的影响,并利用策略实验及潜分层模型对相关问题进行了系统深入的分析。结果表明,回报计划可以有效提升客户的品牌选择购买概率,是一种有效的关系营销策略;策略实验分析得到,竞争的环境下,对零售超市而言其最优决策策略不仅是实施回报计划,而且要努力争取客户成为自己回报计划的会员;此外,通过潜分层模型评估发现客户回报计划仅会对一类特定客户具有明显的刺激作用。最后讨论了结论对企业营销管理实践的意义。     

Supply Chain Management of Fresh Products with Producer Transportation*

This article considers a class of fresh‐product supply chains in which products need to be transported by the upstream producer from a production base to a distant retail market. Due to high perishablility a portion of the products being shipped may decay during transportation, and therefore, become unsaleable. We consider a supply chain consisting of a single producer and a single distributor, and investigate two commonly adopted business models: (i) In the “pull” model, the distributor places an order, then the producer determines the shipping quantity, taking into account potential product decay during transportation, and transports the products to the destination market of the distributor; (ii) In the “push” model, the producer ships a batch of products to a distant wholesale market, and then the distributor purchases and resells to end customers. By considering a price‐sensitive end‐customer demand, we investigate the optimal decisions for supply chain members, including order quantity, shipping quantity, and retail price. Our research shows that both the producer and distributor (and thus the supply chain) will perform better if the pull model is adopted. To improve the supply chain performance, we propose a fixed inventory‐plus factor (FIPF) strategy, in which the producer announces a pre‐determined inventory‐plus factor and the distributor compensates the producer for any surplus inventory that would otherwise be wasted. We show that this strategy is a Pareto improvement over the pull and push models for both parties. Finally, numerical experiments are conducted, which reveal some interesting managerial insights on the comparison between different business models.     

Betriebsformen im Automobilhandel �C Resultate einer empirischen Untersuchung

Whereas most retail industries are characterized by a great diversity of competitive retail formats, the automotive industry largely relies on one single retail format, the authorized car dealer. However, both automobile manufacturers and car dealers are trying to expand sales activities for automobiles by implementing new and innovative retail formats. A focal point raised within this context is the question about (potential) customers?? expectations regarding retail formats in the automotive industry. To be able to analyze these expectations, eleven attributes which are specific to automotive retail formats have been derived from a literature overview. The resulting taxonomy of attributes has then been used to systematically identify current and future retail formats in this particular industry. Using an hierarchical adaptive conjoint analysis model, the attributes describing different automotive retail formats have being extensively analyzed. By developing this specific conjoint analysis model, it is possible to both analyze single attributes and entire retail formats regarding their impact on the automotive market as well as particular market segments.     

中国成功零售企业定位点的实证研究

本文通过对全国样本的零售企业顾客满意度影响因子和评价数据的分析,对中国市场成功零售企业的定位点表现进行了实证研究,本文得出了有价值的五个结论:(1)成功的零售企业有明确的定位点;(2)成功的零售企业一般拥有1个主要、1个次好两个定位点;(3)商品、服务、价格、购物环境等,成为成功零售企业定位点选择的要素;(4)同一零售业态的成功企业可以有不同的定位点;(5)成功零售企业的非定位点都高于行业平均水平,而趋向成功的零售企业达到行业平均水平。     

Managing big data in the retail industry of Singapore: Examining the impact on customer satisfaction and organizational performance

Much of the research on big data analytics has been centered on technical or system development. Research has been carried out on the usage of big data analytics to understand customer relationships and experience, amongst others. Still, there is a lack of research in the retail industry considering big data management, examining the impact on customer satisfaction and organizational performance in the retail sector. Retailers explore analytics to gain a unified picture of their customers and operations across the store or online channels and make strategic decisions contributing to the growth of the retail industry. Thereof, this study has been conducted by majorly focusing on the Singapore retail industry to clarify the feasibility of big data management analytics. Quantitative research method was employed involving 500 participants from the retail industry of Singapore. The results of the study stated that amongst the different big data analytics utilized within the retail industry of Singapore, social media analytics had been majorly answered by the participants. Future researchers can study about the upcoming retail trends in Singapore and how the effects of big data analysis changed in the past few years and deal with the unexpected future recessions in the retail industry within Singapore.     

基于“拆分-填充-分解-集成”的我国线上零售额预测研究

线上零售额的准确预测是政府制定零售政策和发展规划的依据,也是电商和物流企业确定发展战略的基础。由于我国线上零售额数据具有样本量小、波动性大、受节日影响大、存在缺失值等特征,准确预测变得十分困难。为解决这个问题,本文提出了一种“拆分-填充-分解-集成”的预测框架。具体而言,首先将数据集拆分为实物零售数据与非实物零售数据两部分。其次,分别根据实物零售与非实物零售数据不同的缺失特征对样条插值法做了改进,提出了基于“样条插值-二分调整”的分解填充法以及基于“分段线性函数拟合-样条插值”的分解填充法,对两组数据进行缺失值填充。继而基于两组数据的不同特征,分别提出“乘法分解-ARIMA-移动平均”以及“STL分解-BP神经网络-灰色波形”的预测方法对两组数据进行预测。最后将两组预测结果集成,得到我国线上零售额的预测值。实证结果表明,本文提出的预测框架能较好地捕捉我国线上零售额数据的特征,具有很高的预测精度,且较传统的缺失值填充和预测方法在性能上表现更好。本文提出的“拆分-填充-分解-集成”预测框架,丰富了现有的缺失值填充与预测方法,并为预测实践提供了解决方案。     

The superstore format in Australia: Opportunities and limitations

This article outlines the development of both food superstores and non-food superstores (referred to as category killers) in Australia. Ten retail categories have been identified where there is a moderate to high rate of adoption of the superstore format (more than 20 outlets). These ten categories have been analyzed to identify the success factors in superstore development, which include accurate assessment of consumer one-stop shopping needs, sufficient finance, good store design skills and a balanced program of store expansion. The article explores the managerial implications for traditional retailers, for existing superstore retailers (especially the issue of optimal store size), for existing convenience store operators, department stores and for manufacturers and wholesalers. There are limitations of the superstore format in categories which are fashion orientated or where consumers require close distance convenience. These limitations actually provide opportunities to a myriad of retailers in fast food, dry-cleaning, banking, florists and the like, to reassess their locational and service delivery strategies. The superstore concept is clearly a revolution in itself, but its shock waves are provoking and stimulating second order mini-revolutions in traditional specialist stores, department stores, convenience stores, warehousing and manufacturing.     

Planning for retail change: a survey of municipal governments in Washington State

Effectively managing retail is essential for municipalities in terms of meeting land use planning goals, developing revenue sources through taxation, furthering economic growth and providing access to goods and services for residents. In 2013, a survey was conducted to examine the retail planning practices of all the 110 small- and medium-sized municipalities in Washington State. The online survey addressed data collection and analysis, land use, retail recruitment, inter-jurisdictional cooperation and evaluation. A large majority of respondents had retail planning goals in their comprehensive plans, yet only 30% dedicated staff for implementation. Jurisdictions would benefit from regional retail planning (especially in light of changes underway from e-commerce), yet the state tax structure places municipalities in competition.     

Linking inventory efficiency,productivity and responsiveness to retail firm outperformance: empirical insights from US retailing segments

This paper establishes an empirical model linking a retail firm’s inventory management effectiveness to superior competitive operational performance for specific product-line retail segments. Using 16?years of US retail firm financial data from the COMPUSTAT Fundamentals database across 12 distinct competitive retailing segments, we develop and test a time-series model that links several inventory management execution measures to the competitive operational outperformance of retail firms. The analysis presented provides strong evidence that measures of inventory management performance are not ‘one size fits all’ for the retail industry, and helps to explain why extant research has had difficulty linking inventory control policy effectiveness to operational performance advantages in retailing. We discuss the implications of these empirical findings on the study of inventory policy execution, and offer some guidance for further research.