Power and Competition in the UK Retail Grocery Market

The UK retail grocery market is widely recognized as being oligopolistic. This has raised concerns over the level and use of power by the leading retailers. This paper considers the changes in the UK retail grocery market in the context of a discussion of power. This discussion focuses on the possibility of a dominant chain arising in the market. Vertical and horizontal relationships and price and non-price competition form the organizing principles of the analysis. Policy implications are suggested and other conclusions are drawn.     

Strategic Motive for Introducing Internet Channels in a Supply Chain

Rapid advances of information technology in recent years have enabled both the manufacturers and the retailers to operate their own Internet channels. In this study, we investigate the interaction between the capabilities of introducing the Internet channels, the pricing strategies, and the channel structure. We classify consumers into two segments: grocery shoppers attach a higher utility from purchasing through the physical channel, whereas a priori Internet shoppers prefer purchasing online. We find that when the Internet shoppers are either highly profitable or fairly unimportant, the manufacturer prefers to facilitate the channel separation either through his own Internet channel or the retailer's. In the intermediate region, however, the manufacturer encroaches the grocery shoppers and steals the demand from the retailer's physical channel. With horizontal competition between retailers, a priori symmetric retailers may adopt different channel strategies as a stable market equilibrium. The manufacturer may willingly give up his Internet channel and leverage on the retailer competition. When the manufacturer sells through an online e‐tailer, Internet shoppers may be induced to purchase through the physical channel. This reverse encroachment strategy emerges because selling through the e‐tailer leads to a more severe double marginalization problem.     

An optimal credit policy to increase supplier's profits with price-dependent demand functions

This paper deals with the problem of determining an optimal length of credit period from the perspective of supplier. We assume that a retailer jointly determines the unit retail price and order size to maximize profit when he/she purchases a product for which the supplier offers a trade credit. Two widely used demand functions are adopted for the study in which demands are decreasing functions of the retail price. A procedure is presented which shows how to achieve an optimal length of credit period for suppliers. The effects of credit period on the behaviour of retailers are also investigated using an example.     

基于返回策略的供应链网络竞争绩效研究

针对由多个供应商和多个零售商组成的结构可变的供应链网络,分别在零售商之间基于订货量以及价格两种竞争方式下,分析了供应商均不采用返回策略、部分采用返回策略以及均采用返回策略六种情景下供应链网络的竞争绩效。研究发现当零售商基于订货量竞争时,供应商采用协调策略对于其零售商客户及供应链均为占优策略,零售商更换供应商的成本将会影响供应商的收益以及采用协调策略的积极性;当零售商之间基于价格竞争时,返回策略在一定程度上仍能够激励零售商增加订货量,且对供应链渠道的利润绩效及其稳定性均具有一定的改善作用。     

Strategy and Opportunism in European Retail Internationalization

Europe in recent years has witnessed an increase in the amount of cross‐border operations by retailers. The retail sector has undergone substantial structural change characterized by the emergence of a group of rapidly‐growing large retailers, a redefinition of the balance of internalized and externalized functions and a need to respond to the cultural variety present in Europe that becomes evident as retailers move out of their domestic markets. The over‐arching requirement for these large retailers is to grow and gain scale economies. Internationalization of operations has become a requirement for these large firms. It is argued that the established academic conceptualizations of internationalization are unsatisfactory in not addressing this overriding requirement for growth. There is great variety in the international activity in retailing, with the absence of pattern being one of the few generalities. It is proposed that consideration of opportunism may be a better way to gain understanding of retailer activity than trying to fit activity into deterministic strategic models. The experiences of five West European retailers entering and building retail networks in Poland is provided as evidence for this view. Suggestions are made for future work exploring this issue of opportunism as a process in international retailing.     

基于“搭便车”行为的双渠道供应链库存竞争和促销策略

本文建立了由一个制造商和一个零售商组成的双渠道供应链模型，研究了随机需求下"搭便车"行为和渠道间缺货替代行为对供应链库存竞争与促销决策的影响。结果表明：分散式决策下，网络渠道替代率越高，零售商的最优订购量越大，同样的零售渠道替代率越高，制造商会为网络渠道提供更多的库存；而"搭便车"行为对零售商与制造商订购量的影响则取决于渠道替代率的变化，但"搭便车"行为会降低零售商促销努力水平。数值分析发现：分散式决策下，零售商最优订购量随"搭便车"行为的增加而减少。然而制造商的最优库存量并非随着"搭便车"行为程度的增加而增加，不同的是制造商网络渠道最优库存量取决于市场需求对传统零售渠道促销努力水平的弹性系数，即制造商网络渠道最优库存量随"搭便车"行为的增加先增加后减少。通过比较发现在不同的"搭便车"行为程度、传统零售渠道替代率、网络渠道替代率下，集中式决策下供应链期望收益大于分散式决策下供应链期望总收益。     

Replenishment Strategies for Micro‐Retailers in Developing Countries

When formal distribution channels are absent in developing countries, micro‐retailers travel a long distance to replenish their stocks directly from suppliers. This “informal” replenishment strategy is inefficient due to high imputed travel costs involved in the replenishment process. To improve efficiency, one “hybrid” replenishment strategy has emerged under which one of the micro‐retailers in a neighborhood, while continuing its own retail business, also operates as a wholesaler to serve other micro‐retailers in the neighborhood. A major obstacle for the transition from the informal strategy to the hybrid strategy is that the micro‐retailers are reluctant to source from a wholesaler who also competes with them in the retail market. Thus, it is not clear when the micro‐retailers adopt the hybrid strategy instead of the informal strategy. Meanwhile, the micro‐retailers may prefer the “formal” strategy: a traditional replenishment strategy under which one of the micro‐retailers relinquishes its retail business and operates purely as a wholesaler. We examine a situation when competing micro‐retailers contemplate with the three potential aforementioned replenishment strategies. Our equilibrium analysis of the two‐store model reveals that the dominant strategy is: (a) the hybrid strategy when the travel cost is high; (b) the formal strategy when the travel cost is medium; and (c) the informal strategy when the travel cost is low. This key insight is shown continue to hold when we extend the two‐store model to incorporate other issues including: quantity discounts from the supplier, variable operating costs, price competition, local monopolies, and different decision sequences. One additional finding is that the transition from the informal strategy to the hybrid strategy could benefit consumers if the micro‐retailers receive quantity discounts from the supplier. Furthermore, when there are more than two stores, we show that the formal strategy is never dominant. Moreover, when the number of stores increases, the hybrid strategy becomes more preferable to the informal strategy.     

制造商应对强势零售商的战略反应及对我国零售业开放的启示

在渠道关系中,制造商与零售商的利益往往是相互冲突的,制造商面对强势零售商时处于弱势,而面对弱势零售商时则处于强势。基于不同时期零售商零售成本对称与不对称, 以及强势零售商向制造商规定供货价格而弱势零售商接受制造商的供货价格这两个前提进行分析,通过图形和数学模型来分析制造商的2种战略行为——定价战略和促销战略,以及制造商如何通过这2种战略使其利润最大化。同时,结合中国零售业完全开放的国情,讨论在零售成本非对称的情况下,制造商的2种战略行为对增加其自身利益的有效性及对中国零售业的启示。     

零售商嵌入专业技术的营销策略研究

考虑零售商和技术提供商的二元结构,本文构建理论模型分析零售商嵌入专业技术的营销策略选择问题,并探讨技术嵌入以及技术营销策略对决策结果的影响。研究发现,技术提供商作为博弈的领导者在获取边际利润方面具有优势且相对稳定;并且对技术提供商而言,让零售商进行技术营销的策略是最优的。然而,对于零售商而言,不同技术营销渠道下的利润大小会受到技术产出、技术营销、以及营销努力博弈的影响,因此零售商的策略选择较为复杂。在一定的条件下,零售商可以嵌入产出贡献度较大的专业技术,并优先选择自己进行技术营销以增加技术营销贡献度。这一策略有利于零售商快速实现利润最大化,并与技术提供商实现双赢。     

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.     

双渠道供应链的产品互补合作策略研究

在供应链中,直销渠道和零售渠道商品的可替代性导致渠道冲突。考虑零售商在传统渠道中附带销售直销渠道商品的互补品,建立了渠道产品互补合作的供应链Bertrand博弈模型。发现若消费者对零售商处互补品的价格敏感,则供应链中互补品的价格下降,制造商产品的渠道价格增加,同时直销渠道的需求和收益均上升,对零售渠道中制造商产品的销售和收益增加有利。利用上述模型,通过算例得出,如果零售商选择合适的互补品在零售渠道进行销售,将能促进双方收益的增加,渠道产品互补合作策略是可行的。     

EDLP versus Hi–Lo pricing strategies in retailing—a state of the art article

The pricing strategy is seen as one of the five most important priorities in retail management. Over the past years, price wars have emerged and price has become an even more focal point of retailers’ agendas. Especially grocery retailers operate on very low margins and have fallen into a price-promotion trap, pressured both by competition and consumers. In times of intensive competition it is getting even more important for retailers to focus on profitable and successful pricing strategies. Furthermore, retailers act under complex circumstances, especially because of broad assortments, and should therefore define a clear framework for their pricing strategy. There are several studies which have been published on pricing strategy in retailing during the last years, but no comprehensive literature review of this topic with its determinants and outcomes exists. Based on the theoretical and conceptual foundations of pricing strategy in retailing, all relevant conceptual and empirical studies are analyzed. First, the different definitions of pricing strategy in retailing are examined and systemized. Furthermore, a division into studies on determinants and outcomes of pricing strategy in retailing is included followed by a discussion of main and further results. Based on this analysis of the existing literature, avenues for further research are identified and prioritized.     

Joint Ordering and Pricing Strategies for Managing Substitutable Products

Starr and Rubinson (1978) develop a model to establish the relationship between product demand and relative prices. The notion of relative prices motivates us to consider a situation in which a retailer would either charge the same retail price for all products if he adopts a ‘fixed’ pricing strategy or charge different prices for different products if he adopts a ‘variable’ pricing strategy. In this paper, we develop a base model with deterministic demand that is intended to examine how a retailer should jointly determine the order quantity and the retail price of two substitutable products under the fixed and variable pricing strategies. Our analysis indicates that the optimal retail price under the variable pricing strategy is equal to the optimal retail price under the fixed pricing strategy plus or minus an adjustment term. This adjustment term depends on product substitutability and price sensitivity. We also present two different extensions of our base model. In the first extension, our analysis indicates that the underlying structure of the optimal retail price and order quantity is preserved when there is a limit on the total order quantity. The second extension deals with the issue of retail competition. Relative to the base case, we show that the underlying structure of the optimal retail price and order quantity is preserved in a duopolistic environment. Moreover, our analysis suggests that both retailers would adopt the variable pricing strategy at the equilibrium.     

The Role of Slotting Fees in the Coordination of Assortment Decisions

Large numbers of new products introduced annually by manufacturers may strain the relationship between retailers and manufacturers regarding assortments carried by retailers. For example, many retailers in the grocery industry will agree to broaden their assortments only if the manufacturer agrees to pay slotting fees for the new products. We investigate the role played by slotting fees in coordinating the assortment decisions in a supply chain. To do so, we study a single‐retailer, single‐manufacturer supply chain, where the retailer decides what assortment to offer to end customers. Double marginalization results in a discrepancy between the retailer's optimal assortment and the assortment that maximizes total supply chain profits. We consider a payment scheme that is analogous to slotting fees used in the grocery industry: the manufacturer pays the retailer a per‐product fee for every product offered by the retailer in excess of a certain target level. We show that, if the wholesale price is below some threshold level, this payment scheme induces the retailer to offer the supply‐chain‐optimal assortment and makes both parties better off.     

A Comparison of Organic and Conventional Fresh Produce Buyers in the Boston Area

Food safety concerns and the demand for organically grown produce have increased significantly in the United States over the last decade. Key differences in lifestyle characteristics, food safety attitudes and beliefs, perceived food safety risks, and valuation of health risk reductions between organic and conventional food buyers remain largely unknown, however. To better characterize how buyers of organic fresh produce differ from their conventional counterparts, over 700 food shoppers were sampled from ten major retail stores in the Boston area. Survey results show that self-reported organic buyers are more likely than conventional buyers to engage in a variety of health-promoting and environmentally friendly behaviors. Organic buyers are less trusting of federal food safety agencies than are conventional buyers, and perceive greater benefits associated with organically grown produce than do their conventional counterparts. Further, organic buyers have significantly higher risk perceptions than do conventional buyers for food safety hazards associated with conventionally grown produce. Compared to conventional buyers, organic produce buyers also perceive significant risk reductions associated with switching to organically grown produce and are willing to pay a higher price to reduce perceived food safety risks. Few sociodemographic differences between buyer types were observed, possibly due to how organic and conventional food stores were matched. Survey findings highlight the need for greater public education about a range of food safety issues and farming practices to ensure that consumers are making informed decisions in the marketplace.     

Demand uncertainty and manufacturer returns policies for style-good retailing competition

This paper investigates the role of the returns policy in the co-ordination of supply chain: A manufacturer provides a return policy for unsold goods to two competing retailers who face uncertain demand. The problem is described with a game theory structure: The manufacturer, as the Stackelberg leader, first commits a returns price to the retailers under a given wholesale price. Upon receiving this information, two competing retailers, as followers, make decisions for their retail price and order size, in which the process of pricing and ordering is played as Nash equilibrium. Anticipated the retailers’ responses, the manufacturer designs his returns policy. Adopting the classic newsboy problem model framework and using numerical study methods, the study finds that the provision of a returns policy is dependent on the market conditions faced by the retailers. The paper also analyses the impact of demand variability on the decisions of optimal retail price and order quantity and profit reallocation between the manufacturer and the retailers. Finally, it investigates how the competing factor influences the decision-making of supply chain members in response to uncertain demand and profit variability.     

Impact of Customer Traffic and Service Process Outsourcing Levels on e‐Retailer Operational Performance

Many service firms deliver services via a mix of internally developed and delivered (i.e., insourced) and externally developed and delivered (i.e., outsourced) service processes. Service process outsourcing is especially common in e‐retailing. Portions of e‐retail customer ordering processes and delivery processes can be digitized and contracted to third‐party vendors. Via outsourcing, service systems change from dyadic to triadic. Prior research examines consumer perceptions of dyadic (consumer to e‐retailer) outcomes, but little research considers service co‐delivery with outsourcing partners (i.e., triadic systems). Literature also does not focus on joint associations of service process outsourcing and customer traffic with e‐retailer operations. We analyze several years of data on North American e‐retailers. We first examine factors associated with e‐retailer outsourcing levels, for front‐end and back‐end service processes. We observe customer traffic is positively associated with future outsourcing. We then examine how outsourcing moderates associations between contemporaneous customer traffic and e‐retailer operational performance, as measured by numbers of processed orders, website response times, and customer satisfaction. Results suggest outsourcing levels are associated with operational outcomes, yet surprisingly, high outsourcing and high traffic jointly may not benefit e‐retailers.     

购物中心顾客行为的跨国比较

本文通过对问卷调查所得数据的处理、分析,比较了中、美和智利三国顾客在购物中心的惠顾行为和购买行为上的异同。分析与比较的结果显示：三国购物中心的顾客在人口统计特征、惠顾动机、惠顾原因、惠顾行为和购买行为上均有显著差异。本研究的结果有助于中国购物中心的发展商、供应商、零售商和其它经营者更明确地认识中国购物中心顾客行为的特点,从而更有效地从事有针对性的市场营销活动,也有助于那些致力于走出国门的工商企业了解国外购物中心及顾客行为的特点,并据此设计与开发产品、选择营销渠道、制定营销策略。     

Simulation analysis of cold chain performance based on time–temperature data

Perishable goods are a fundamental source of revenue for the retail sector; their management, however, constitutes a severe challenge for retailers and supply chain partners. A significant cost in particular is the fraction of products perished through the supply chain, which also constitutes an ethical and environmental concern. Supply chain organisation and operative characteristics have a significant influence on this matter, as in fact ensuring suitable temperature conditions for the stock-keeping units throughout the supply chain is mandatory for perishable products. Recent developments in sensing and communication technologies allow detailed monitoring and control of cold chain; however, depending on the characteristics of the supply chain, an inherent risk of perished products is often inevitable, even in the hypothesis of perfect control. This article proposes a methodology to evaluate the performance of a cold chain in terms of expected product quality at the retail store, and to estimate the expected fraction of perished products, according to the supply chain configuration. The approach is based on Monte Carlo simulation, and implements referenced shelf-life models. A real application is also presented, involving a preliminary analysis and mapping of the supply chain activities based on time–temperature data, in order to demonstrate the practicability of the approach proposed.     

THE EFFECT OF RETAIL PROMOTIONAL ACTIVITIES ON SALES*

This article reports the formulation and results of a multiple equation econometric model to relate retail sales by brand and package size to retail promotional variables for a branded, frequently purchased grocery product. Primary emphasis is placed on the formulation of the model as opposed to the results obtained from its use.