Manufacturing for overseas private labels: A win–win strategy for retailers and producers

Abstract

The study discusses the use of private labels, both for retailers and manufacturers, within the context of international markets. It is proposed that agreements between manufacturers and retailers from different markets may solve or mitigate some abiding frictions and serve the interest of both parties. Using data collected through 101 in-depth interviews among marketing managers, qualitative and quantitative procedures were used to explore producers' attitudes and behaviour in regard to agreements to manufacturing for overseas retailers' private labels. The study revealed that lower transaction costs, quicker penetration into new markets and retailers' reputations among customers are the dominant motivators while short-term strategy, appropriate mainly for grocery items, increases dependency on retailers and deters manufactures from contracting with overseas retailers' private labels. The study also found that gaps exist between manufacturers' perceptions and actual behaviour, mediated particularly by firm size and product categories. The findings, which reflect observed practice, are interpreted through theoretical propositions related to earlier studies. Managerial implications are provided.     

The Buying of Private Brands and Manufacturer Brands in Grocery Retailing: A Comparative Study of Buying Processes in the UK,Sweden and Italy

Private brands in grocery retailing have evolved from a way to compete on price by selling low quality products at a low price, into a brand category in their own right, with a wide range of positioning options open to retailers. The buying and selling of private brands means that retailers' add new activities and processes to those that are traditionally associated with retailing. This paper compares the buying processes for manufacturer brands and private brands across three European countries in an attempt to analyse how the extension of the buying process inherent in private brand ranges, and the organisational contexts within which these processes operate impact upon complexity in the retail buying process     

Effects of intra-brand competition between private labels and manufacturer brands: Empirical results from the Italian market

A proliferation of private labels in European food retailing has been evident for several years now. The purpose of this study is to analyze the impact of competition between manufacturer brands and private labels on assortment and pricing practices by Italian grocery retailers. Previous studies emphasized both pro-competitive and anti-competitive effects of private label development. In this study, within an empirical analysis based on scanner data from Symphony IRI Group, all fast moving consumer goods product categories are investigated over a period of two years (from September 2008 to September 2010). The empirical results indicate that in Italy there is no clear and strong evidence of decreases in manufacturer brands' assortments, prices, and turnover caused by a proliferation of private labels. In particular, analyzing at the same time all categories and all retailers' data in the Italian Market there is not much evidence for the existence of a strategic trade-off between manufacturer's and retailer's brands.     

Beyond convenience: the future for independent food and grocery retailers in the UK

The UK's independent food and grocery retail sector's competitive advantage of 'convenience' has been eroded in recent years as major retailers increase opening hours and develop their own convenience trading formats. As a result, large numbers of independent retailers are closing. A UK-wide survey was undertaken to identify other sources of competitive advantages, and the changes needed to stop or reverse the decline in this sector. Exploratory semi-structured interviews led to the development of a questionnaire on six major issues affecting the sector. 'Snowball' sampling, using industry partners, provided 142 respondents. The provision of a 'social shopping experience' emerged as a key competitive advantage that could be developed. Improving vertical and horizontal trading alliances, and the wider use of information technology, provided other options.     

THE IMPACT OF ORDER FULFILLMENT SERVICE ON RETAILER MERCHANDISING DECISIONS IN THE CONSUMER DURABLES INDUSTRY

Historically, manufacturers held the upper hand in consumer goods supply chain relationships. There has been a pervasive shift of power to retailers over the past 20 years, however, ushering in an era of waning consumer loyalty to manufacturers' brands and increasing loyalty to retailers. While there is extensive research focusing on the manufacturer‐consumer relationship, retailers' increased ability to influence consumer purchases suggests that manufacturers should understand not only consumer perceptions of delivery service, but also retailer perceptions. We incorporate social network theory to examine the manufacturer‐retailer‐consumer linkages in the consumer durables industry, with the emphasis on the retailer in the role of the “broker” (Burt 1992). Specifically, we examine whether retailer perceptions of a manufacturer's order fulfillment service (OFS) positively impacts retailer perceptions of the manufacturer's brand, the importance of the product, and the likelihood of the retailers' salespeople to recommend the product to consumers. The research bridges OFS and retailer purchase behavior in a consumer durables industry characterized by high levels of consumer involvement, brand presence, and personal selling.     

The impact of retailers’ sustainable development on consumer advocacy: A chain mediation model investigation

This study explores the impact of retailers' sustainable development (RSD) on consumer advocacy. Drawing on the theoretical foundations of institutional theory, this study presents and confirms a model that investigates the mediating role of retailers' legitimacy and consumer trust, and the moderating role of consumer ecological literacy between RSD and consumer advocacy. Using the sample of 942 consumers and PLS-based structural equation modeling technique, the results revealed that RSD positively correlates with consumer advocacy. Additionally, retailers' legitimacy and consumer trust mediate this correlation by a respective mediating role and a chain-mediating role. Besides, consumer eco-literacy negatively moderates the direct impact of RSD on consumer advocacy and consumer trust, and the indirect impact of RSD on consumer advocacy through consumer trust. However, the direct impact of RSD on retailers' legitimacy, the mediating effect of RSD on consumer advocacy through retailers' legitimacy, and the chain-mediating effect of RSD on consumer advocacy through retailers’ legitimacy and consumer trust are not moderated by consumer eco-literacy. This study has implications for retailers seeking practical ways to increase consumer advocacy.     

Buying Behavior of Western European Food Retailers

Abstract

The aim of this study has been to analyze important aspects of buying behavior of food retailers, i.e., trade buyers' evaluation of product and vendor attributes, based on a number of background variables, when choosing a new supplier of an already well-known product category. The study encompassed the retailers' buying behavior for pork, fish and cheese products. By conducting a conjoint analysis in sixteen Western European countries (15 'old' EU Countries (except Luxemburg), plus Norway and Austria), it is demonstrated that the traditional four Ps are losing ground to some previously neglected attributes, and that it is possible to generalise retailers' buying behavior for different food products across countries, retail organizations, and buyers.     

Demand pull and technology push perspective in technology-based innovations for the points of sale: The retailers evaluation

Despite the consumers' increasing demand of technology-based innovations for making stores more appealing and the huge availability of advanced technologies, there is still a lack of research on the retailers' and employees' points of views towards the introduction of these systems. In fact, an efficient innovation should take care of both the final users/consumers' and the retailers/employees' needs and expectations. Hence, the aim of this study is to advance our knowledge on retailers' pull of new technologies for improving their job in accordance with the most recent systems, as well as on the main characteristics of these innovations for defining a new integrative framework of analysis and development.     

Economic and non-economic factors of Korean manufacturer-retailer relations

The purpose of the study was to examine the impact of antecedent channel power sources on satisfaction, conflict, trust, dependence and long-term channel relationships between Korean retailers and manufacturers. The sample included 210 cosmetic retailers in 15 Korean cities. The results indicate that Korean manufacturers' exercised coercive power decreases retailers' economic and non-economic satisfaction, while exercised non-coercive power increases economic and non-economic satisfaction. Second, exercised coercive power increases both economic and non-economic conflict, and exercised non-coercive power decreases non-economic conflict. Third, retailers' economic and non-economic satisfaction is negatively related to economic and non-economic conflict. Fourth, trust is a mediating factor between satisfaction (economic and non-economic) and a long-term relationship. Finally, results indicate that neither conflict nor satisfaction is unidimensional; each has an economic and non-economic dimension. This finding is an important contribution to the channel relations literature.     

Retailers and apparel imports: variables associated with relative proportions of imports carried

Purposes of this exploratory study were: (i) to determine retailers' views toward imported apparel, (ii) to gain insight into retailers' reasons for carrying imported apparel, and (iii) to examine variables associated with relative proportions of imported apparel carried in stock. Interviewers surveyed 191 retailers in the eastern U.S.A., using a structured telephone interview. Data analysis included chi-square tests of association and frequency distributions. The proportion of stock retailers reported to be imported was cross-tabulated with a number of variables. Results gave insight into retailers' reasons for carrying imported apparel, although a majority appeared to favour domestic apparel; results also indicated some of the problems associated with carrying foreign-made goods. Results can be useful to manufacturers in their efforts to counter retailers' trend to carry increasing quantities of imported apparel and to educators preparing graduates for employment in this sensitive sector.     

When do loyalty programs work? The moderating role of design,retailer-strategy,and country characteristics

Many grocery retailers carry a loyalty program (LP). However, little is known under what conditions these programs are more or less effective. We provide a contingency framework that considers various design, retailer, and country characteristics that can moderate an LP's impact on a retailer's sales productivity. We test the framework across a large sample of 358 grocery banners from a broad cross-section of 27 western and eastern European countries. We find a positive effect of the more basic LP variant that offers direct and immediate rewards. This positive effect, however, disappears when retailers operate a more complex progressive-reward system and when they are part of a multivendor program. An LP's impact also differs between retailers and countries: it is lower when operated by discounters, and higher in countries that are more individualistic and long-term oriented, and where fewer competitors also carry a loyalty program.     

Below-cost legislation: lessons from the Republic of Ireland

This article traces the emergence, evolution and demise of below-cost legislation in the grocery industry in the Republic of Ireland. The article adds to our understanding of the legislation by adopting the view that, by using the net invoice price as its definition of cost, the legislation increased two streams of quasi-rents, first on suppliers' brands and second on retailers' own brands, which acted to depress competitive forces and direct supplier–buyer negotiations to off-invoice discounts. Supplier-generated quasi-rents financed discounts and, when coupled with retailers' higher margins on their own brands, provided little incentive for a return to a price-competitive environment. Two factors undermined this situation: the substitution of discounters' products for suppliers' brands as the discounters share of the market grew and the increase in cross-border shopping. These had the combined effect of reducing the available quasi-rents earned in the Irish market, resulting in the breakdown of the status quo and a return to price competition. Through its impact on negotiations, the legislation also introduced inefficiencies to both retailers' and suppliers' businesses, representing additional waste that could have been more productively used to reduce consumer prices. The article endorses the Government's decision to rescind the order and remove an important constraint on both vertical and horizontal competitions. Lessons from the Republic of Ireland suggest that the competitive response to the removal of below-cost legislation, and reductions in prices, may take time and will depend on economic circumstances and a change in the prevailing norms of organisational behaviour and quasi-rent seeking opportunities.     

Retailers’ coalition and quantity discounts under demand uncertainty

Coalition of retailers is a nowadays phenomenon in retailing channels (RCs) that makes it possible for the retailers to enhance their business performance and respond to the consumers' needs more effectively. This paper discusses the retailers' coalition advantages and challenges in a two-echelon retailing channel consist of one wholesaler and two non-competing retailers who serve the consumers. The model is developed under a classic newsvendor problem where an all-unit quantity discount is offered by the wholesaler. Our investigations are conducted for both homogeneous/heterogeneous retailers under three different scenarios. In the developed models, the retailers start to make a coalition and make a joint order in order to gain more from the offered discount by the wholesaler, and then using a heuristic procedure they allocate the received order to serve their individual markets. The main objective of this study is to analyze and resolve challenges of the retailers' coalition when a quantity discount is offered in order to make them capable to meet consumers' needs in the best possible manner. Three models are developed: (1) no-coalition decentralized scheme, (2) decentralized coalition where the retailers coalesce, and (3) centralized coalition where not only the retailers but the wholesaler participate in the coalition scheme. Our paper contributes to the RC management literature by analyzing the benefits of the retail coalition in taking most advantage from an offered quantity discount. Results demonstrate that the optimal configuration of the retailers' coalition increases profits of both the retailers and the RC in comparison with the no-coalition scenario. Our findings help procurement managers to rethink their ordering policy toward forming coalition to gain more profits and enhance their service level to meet consumers’ needs.     

Organizational culture as differentiator in international retailing

Much of the international retailing literature echoes major retailers' assertions that inimitable organizational cultures can create competitive advantage. However, the culture concept remains ill-defined and systematic international empirical analysis is lacking. Based on website analyses of nine international retailers, the paper investigates how organizations define their cultures, codify and transfer them into practice, and aim to homogenize them across borders. Although some evidence for organization-specific cultural aspirations is identified, findings suggest that retailers' cultures become homogenized within and between countries. This supports previous work on the existence of industry-specific macro cultures and challenges the resource-based view, which sees culture as a source of competitive advantage.     

Grocery pickup creation of value: Customers’ benefits vs. spatial dimension

This article examines an Internet grocery shopping model very frequent in the UK and in France: the grocery pickup system. It strives to answer this research questions: does this system create value for consumers? The methodology relies on in-depth interviews with retailers and data from French retail grocery industries. The exploratory approach through experts’ interviews concerning the content of retailers’ selling propositions for consumers reinforces the theoretical framework related to customers’ value and grocery pickup. It appears that long term value could exist through the satisfaction of functional, experiential and relational benefits responsible for the uniqueness of the retailer's positioning. Given the asymmetry between retailers approach and consumer's one, the second part is focused on a particular aspect of the functional benefit: closeness in retailing. Then, an entropy measurement in a French context from two large samples of 1576 hypermarkets and 1473 grocery pickups are conducted. Results show that grocery pickup locations fulfill this sine qua non successful condition. Nevertheless, it is made evidence that this new channel is most of the time developed in overstored areas.     

Expansion within the Single European Market:a motivational structure

This paper considers the motivational context in which internationalization occurs. The paper considers the recent research of Pellegrini (1994) and Williams (1992a, 1992b) and addresses the fundamental question concerning the nature of internationalization raised by Brown and Burt (1992). The paper reports on, and uses findings from, a survey carried out in July 1993 which focused on retail expansion within the Single European market (SEM). The relative importance of motivations is considered in the context of retailers' attitudes to the SEM. These results are placed in the context of previous research findings and the theoretical literature on international retailing. On the basis of UK retailers' attitudes to expansion in the SEM and in the light of previous research work, this paper discusses the positions adopted by retailers in relation to internationalization. A matrix representing these positions is proposed and discussed.     

The Impact of the Multi-channel Retail Mix on Online Store Choice: Does Online Experience Matter?

More and more grocery retailers are becoming multi-channel retailers, as they are opening an online alternative next to their traditional offline supermarkets. While the number of multi-channel grocery shoppers is also expanding at a fast growth rate, there are still large differences in online shopping frequency, and as a result, in the levels of experience with buying in the online grocery channel. This study wants to (i) identify the underlying drivers of online store choice and (ii) explore if and how these drivers change when multi-channel shoppers gain online grocery shopping experience. We investigate this question with an online store choice model using purchase data of an extensive UK household panel over a two-year period, covering all multi-channel retailers in the grocery market. Our results show that multi-channel shoppers, at the start of online grocery shopping, tend to select the online store belonging to the same chain as their preferred offline store, especially when the online store is strongly integrated with the offline store in terms of assortment. When online grocery shopping experience increases, multi-channel shoppers’ focus shifts from a comparison within a chain across channels to a comparison across chains within the online channel, resulting in an increasing importance of online assortment attractiveness and online loyalty when choosing an online store.     

Perceived trust in contractual channel dyads: an exploratory investigation of Finnish food retailers

Distributor firms have found long-term contracting an effective means of gaining competitive advantage. To realize these benefits, the alliance should involve trusting others. However, contracts can also be one-sided rather than reciprocal, favouring the larger business partner. Should trust develop naturally where there are formal contracts defining the terms of the relationship? And what inducements should a supplier take to gain retailers' trust? The trade-off is further complicated when the retailers operate in a small market with few suppliers and high barriers to entry. This study focuses on these questions. We use original field data from Finnish food retailers who have signed a written agreement with their focal wholesaler. We find that maintaining autonomy increases trust in the relationship. We also find that regular communication in the dyad and balance between perceived rewards and contributions are associated with higher levels of trust. In turn, intrachannel competition strongly reduces retailers' trust in the dyad.     

The Temporal Context of UK Retailers’ Motives for International Expansion

This article re-examines the motives for retailer internationalisation with the aid of a survey of UK retailers with international retailing operations. The survey results are grouped according to the number of years companies have been operating in international markets. This facilitates a comparison of their views on internationalisation according to the different points in time that internationalisation is initiated and within the context of contrasting economic conditions. Overall, the survey results indicated that UK retailers remained strongly influenced by growth-oriented or proactive factors in their decision to internationalise. However, those retailers moving overseas for the first time, within the context of the rather severe operating conditions of the early 1990s, were in fact more likely to cite reactive factors as important influences. The article identifies a number of key issues for further research into the motives for retailer internationalisation and outlines the methodological implications.     

Consumers' Perceptions of Online and Offline Retailer Deception: A Moderated Mediation Analysis

This research examines the effects of consumers' perceptions of retailers' deceptive practices on their evaluations of online and offline retailers. Results from two samples of consumers (shopping in online versus offline channels) show the direct and indirect influence of consumers' perceptions of retailers' deceptive practices on consumers' evaluations, including product satisfaction, retailer satisfaction and word-of-mouth. Perceptions of deception influence retailer satisfaction through product satisfaction, and word-of-mouth through retailer satisfaction. These mediated effects are further moderated by the online vs. offline purchase channel. Implications for theory and management are discussed.