Retail Marketing Channel Franchise Failure

Abstract

The retail franchising channel is significant and growing rapidly in the U.S., U.K. and other countries. This paper presents a new retail strategic management perspective and provides new, more reliable U.S. longitudinal retail franchise government furnished data, covering over 800 franchise systems and over 250,000 franchise units.

A strategic management failure perspective and more accurate retail franchisee channel failure data facilitate understanding and mitigating failure. Retail franchisee channel failure is an important topic that merits further research and franchise system management attention.     

The paradox of diminishing returns: Measurement and metrics for valuation of B2C sales professionals

Abstract

The realization of channel multiplicity is increasingly present in retail exchanges. Retailers understand that consumers may seek information in one channel and complete their purchases in another channel. Researchers have labeled this retailing concept as “showrooming.” Showrooming suggests that retail salespeople may provide information, services, and suggestions that generate retail sales revenues at another time in another place. While they likely mediate exchange value, retail salespersons’ contributions to building sales revenues and customer relationships may be difficult to measure. The degree of value engendered in the retail sales role set is associated with product and transaction complexity. As such, retail sales functions may range from highly transactional (i.e., facilitating a transaction) to highly relational (i.e., building retail patronage). This article proffers a taxonomy of retail salespeople based on sales role sets: Companions, Consultants, Clerks, and Closers. Managerial recommendations are provided for measuring retail salesperson performance in an omni-channel marketplace.     

On manufacturers complementing the traditional retail channel with a direct online channel

With the explosion of the Internet and the reach that it affords, many manufacturers have complemented their existing retail channels with an online channel, which allows them to sell directly to their consumers. Interestingly, there is a significant variation within product categories in manufacturer's use of the Internet as a direct distribution channel. The main objective of this study is to examine the strategic forces that may influence the manufacturer's decision to complement the retail channel with a direct online channel. In particular, we are interested in answering the following questions:

1. Why is it that in some markets only a few firms find it optimal to complement their retail channels with a direct Internet channel while other firms do not?
2. What strategic role (if any), does the direct Internet channel serve and how do market characteristics impact this role?

To address these issues we develop a model with a single strategic manufacturer serving a market through a single strategic retailer. In addition to the focal manufacturer's product the retailer carries products of competing manufacturers. Consumers in this market are one of two types. They are either brand loyal or store loyal. The retailer sets the retail price and the level of retail support, which impact the demand for the manufacturer's product. The retailer's decisions in turn depend on the wholesale price as well as the Internet price of the product if the manufacturer decides to complement the retail channel with an online channel. Our analysis reveals that the optimality of complementing the retail channel with an online channel and the role served by the latter depends critically upon the level of support that the retailer allocates to the manufacturer's product in the absence of the online channel. The level of support allocated by the retailer, in the absence of the online channel, depends upon the retail margins on the manufacturer's product relative to that on rival products in the product category. When the size of the brand loyal segment is small relative to the size of the store loyal segment then in the absence of the online channel, the manufacturer can lower wholesale price and enhance retail support, especially when the retail margins on the rival products are low. In contrast, when the size of the loyal segment is large and the retail margins on rival products are high the manufacturer will find it more profitable to charge a high wholesale price even if that induces the retailer to extend low levels of support. If the manufacturer decides to complement the retail channel with an online channel, some consumers who would have purchased from the retailer might prefer to purchase online. Our analysis reveals that when consumers' sensitivity to price differences across the competing channels exceeds a certain threshold it is not optimal for the manufacturer to complement the retail channel with an online channel. However, this price sensitivity threshold itself depends upon product/market characteristics, suggesting that manufacturers seeking to complement their retail channels with an online channel should look beyond the nature of threat the online channel poses to the retail channel in devising their optimal distribution strategies. When the retail margins on rival products are sufficiently small, complementing the retail channel with an online channel when optimal allows the manufacturer to price discriminate and enhance profits. In contrast when retail margins on rival products are sufficiently high, complementing the retail channel with an online channel serves to enhance retail support. We also identify market conditions under which profits of both the manufacturer and the retailer are greater with the online channel than that without it. This is particularly interesting since the online channel competes with the retail channel.     

Information Asymmetry and the Franchise Decision

Abstract

A key explanation for the existence of franchising as a marketing channel has its underpinnings in the information asymmetry between the firm and individual outlets. Franchising is the preferred option for outlets where information asymmetry leads to prohibitive monitoring costs within a vertically integrated system. While modern information technology has the potential to reduce monitoring costs at geographically isolated locations, several factors are likely to limit its effectiveness. Thus, the incentive to franchise these outlets should continue to exist. The paper also discusses the possible implications of the increased use of information technology in the franchised channel.     

Measuring retail performance in an omni-channel world

Abstract

Driven by global advances in technology and changes in consumer buying behavior, brick-and-mortar retailers are being forced to become omni-channel retailers. This calls for new metrics for evaluating retail performance. We examine the challenges facing the retail industry, the metrics that traditional brick-and-mortar stores have used as well as the new metrics that retail industry experts are suggesting for online retailing. A conceptual framework for omni-channel retailers is suggested.     

Potential of the Internet as a Retailing Channel in South Africa

Abstract

This study examines the factors affecting retailers perceptions of the Internet as a potential retail channel. It examines the environmental factors as well as the organizational factors impacting on the potential of Internet retailing. Results are reported from 102 South African retailing chain organizations across all categories. The authors discuss the results and provide some guiding points for retailers who intend to use the Internet as a retailing channel in the future.     

Rural Retailing: Challenges to Traditional Handicrafts

ABSTRACT

The expansion of tourism into villages has provided craft traders of Kerala with significant opportunities in rural retailing. However, village artisans with limited resources fail to reach global consumers. This study aims to clarify the challenges faced by rural craft cooperatives in selecting retail channels for their products. Testing the hypotheses at two levels using primary and secondary data, the author identifies the retail channel that offers the maximum returns to producers and satisfaction to consumers. The results indicate that those cooperatives owning exclusive retail channels guarantee sustainable market relationships for rural artisans.     

The Linkage of Trades in Terms of Wholesale Business Formats in Japanese Distribution Systems

Abstract

Japanese distribution and particularly wholesaling are often suggested as having complex channel structures. This can provide difficulties for international retailers who wish to develop direct links with manufacturers and agricultural producers. Wholesalers, in this system, attempt to synchronize their buying and selling functions that gives rise to different types of wholesale business format. Unlike retail formats, wholesale formats seldom have relationships with the final consumer. Results of a survey of wholesalers are presented. The results show that the buying and selling trade relationships are driven by different factors depending on the business format of the wholesaler.     

Consumer-computer interaction and in-store smart technology (IST) in the retail industry: the role of motivation,opportunity, and ability

ABSTRACT

Recent advances in technology have led to the emergence of smart technology systems in brick-and-mortar stores. This study aims to explore the factors that influence customer adoption of in-store smart technology in a retail setting. By adopting the motivation, opportunity, and ability framework, the present study examines the role of relative advantage, perceived complexity, flow experience, enjoyment, retailer support, perceived attractiveness, technology readiness, and self-efficacy in customer perception of shopping effectiveness, which in turn, impacts their adoption intentions. By adopting a quantitative approach, a survey questionnaire was used to collect 747 responses from Australia and Indian retail shoppers. The results show that the motivation, opportunity, and ability framework provided a very insightful way for understanding customer adoption of IST. Specifically, we find significant differences in the role of flow, retailer support, and perceived attractiveness in determining customer evaluation of in-store smart technology for Australia and India. Findings have important managerial implications.     

Numeric or weighted distribution? The effect of different channel performance metrics on market share

Abstract

Previous studies have found a convex relation between weighted measures of distribution and market share for consumer products in developed economies, while companies in emerging markets often use a non-weighted (numeric) distribution measure to manage their channel strategy. In contrast to the markets with high retail concentration, the numeric distribution could be best suited to a more fragmented retail market in which the percentage of physical distribution is important. We investigate the effects of expanding numeric versus expanding weighted distribution by studying stores in channels and regions characterized by structural differences in an emerging market. Our data come from retail audits in Brazil and include 91 soft drink manufacturers, 195 brands and 1,110 stock-keeping units. Our study highlights the importance of numeric distribution as a performance measure in this market. Additionally, we show that the effects of numeric and weighted distribution on market share vary by region and channel format.     

Country of Origin Association in Retail and Wholesale Branding

ABSTRACT

The purpose of this article is to consider country of origin in terms of its association with brand heritage and its implications in fashion branding, thus providing a new perspective within the context of retail and wholesale brands. This qualitative study demonstrates how country of origin is widely used as a communicative tool by retail and wholesale brands, associated with brand heritage. However, the way country of origin is manifested and/or associated (e.g., brand name, color, etc.) varies depending on a brand's history, positioning, brand value, and the type of market sector that the retail and wholesale brands are targeting.     

Critical Factors for CPFR Success in the Chinese Retail Industry

ABSTRACT

The CPFR (Collaborative Planning, Forecasting and Replenishment) concept has been successfully applied by retailers in many western countries. Due to economic, technical and cultural differences, it has been a big challenge to adopt the CPFR concept in China, and the CPFR implementation process has to be adapted to the characteristics of the Chinese retail industry. In this paper, we analyze current management and information technology applications in the Chinese retail industry and a CFPR application case in China. Then some critical factors for the successful implementation of CPFR by Chinese retailers are discussed.     

Consumer Product Redistribution

Abstract

Formats for product redistribution are emerging and evolving, creating alternative channel options for consumers' disposition of unwanted possessions. These retail formats operate in both informal (e.g., garage sales) and formal (online auctions) economies. As consumers participate in redistribution channels, some retailers are confronted with new competition and the potential for declining sales. This article expands on both recycling and disposition literature by examining consumer disposition behavior and the flow of used products through various redistribution channels. Strategies are offered to address consumer disposition behaviors as well as to assist retailers in combating traditional and non-traditional competition.     

What drives competitive webrooming? The roles of channel and retailer aspects

ABSTRACT

Competitive webrooming, the phenomenon in which consumers gather product information online but ultimately purchase the product in an offline store of a competing retailer, has gained traction and become a major threat for retailers. To gain a deeper understanding of its drivers, we surveyed 1081 retail customers about their most recent consumer electronic product purchase to examine the impact of channel-related aspects as well as retailer-related aspects – a dual approach that has not been applied previously. A channel’s anticipated after-sales service and price level are the strongest predictors for webrooming. Moreover, retailer aspects determine whether customers simultaneously switch retailer when webrooming. A retailer’s assurance of delivery, including payment modalities, return policies, and product obtainment, as well as competitive product prices motivate consumers to switch retailer when webrooming. These results suggest that customers have a fundamental need for certainty within and after the buying process, which can be satisfied by both channel and retailer. Additionally, this is the first study to empirically test for interactions between channel and retailer aspects, as they are likely to occur in real shopping situations. We identified two interactions: First, a retailer’s assurance of delivery can compensate for an anticipated lack of a channel’s after-sales service, dampening the impact of the latter on competitive webrooming. Second, retailer’s price attractiveness acts in a similar vein. Hence, to steer customers into channels and/or keep them with the company, retailers should emphasize their price attractiveness as well as assurance of delivery.     

Brand management in small and medium-sized (SME) retailers: A future research agenda

Abstract

Recently, an emerging body of literature has advocated the importance of branding to small and medium-sized (SME) retailers. Nonetheless, this discourse has ignored the complexities and idiosyncrasies of retail branding. The aim of this paper is to provide a new theoretical understanding of brand management by SME retailers. In order to achieve this aim, the paper integrates the brand management, SME branding, and retail branding literature, and offers a conceptual framework for SME retail branding. A number of propositions are included that aid understanding of brand management in SME retail organisations. It is anticipated that these propositions will help shape future empirical research in this area. Further in-depth research into the application of branding within the SME retail context would address a significant gap in academic knowledge. In doing so, it would also provide important insights for management practice.     

Minding the competition: The drivers for multichannel service quality in fashion retailing

PurposeConsumer purchasing behaviour has changed substantially in the light of recent developments in E-Commerce. So-called ‘multichannel customers’ tend to switch retail channels during the purchasing process. In order to address changing consumer behaviours, multichannel fashion retailing companies must continue to learn how to provide excellent service to such customers. Drawing on expectation confirmation theory, this paper investigates drivers for service quality from the perspective of multichannel fashion customers.Design/methodology: This paper approaches the topic of multichannel service quality by adopting a social constructionist research paradigm, utilising an abductive approach and an embedded case study research strategy. It aims to explore the lived experiences and perspectives of individuals in the context of an evolving complex and multidimensional phenomenon. The paper seeks information-rich cases and therefore views service quality through the eyes of experienced German multichannel customers. A customer perspective helps to explain the phenomenon of multichannel service quality and helps to disclose the meaning that these customers give to it. The sample size for this research consisted of 18 in-depth interviews and two focus groups including ten focus group participants. As such, a process of methodological triangulation was followed.FindingsIntegration quality is identified as the essence of competitive advantage for multichannel retailers. The paper conceptualises integration quality as a catalyst, which plays a supporting role in reinforcing the reactions of the physical and electronic service quality in order to provide an optimised service quality experience.Originality/valueThis paper looks at retailer/customer interactions in the context of purchases of a fashion product at a retailer using different retail channels. It highlights the distinctive requirements of multiple-channel systems within which the focus should not only be to enhance and improve physical and/or electronic service quality, but must also be about the integration of the service offers of each channel. The paper contributes to the interpretation of multichannel service quality with a new concept that explains the phenomenon from the perspective of customers.     

Can the Retailer’s ICT Enhance the Impact of Service Recovery Efforts on Customer Satisfaction?

Abstract

Service recovery remains a topic of considerable interest for both academics and practitioners. This paper aims to explore the relations between recovery efforts and causal attributions, satisfaction, and both conventional and online word-of-mouth, as well as the moderating role of information and communication technologies (ICT) on the relationship between retailer’s efforts and satisfaction with the service recovery. On a sample of 336 retail customers who experienced service failure, we use SEM and multigroup analysis. As a result of the data analysis, there is evidence supporting the positive impact of attributions and recovery efforts on satisfaction, and the influence of the latter on both conventional and online word-of-mouth. Furthermore, the moderating influence of technology in the “recovery efforts-satisfaction” relationship is evidenced. Practical implications for retail managers and further research are presented.     

Retailing to Foreign National Consumers in the Border Zone

Abstract

This study investigates the factors that affect how retailers in a border zone manage the elements of the retail mix with respect to foreign national consumers. Several hypotheses concerning the effects of competition from foreign retailers and currency devaluation(s) on variables of the retail mix and traditional measures of perceived retailer outcomes are advanced. Results indicate that while perceptions of devaluation have an impact on the planning of the retail mix as well as on perceived retail outcome measures, competition from foreign retailers is not perceived to be an important factor. Research and managerial implications are offered.     

Organizational climate for innovation and creativity – a study in Swedish retail organizations

ABSTRACT

Innovation in retailing is under-investigated in academia and yet a highly relevant concern given the current changes in the retail landscape. Although retailing is often characterized by a dynamic and highly competitive environment, retail organizations are not often considered as ‘innovative,’ at least when compared with manufacturing industries, or when using existing innovation frameworks in academic literature. There are many aspects of innovation discussed in literature and a need to consider different ways of looking into retail’s innovativeness. Among them, the importance of organizational climate on influencing creativity and innovation may help explain how to enable innovation in service organizations, such as retailers. The purpose of this study is to evaluate the climate for innovation and creativity and examine how retail organizations perceive it. We applied a mixed-methods approach using an established organizational climate survey and semi-structured, one-on-one interviews regarding the innovation climate and other aspects of innovation management in the companies. The study shows that despite retail organizations still struggling to incorporate innovation on a strategic level and move beyond incremental developments in their operations, retailers score positively on being innovative regarding certain dimensions of the organizational climate survey. This indicates that retailers (especially conventional ones) could benefit from challenging current practices and moving towards becoming more active and strategic innovators since their organizational climate to a certain extent allows for it. Respondents within the organizations also express a need for better innovation support, whether it is through established structures and processes or an improvement in the current conditions of the organizational climate. How retailers could enable themselves to become more active innovators – based on what we know that retailers look more towards entrepreneurship and continuous development as a driving force rather than formalized innovation practices per se – is a potential avenue for further research.     

The role of design in the future of digital channels: Conceptual insights and future research directions

PurposeIn the past channel literature has looked to other disciplines in developing and refining their theories, models and methods in order to evolve the field. This paper traces such history and highlights the substantial changes caused by the digital age. In light of this, the inclusion of design theory into future channel management is presented to overcome existing concerns.Design/methodology/approachA comprehensive review of literature on the history of channels, the emotional experience (people), limitations of digital innovation (technology) and the role of design (business) has been conducted to create a new approach, built upon the theory of the techno-economic innovation model.FindingsThe findings of this study propose design-led channel management as a new research area, providing novel research questions and future research directions. The inclusion of design and emotion theories indicates that the future of digital channel design requires a deeper understanding of customers and needs to go beyond technological advances.Theoretical implicationsThe findings provide an opportunity to explore dynamic theories and methodologies within the field of design that will broaden the horizons and challenge existing notions in channel literature.Originality/valueThis paper is the first paper that introduces the theory of Emotionate, as the next evolution of channel literature. The value of Emotionate lies in providing a new design-led process of integrating emotion to provide advice to practitioners as well as identifies research areas for academia, thereby extending the reach and richness of this emerging research field.