Competitive advantage,private-label brands,and category profitability

Abstract

The purpose of this study was to investigate the influence of private-label resources possessed by a supermarket retailer. Our study examines whether or not private-label products can help in the overall enhancement of product category performance. We examine the performance of a supermarket retailer in the Northeast United States that operates over 100 stores and generates a total yearly sales volume in excess of $3 billion. Data of this nature is difficult to obtain for research purposes, and this proved to be very valuable. Data obtained from the internal financial database of the supermarket was used and generated from point-of-sale information. We then developed a research model from the literature review and used structural equation modelling to analyse the data. The findings of this study indicate that a change in category private-label sales penetration and category market share had little impact on category profitability. The major implication for retailers is the necessity for category managers to focus on all brands within their respective categories and not over-emphasise a private-label brand focus.     

The role of Swedish retailers in food innovations

Innovations should create value for increasingly individualistic consumers with varying demands and for other stakeholders. Today, retailers have the power in the supply/value chain. This research investigates how Swedish food retailers view innovations, their role and that of customers and suppliers in the development process and how they see future development. The study is based on open-ended interviews. The results show that Swedish retailers regard food product innovations as something to provide to consumers rather than achieve with consumers. Retailers want more collaboration with packaging suppliers to differentiate. Retailers are successful in establishing their own brands, in becoming brands themselves and in competing with producer brands. This follows the UK model and may result in fewer alternatives in stores and fewer product – or new technology-based innovations by Swedish producers. Service innovations can still occur for retailers to retain consumer loyalty. Consumers demand more than new products; they want to be excited by the shopping experience. More innovations will require deeper insight about consumers, efforts from the value chain and from outsiders. Collaboration is needed to establish trust among supply chain actors.     

大型超市生鲜供应链的重构

针对目前我国大型超市生鲜供应链在产品特性、技术支持、营销与竞争和组织成熟度方面表现出的非有效性,本文对大型超市的生鲜供应链重构与优化展开研究,旨在借助供应链管理这一新兴理论探索大型超市生鲜食品经营创新的发展方向。     

Holding up the mirror: The impact of strategic procurement practices on account management

Procurement has grown up. It is now a strategic business function that increasingly recognizes the importance of strategic supplier relationships, a reflection of key account management. It is time to assess the impact of this shift on the profession and practice of account management. This paper examines customer adoption of strategic procurement and then discusses the implications this has for account managers at the suppliers serving these customers. New techniques are emerging in these special relationships, including the use of psychological contracts and co-measurement and monitoring. Perceived fairness will also have a major impact on the customer's view of their suppliers. Account managers must recognize these changes or fall victim to supplier delusion: the belief that they are performing better than they really are.     

Understanding B2B Supplier Selection Relationships: The Case of Taiwan Agribusinesses

Purpose: This article seeks to investigate the factors impacting the selection of suppliers in the Taiwan agribusiness sector and explore the relative importance of these factors. In addition, it explores the potential differences based on the organization's size and stakeholders (i.e., buyer versus supplier and management versus operational).

Methodology/Approach: This study is exploratory in nature and involves a two-stage process. In the first stage, in-depth interviews were conducted with 10 agribusiness professionals in Taiwan to determine the relevance of the current literature about the criteria used in the selection of suppliers in the Taiwan agribusiness industry. The second stage involved 16 case studies with 32 interviews, using information gathered from the first stage.

Findings: Findings revealed that the support of the 22 selection criteria presented in the preliminary framework was important to influencing an organization's selection of suppliers in the Taiwan agribusiness industry. The findings suggest that Taiwan agribusiness buyers consider the financial position of the suppliers and the quality of their managerial teams as critically important in the supplier selection process. There was little indication that the desire for business, geographical location, and repair service were regarded as important criteria for selecting suppliers.

Research Implications/Limitations: The findings of this research have added new insights to the existing literature of B2B supplier selection criteria with the identification of two additional criteria (innovativeness and willingness to cooperate). The exploratory nature of this study and the initial development of a framework of supplier selection within the context of the Taiwan agribusiness industry had constrained the applicability of the findings to other markets and industries.

Practical Implications: The findings highlighted a list of important selection criteria that agribusiness managers can consider during their supplier selection process. In addition, the findings can assist agribusiness managers from supplying organizations to build on their organizations' strengths and capabilities in meeting those important supplier selection criteria so that they can stay ahead in the increasingly competitive agribusiness industry.

Originality/Value/Contribution: By focusing on the agribusiness sector, this study provides insights into a much neglected industry where supplier selection is a crucial issue to many agribusinesses, particularly from the perspective of major buyers in value-adding agribusiness enterprises.     

An integrative perspective of closeness in retailing: From retailers' sense-giving to consumers' sense-making

This research investigates the concept of closeness in retailing. While previous research on closeness has tended to adopt only consumers' point of view, in-depth interviews with managers and customers of a French supermarket chain show that both parties interpret and define closeness differently. Analysis reveals that “store closeness” comprises a complex set of meanings that are not limited to a geographical notion but rather encompass functional, relational, and integration notions. Furthermore, retailers define store closeness very broadly, which contributes to nurturing their positioning but also leads them to idealize their role in the marketplace. In contrast, consumers’ definition of store closeness is more limited and mainly focuses on the functional features of the store, thus highlighting a discrepancy between retailers’ sense-giving and consumers’ sense-making.     

The Role of Retail Equity,Value and Relational Benefits in Building B2B Relationships in Retailing

Abstract

The present paper aims to examine if variables widely studied in B2C contribute to building strong relationships in B2B markets. Moreover, it analyzes the existence of differences across retailers related to percentage of purchases from the main supplier. Through a personal survey to retail store managers regarding their relationships with their main suppliers, a structural equation model is estimated through PLS to test the hypothesized relations between retail equity, value, relational benefits, trust, and commitment. A multi-group analysis is performed to test the moderating role of the percentage of purchases from the main supplier. Three types of relational benefits identified have unequal influence on relationship value. In particular, special treatment benefits and social benefits, together with retail equity, emerge as the main drivers of value in the relationship between retailers and their main suppliers. The percentage of purchases from the main supplier plays a moderating role in some of these relations. This research provides evidence in the sense that, in the relations held by retailers with their main suppliers, retail equity contributes to relationship value creation. Relational benefits are relevant in building B2B relations since special treatment and social benefits have a positive influence on value that is positively related to trust and commitment. To build strong relations with their customers, suppliers of retailers should mainly concentrate their efforts on building brand equity and providing evidence of the existence of special treatment benefits beyond the service delivered, in view of its ultimate influence on customer trust and commitment.     

Traces of foreign retailers – local knowledge-spillovers and strategy adaption within retail internationalization

ABSTRACT

Since the 1990s certain retail companies have evolved into some of the largest and most dispersed transnational corporations worldwide. However, within the ‘new era of retail distribution’ retailers are increasingly divesting from foreign markets. This study addresses these recent and under-explored dynamics by revealing the traces transnational retail corporations leave after divesting from a country. It explores the aspect of learning of host market retailers from entering transnational corporations (TNCs) and examines how foreign knowledge is adjusted in the business strategies of these local actors. It takes a fresh empirical slant using qualitative interviews with host market retail managers including former TNCs’ subsidiaries operating under domestic ownership. The emerging economy of Turkey serves as an empirical example. The paper finds that foreign retailers transfer firm-specific resources to the local retail through (1) demonstration and imitation, (2) vertical linkages with suppliers, (3) joint ventures and acquisitions, and (4) labor turnover of TNC trained staff. Certain successful local companies adjust the foreign knowledge based on their local knowledge and strengths, their high level of flexibility and deep territorial embeddedness, and create ‘hybrid’ business strategies. These findings suggest that dynamic capabilities are crucial to successful retailing in an international competitive environment. TNC managers should work with local staff in partnerships of equals and managers of locally operating companies should incorporate new knowledge by hiring TNC trained staff.     

Larger partitions lead to larger sales: Divided grocery carts alter purchase norms and increase sales

Before food portions are determined at home, they are determined at the supermarket. Building on the notion of implied social norms, this research proposes that allocating or partitioning a section of a shopping cart for fruits and vegetables (produce) may increase their sales. First, a concept test for on-line shopping (Study 1) shows that a large produce partition led people to believe that purchasing larger amounts of produce was normal. Next, an in-store study in a supermarket (Study 2) shows that the amount of produce a shopper purchased was in proportion to the size of this partition – the larger the partition, the larger the purchases (especially in a nutrition-reinforced environment). Using partitioned or divided shopping carts (such as half-carts) could be useful to retailers who want to sell more high-margin produce, but they could also be useful to consumers who can simply divide their own shopping cart in half with their jacket, purse, or briefcase. Divided shopping carts may lead to healthier shoppers and to healthier profits.     

风险喜好型零售商主导的双渠道定价策略研究

一个由生产商和零售商组成的供应链中决策的顺序为:零售商率先根据自己掌握的市场信息公布最大潜在订单数量,生产商根据最大订单数量来调整其批发价格和直销渠道价格,最后零售商才确定其最优订货数量。研究表明,在一个由风险喜好型的零售商和一个风险规避型的供应商组成的供应链中,零售商风险偏好系数超过某一特定值时,随着需求方差的增加,零售渠道最优定价会越来越高;而对于风险规避型供应商,则是随着需求方差和(或)供应商风险规避程度的增加,会选择较低的产品售价以期获得稳定的收入。     

The delisting of products by retail buyers

The main aim of the research reported here is to identify any patterns in the delisting behaviour of retail buyers, where a delisted product is defined as one which is removed from sale by a retailer but which continues to be sold by other retailers. The influence of the retail buyer in the marketing of consumer products has become ever more significant. Much academic research into retail buying has aimed at identifying criteria that affect purchasing decisions but few generalizable findings have emerged due to the context‐specific nature of such decision making. In this research a specific context is chosen, that of the de‐selection or delisting of products, a topic that has received little attention to date.

The results of interviews with 125 buyers, working for large and small retailers, on their reasons for 290 examples of product delistings are reported. The influence of more detailed contextual variables such as the buyer's age, experience and qualification, the product type, and the source of the product are examined together with a number of reasons for delisting the product. Many of these contextual variables, particularly the size of the retail business and whether the buyer had experience of working in a retail outlet, correlated widely with the relative importance of decision variables. Buyers working for smaller retailers tended to delist because of low sales volumes. Nett profitability, the reason why products should be delisted, was rarely cited as a major criterion.

More detailed analysis of the data set using factor and cluster analysis revealed that delisting decisions could be categorized into two types, each defined by combinations of contextual and decision variables. The most important variables in distinguishing between the two types of decisions were the buyer's age and experience as a buyer (contextual variables) and the decision criteria of nett margin being too low or the selling price to the retailer being too high. Younger, less experienced buyers were more likely to delist products because of low nett margins and high buying prices. Older, more experienced buyers were likely to delist for reasons other than these. The implications for retailers and for their suppliers of both the major and minor findings from the study are discussed.     

Sustainable Retailing

As consumers seek products that cause minimal environmental harm and bring about positive social impact, and as awareness of supply chain impact grows, retailers must embrace sustainability. Given their unique position in the supply chain between upstream suppliers and downstream consumers, retailers are key to a circular economy in which products at the initial end-of-life stage are returned to the supply chain for continued use. By serving as a connection between suppliers and consumers, retail initiatives can help to reduce, reuse, and recycle. Furthermore, retailers can leverage their unique position in the supply chain to enable and legitimize a focus on social issues across the supply chain. We discuss such actions, the challenges that need to be overcome to have scalable impact, and the mechanisms retailers can utilize to make such progress.     

Interfirm Arrangements in Different Institutional Environments

Abstract

This paper aims to investigate the effect of the institutional environment variables on the organizational choice by franchise chains that share a business format. Inasmuch as this type of franchising requires strict standardization, a comparative analysis of the same franchise chain operating in different institutional environments allows for the control of several variables, such as product and firm strategies, so that the observed organizational differences may be attributed to institutional variables. Different rules of the game may explain different governance structures in the transaction between franchisor and franchisees and their procurement contracts. In this paper, we did case studies based on semi-structured interviews with procurement and franchising managers of McDonald's in France and Brazil. The main finding is that McDonald's uses in Brazil governance structures that provide more control on transactions, both in the transactions with their outlets and their suppliers. In accordance with our results, institutional environment features explains differences in the organizational choice in each country. Results suggest the need for further research in two directions: a larger sample of countries and the investigation of other franchise chains.     

我国生鲜农产品物流变革的经济学分析

我国生鲜农产品物流存在着很多问题,由"集市"向"超市"的物流模式变革是生鲜农产品物流发展的必然趋势。根据新制度经济学的分析,本文认为从"集市"到"超市"的变革是节约交易费用的结果,也是制度变迁的结果。因此,促进这种变革,对我国生鲜农产品物流水平的提高,意义重大。     

Made in Italy. Made in Britain. Quality,brands and innovation in the European poultry market, 1950–80

This paper compares the development of the poultry industry in Italy with the UK. Earlier research has suggested that the UK poultry industry developed a symbiotic relationship with the emerging supermarket retailers. Italy had a retarded supermarket sector. Its distribution system favoured small-scale, independent butchers rather than chains of self-service supermarkets. Despite this the Italian poultry industry also modernised, adopting US technologies. The catalyst for this modernisation was technological innovation in refrigeration technologies that enabled Italian consumers and independent retailers to be persuaded of the merits of the new ‘technological’ chicken. While the Italian market has become dominated by AIA and Amadori in recent years, the key innovators were the entrepreneurs that created the company called Arena.     

Considering Technological Impacts When Selecting Food Suppliers: Comparing Retailers' Buying Behavior in the United States and Europe

Purpose: The research investigates the impact of emergent technologies, specifically supply-chain technology and food-production technology (i.e., genetically modified organisms [GMO]), on global food retailers' supplier decisions.

Methodology/approach: Qualitative research is conducted to examine technology-related vendor selection criteria of food retailers in 5 European countries comparing to those in the US.

Findings: Our findings show that global food retailers view supply-chain technology as a competitive advantage and is integrated as an important selection criteria; however, selection criteria differ for food-production technology between the United States and the European countries. European food retailers explicitly oppose food-production technology (GMO), while U.S. food retailers implicitly accept food-production technology. Emerging from this opposing view, global food retailers establish similar criteria for organic food (non-GMO) supplier selection: reliability, distance, consistent quality, and relationships with suppliers.

Research implications: Applying the supplier choice criteria framework (Lehmann and O'Shaughnessy 1982 Lehmann, D. R. and 'Shaughnessy, J. O. 1982. Decision criteria used in buying different categories of products. Journal of Purchasing and Materials Management, 18: 9–14.  [Google Scholar]) to further analyze organic food suppliers, we find that reliability (adaptive criterion), distance (integrative criterion), consistent quality (performance criterion), and relationships with suppliers (economic criterion) are essential, but price is not.

Practical implications: This study suggests that to sustain competitiveness in the global food market, food suppliers not only need to ensure technological compatibility in supply-chain, but also adapt to the local food-production restriction (GMO) and organic food selection criteria preferences.

Originality/value/contribution: Supply-chain technology is strategically important and is adopted by global food retailers for competitive advantage; yet, there are dramatic differences regarding the acceptance of food production technology. This research contributes to the better understanding of how technologies exert significant and strategic weight in the food supplier selection process.     

Supermarkets in China: the case of Shanghai

Supermarkets have established a visible presence in Shanghai with some 1,000 stores and an estimated 5 per cent of market share. Local chains dominate the sector but well-known international retailers are very active. Studies indicate that a large proportion of consumers regularly shop in supermarkets but they use them 'selectively', mostly for packaged and processed foods, and continue to purchase fresh food in traditional outlets. The author uses a variety of data types and a number of research methods to analyse supermarkets' penetration into Shanghai. A background discussion of the food retail system in Shanghai highlights the traditional formats, the local and foreign supermarket chains, and the independent supermarkets. The data from a consumer shopping behaviour study is then used to assess supermarkets' penetration. Supermarkets' fast penetration into Shanghai is surprising given the findings of earlier studies, which identified the existence of serious limitations on the format's penetration into less developed countries (LDCs). Consequently, the focus in the second part of the paper is on explaining the reasons for the success of supermarkets. The impact of the factors identified in the earlier studies as constraining supermarkets' advance were evaluated and it was found that in Shanghai three of these factors (consumers, traditional retailers and government) did not cause serious problems for supermarkets. Only the supply-side conditions negatively affected their operations. The Shanghai example highlights the need to update our thinking regarding the LDCs' food retail modernization process in a number of directions. First local supermarket chains, not foreign ones, drive the process. Second, supply-side factors, not the demand-side ones that were emphasized in earlier studies, pose the major difficulties. Third, this analysis affirms the importance of the 'selective' adoption phenomenon where LDC consumers who regularly shop in supermarkets continue to purchase fresh food in traditional outlets. The implications of this analysis for food retail modernization theory and for practice are discussed and the prospects for further development of the supermarket sector in Shanghai are assessed.     

Implementation of technology and relationships to supply chain performance: apparel manufacturers' perspectives

Apparel manufacturers operate within a distribution channel with suppliers, retailers and consumers. In a competitive market, apparel manufacturers, in transactions with retailers, must make changes. These changes have potential to affect the supply chain and consequently to add or reduce value of products for the retailer. This study investigated changes in products and services associated with implementation of new technologies. A two-stage design used both a qualitative study and a quantitative study. The qualitative study with 10 industry personnel was used to develop the change variable. The quantitative study had US apparel manufacturers (n = 105) respond to a mailed survey about changes their firms had experienced. Findings indicated that implementation of Quick Response (QR) technologies when moderated by the demographics of fashion level, seasonality, and price point of the product did correspond with changes in product offerings and customer services.     

Demand forecast information sharing in the competitive online and traditional retailers

An important strategic issue for retailing business managers to study is the information strategy. In this paper, we develop a profit-maximization model to investigate the benefits of demand forecast information sharing for the competitive online and traditional retailers with the consideration of the compatibility of the product with online marketing. Both retailers use a Bertrand model to compete. We analyze and compare two scenarios: (1) when forecast information is not shared between the online and traditional retailers; (2) when forecast information is shared between the online and traditional retailers. Our results show that both the online and traditional retailers will be better off from information sharing. Especially when the channel forecast is less accurate, the product is more compatible with online marketing, and the market is more volatile, both retailers will profit more. Based on our results, optimal strategies are derived and probable paths of future research are identified.     

Marketplace spirituality: challenges for the New Age retailer

The consumers of New Age spirituality products have been said to be involved in a form of ‘pick and mix’ religion or to be browsing in a ‘spiritual supermarket’ which emphasises borrowing from a wide variety of cultures. The paper details the different physical and virtual channels through which consumers may access goods and services. Retailers who serve this market are typically independent traders and face many of the challenges that are characteristic of the small business sector. The term ‘New Age' is identified as applying to a broad range of retailers who attempt to occupy different market positions. The research however identifies considerable product overlap between these retailers and suggests that the market displays limited differentiation. As this paper is an exploratory study, it finally sets out a series of research themes for future work.