Motives behind retailers’ post-entry expansion - Evidence from the Chinese luxury fashion market

This study aims to examine the motives behind retailers’ post-entry expansion in foreign markets. Through case studies of eleven participating luxury fashion retailers in China, qualitative data was collected from twenty-two executive interviews. Although their initial market entry was driven by both reactive (push) and proactive (pull) factors, the motives behind their post-entry expansion have become predominantly proactive, especially long-term growth strategies, the ambition to extend their brands and retail formats to more cities, and the experiences gained in entry markets. The desire to optimize the retail store portfolio through multiple channel strategies have slowed down the expansions of physical stores.     

Consumer reactions to the availability of organic food in discount supermarkets

The market for organic food products in industrial countries has changed significantly. Conventional grocery stores have entered this market in recent years and now present an alternative point of purchase to farmers’ markets and specialized health food shops. In Germany, the main newcomers in this field are the discount supermarkets. The question is whether the increased supply of organic food products leads to sustained effects on consumer behaviour. In other words, can a first‐time purchase of organic products at a discounter act as an ‘icebreaker’ and induce further purchases? This question is addressed here. A consumer survey (n = 231) indicates that an initial purchase of organic food in a discount store is indeed very likely to lead to follow‐up purchases. The link shown is statistically significant. Furthermore, customers are very interested in the availability of locally grown products, reliable information and easy comparison with non‐organic products. Important recommendations concerning organic product range, display and information, especially for retailers, can be deducted.     

Why Private Label Grocery Brands Have Not Succeeded in Asia

Abstract

Lower disposable income among Asian grocery shoppers, heavily discounted private label grocery brands, relative to national brands, and a favorable retail distribution structure would seem to predispose the former to success. But this has not been the case. To learn why private label grocery brands have not succeeded in Asia, two identical shopper surveys were conducted in Wichita, Kansas (United States) and Prakanong-Bangna, Bangkok (Thailand) to examine possible factors relating to retail grocery shopping differences. The authors found that poor market knowledge, and the tendency of Thai consumers to infer product quality by using extrinsic cues such as high price were salient. Additionally, Thai choices were influenced more by social factors than Americans, making them less prone to bargain hunting. The paper concludes with the discussion of managerial implications and offers recommendations to retail chain owners operating in the region.     

Consumer satisfaction in retail stores: theory and implications

The substitution of small retail stores by the large stores has been a topic of debate among academics, practitioners, retailers and general public, especially in the context of foreign firms entering emerging markets such as China and India. The purpose of this research is to find out the determinants of consumer satisfaction in small and large retail stores in an emerging market, with a sample from India. Data were collected using a 39‐item structured questionnaire developed by the authors. The sample consists of 225 consumers who shop at retail outlets (Convenience sample of 125 consumers from small and 100 consumers from large stores respectively). Exploratory factor analysis grouped the 39 variables into 14 factors. Further, regression analysis revealed that six of the factors (Social desirability, staff friendliness, shopping economy, shopping ambience, family shopping and deal proneness) were major predictors of consumer satisfaction as they were found to be significant at 5% level. The significance of factors such as social desirability and staff friendliness imply that many consumers prefer those typical features of small stores, which in turn results in the likely coexistence of small retail formats in spite of the entry and proliferation of large retail stores from different countries. We posit three theoretical propositions to stimulate further research in this area.     

The battle of traditional retailers versus discounters: The role of PL tiers

For grocery retailers in Europe, intense competition from hard discount formats like Lidl and Aldi is an established part of the competitive landscape. Due to the highly competitive retail environment, traditional retailers’ private label (PL) tiers are now set to become the new battle ground in this competition. This study analyzes how PL tiers (i.e. economy, standard and premium) affect the competition between discounters and traditional retailers. We use a representative UK household panel dataset (2009–2010) for the ready-to-eat cereal and canned soup category, and estimate a demand model for the choice between national brands (NBs) and PL tiers across the top-7 UK retailers. Using our demand estimates, we conduct several counterfactual experiments that predict consumer responses to different strategies of traditional retailers and discounters in their fight for the consumer. In particular, we compare the effectiveness of three types of PLs offered by traditional retailers to fight discounters: economy PLs versus standard PLs versus premium PLs. We find that premium PLs are not very effective strategies for traditional retailers to fight with discounters. On the other hand, economy PLs manage to steal some market share from discounters, but as a downside they also cannibalize traditional retailers’ standard PLs. Standard PLs seem the most effective tool to fight with discounters, since they steal most market share from discounters (and NBs). From the point of view of the discounters, our results indicate that discounters benefit from a further increase in their NB offerings (assortment depth) as well as from a price cut in their own PLs.     

Store and store format loyalty measures based on budget allocation

In highly competitive environments, such as retail markets, characterized by a growing heterogeneity of demand and the proliferation of new retail formats, cross-shopping behavior between stores and formats is becoming increasingly common. This process makes customer loyalty a key strategic challenge for retailers that want to consolidate their position within the market. To contribute to the analysis and comprehension of this reality, the authors propose and assess different objective indicators of store loyalty, store format loyalty, and intra-format store loyalty based on budget allocation. Specifically, they analyze the role of retail format in observable loyalty patterns in a market. Through an empirical analysis of grocery purchase patterns of a sample of 580 Spanish households, the authors find that diverse objective loyalty indicators based on budget allocations provide very similar information from a practical point of view. They also find that consumers' regular use of various formats (specifically, supermarkets, hypermarkets, and discount stores) for their purchases explain observed disloyalty better than does purchasing in several stores within these formats. The observed patterns reveal that retail formats define differentiated store profiles that relate to the benefits sought in different purchase situations.     

The key role of intermediaries in Thailand's fresh food distribution system

New overseas retail formats have been entering emerging markets since the late 1990s. Accordingly, research on the advance of transnational retailers into emerging markets has recently flourished, and Thailand, one of the most popular host countries for transnational retailers, has often been examined as a case study. Many of these studies clarify the retail internationalization process and conclude that the new formats are driving the host countries' traditional distribution system toward a fundamental change. Although these studies consider the host countries' circumstances, they do not necessarily pay sufficient attention to specific characteristics of those host countries. In case studies of Thailand, the specific roles of intermediaries throughout the entire retail and distribution system are commonly overlooked. This paper argues that intermediaries continue to play an important role in Thailand's distribution systems, especially in the system of fresh vegetable distribution. This study first explains why earlier studies often attached less importance to the examination of intermediate distribution systems, despite the necessity of considering the roles of intermediaries for a deeper understanding of the impact of new retail formats on the host countries' distribution system as a whole. After discussing the key roles of intermediaries in Thailand's vegetable distribution system, this paper concludes that because modern retailers' involvement, particularly that of transnational retailers, at the agricultural production stage is still limited in Thailand, they often rely on intermediate distributors, such as local assembling wholesalers, coordinator-type intermediaries, and wholesale markets, for the intermediate distribution process.     

Conceptualising innovative customer-facing responses to planning regulation: the UK food retailers

While receiving extensive coverage across a wide range of industries, brand adaptation in the face of regulatory change has been largely under-researched in the field of retail marketing management. This paper seeks to fill this void by reviewing the strategic customer-facing responses of the leading UK food retailers to the tightening of retail land-use planning regulations; in doing so, this paper exposes a highly variable range of strategies that include store format adaptation, new format development, entry into new markets and more controversially the outright challenging of government regulation. The findings underline that although regulatory intervention can serve to restrict continued expansion, it can also encourage customer-focused innovation where well-established retail brands retain market focus but modify the shape of their ongoing growth.     

Two retailers go global – the geographical dimension

The world-wide expansion of two specialist retailers is analysed. Looming market saturation at home is a potential and quantifiable trigger (‘Why?’). It is paralleled by strong entrepreneurial ambition and possibly the desire to pre-empt competitors (‘When?’). Centralized and standardized operations favour organic growth through owned stores (‘How?’). The process follows roughly decreasing cultural closeness (‘Where?’), to which the logistics function coupled with relative market size may cause aberrations. In unfamiliar and distant markets, franchising is used which calls for a separate and more random entry sequence.     

Segmenting the growing UK convenience store market for retail location planning

Branded convenience grocery stores have become commonplace in UK retailing, increasingly adopted by retailers traditionally associated with superstore retailing. This paper initially explores the conditions in which this shift has occurred, looking at supply-side changes, planning policy, and changing demographics and consumer behaviour. Subsequently, this paper quantifies the geographical market share of a number of prominent convenience grocery retailers at the postal area level across the UK in 2012. Finally, the paper offers a segmentation of the convenience market into a series of clusters by location type. By understanding the drivers of trade in different locations, through the cluster analysis outlined in this paper, a more powerful set of location strategies can be adopted by companies expanding in this market.     

Little Retailers and Friends Target Big Retailers in the U.S., China,Japan, and Germany

Abstract

Wal-Mart isn't the only large retailer facing new obstacles to their operational policies and expansion plans, and the United States (U.S.) isn't the only country where resistance is growing to big chain store operations. Some consumers, unions, special interest groups, and governmental entities are erecting roadblocks for a number of large retailers in the U.S., China, Japan, and Germany. They're busily attacking retail brands using consumer images and perceptions of large stores as a fulcrum to portray the retailing whale as a shark. Some competitors even go so far as to say the problem isn't that the big stores want some of their business, the problem is that they want allof it.     

Price formation in channels of distribution with differentiated products: Theory and empirical evidence

This paper presents a theoretical and empirical study of price formation in markets where goods differ in two attributes, perceived quality of each variety, and service provided by the store where the good is sold. Price competition in the vertically differentiated market is modeled as a two-stage game where manufacturers choose the contract that determines wholesale prices, and retailers choose consumer prices. One important novelty of the paper is that it contemplates competition between brands of different quality in the same store, and competition between brands of the same quality sold at different stores. This is in fact the situation observed in the domestic detergent market and the predictions of the model can be used to guide the empirical analysis of the data available for such market in the area of Barcelona, Spain.     

Retailer Categorization: How Store-Format Price Image Influences Expected Prices and Consumer Choices

Prior research indicates that consumers may base their retail decisions (e.g., store choice, purchase quantity) on price image, which has been defined as consumer perceptions “of the aggregate price level of a retailer” (Hamilton and Chernev 2013, p. 2). The present research shows that consumers associate different price images not only with specific retailers, but more broadly with various store formats — such as grocery stores, convenience stores, and specialty stores. Six studies provide evidence that store-format price image exerts influence on consumer price expectations and store choice decisions, and that these retailer categorization effects are distinct from the effects of retailer price image.     

The moderating effect of average wage and number of stores on private label market share: A hierarchical linear model analysis

Existing research on private label market share is primarily in the context of the Western market. The Chinese market context research is scarce, although private labels are developing rapidly in the past several years. This study investigates how the average wage and number of stores affect the Chinese market's private label market share. More importantly, this paper examines the moderating effect of the average wage and the number of stores on the relationship between the private label market share and product assortment as well as the relationship between the private label market share and pricing. Data collected from a Chinese supply chain dyad is analyzed to study category management using hierarchical linear models. The results reveal that the average wage and the number of stores positively affect the private label market share. Furthermore, the average wage enhances the negative effect of the number of brands, weakens the negative effect of the private label price, weakens the positive effect of national brand price. Meanwhile, the number of stores enhances the positive effect of the SKU proliferation of private label, enhances the negative effects of the number of brands, and enhances the negative effect of the private label price. This study contributes to category management. Furthermore, the findings will be valuable to domestic and international grocery marketers and retailers operating private labels in China.     

Prices Paid in Grocery Markets: Searching Across Stores and Brands

Using a large sample of prices paid for 21 homogeneous grocery products available in several brands in each of 16 markets, we simulate the search behavior of a consumer following different shopping strategies using as many as four supermarkets. We find that price search can lead to substantial savings. Brand switching can generate savings at least as large as visiting multiple stores to find the lowest price for a single brand. Buying a private label is usually a better way to save than any amount of search for low prices on national brands. A case study in a small metropolitan area grocery market yields results substantially the same as the simulation results.     

Indian Consumers’ Perception for Packaged Food and the Strategies of Food and Grocery Retailers in India—An Analysis

The aim of this article is to study the Indian consumer buying decisions of packaged food and to assess the impact of demographic dynamics on their behavior and their perception about the practicing marketing strategies of different leading food retailers across the National Capital region. We have taken six different retailers—viz. Big Bazaar, Spencer’s Retail, Reliance Fresh, 6Ten retail stores, convenience stores, and kirana (mom-and-pop) shops—in our research in an attempt to examine the consumer’s perception for these retailers’ marketing strategies to sell packaged food. The purpose to choose these retailers is to assess the impact as a whole from organized food retail as well as unorganized food retailing on consumer buying decisions. Respondents were selected by using the stratified random sampling method, and participation was voluntary. 925 respondents from the cities Delhi, Gurgaon, Noida, and Faridabad were interviewed using a structured questionnaire. Statistical tools such as chi-square, factor analysis, ANOVA, and the Bonferroni test were used to attain final empirical results and to know the comparison of food retailer strategies with the customer’s choice of retailer.     

Predicting Under- and Overperforming SKUs within the Distribution–Market Share Relationship

This research presents a retail analytics application which uses machine learning (ML) to identify and predict under- and overperforming consumer packaged goods (CPGs) using retail scanner data. Essential to measuring market performance at the SKU level is the relationship between distribution and market share (the velocity curve). We validate that ML can reproduce the velocity curve, and ML is further used to predict underperforming, in-line performing, and overperforming SKUs relative to the velocity curve, based on a range of variables (SKU features) at a point in time. Our ML approach can correctly predict 83% of SKUs as under-, in-line-, or overperforming based on their characteristics. The research analyzes 9,321 SKUs of 2,565 brands across seven product categories of CPGs which were sold in 8,117 stores from 49 different retail chains of five different retail channels located in the US states of California, New York, Texas, and Wisconsin. The retail stores comprise convenience stores, drug stores, food stores, liquor stores, and mass merchandise retail stores. The data is Nielsen retail store scanner data for the calendar year 2014. The relationship between distribution and market share is a market-wide proxy for the ratio of relative sales in a category to, for example, aggregate shelf space, a key retail productivity metric. We further find indications that the distribution of SKUs across different store sizes, the stores’ category specialization, the line length of the brands, the overall performance of the parent brand, and sales consistency are the most important characteristics for the prediction of market share performance beyond the velocity curve. The methods and results presented will help CPG marketers (suppliers and retailers) understand which SKUs are under-, in-line-, or overperforming and the potential factors contributing to that performance. Optimizing assortments and portfolios is essential to decrease failure rates of individual SKUs. ML approaches can evolve to complementary support tools for such management problems.     

消费行为与企业战略的融合——不同零售业态的价格定位及其市场细分战略

现代零售业态发展趋于多元化,零售企业针对不同消费者的价格敏感程度来定位零售商品的价格,从而选择不同的销售渠道即经营业态,通过不同产品线的组合来满足不同层次消费者的需求。以此来体现企业的市场细分战略,形成顾客忠诚,实现其经济效益的最大化。     

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.