Distributional Effects of Lower Food Prices in a Rich Country

Controlling for differences in taxes and transportation costs, the Nordic Competition Authorities claims, in a report from 2005, that food prices are 11% higher in Sweden compared to the EU-15 countries. One explanation for this put forward in the report is the limited competition on this market which suggests there to be a potential for lower food prices. This paper focuses on distributional effects of a price decrease on food. Based on a simple model of household utility, the households demand for food is derived and estimated. Price and income elasticities for different income groups are then calculated based on these parameter estimates. Our results suggest that food is a normal good with an average income elasticity of approximately 0.18 and a price elasticity of 0.45. In addition, and of importance from a policy perspective, the results indicate the income elasticity to differ across income groups while price elasticities are constant.     

“If you loved our product”: Do conditional review requests harm retailer loyalty?

Online retailers frequently solicit reviews from customers who have recently purchased their products or services. This research examines how consumers react to conditional requests—wherein a retailer explicitly asks them to consider their experience but to only leave a review if this experience was favorable—versus more neutral unconditional requests. The provision of conditional requests is widespread, presumably because retailers believe that such requests will yield more positive reviews. Irrespective of whether these potential benefits materialize, the present research demonstrates that the consequences of conditional requests on customer loyalty (i.e., retailer engagement and repeat purchase behavior) are uniformly negative and surprisingly expansive. Six experiments with over 3,000 participants reveal that customers who receive conditional (vs. unconditional) requests are subsequently less loyal to the retailer, whom they perceive as manipulative and untrustworthy. This research also shows that easily implementable message modifications can attenuate (although not necessarily eliminate) the adverse effects of conditional requests on customer loyalty. Substantively, this work highlights how the messaging used in a review request affects customers’ inferences as well as their later judgments and behaviors. Managerially, the findings should exhort online retailers to exercise caution before sending conditional review requests given the risk of reputational harm.     

Co-Creating Value in a Retail Market Setting

It is usually assumed that the co-creation of value requires a close relationship between producers and customers. Typically, this is easier in a business-to-business context, where the numbers of customers and suppliers are relatively low and the capabilities and needs of each partner can readily be assessed. On the other hand, it could be assumed that the co-creation of value in a business-to-consumer context is likely to be more difficult, given the larger numbers of customers and more frequent, short-term, discrete transactions. This article investigates whether it is possible to co-create valuable consumer experiences in a mass market setting by examining the customer relationship strategies of eight Norwegian seafood retailers. The results show that considerable effort from both retailers and consumers are devoted to co-create valuable consumer experiences. We also reveal a repertoire of strategies to engage customers in the co-creation process. Findings are discussed and implications highlighted.     

Explaining customers' switching patterns to brand delisting

Delisting is frequently used by retailers to strengthen their negotiating position against manufacturers. However, both parties have to consider the risk of potential reactions when customers are faced with a reduced or modified assortment and thus, different choice. This research investigates customers' switching behavior if a brand is delisted by taking into account context theory. The results of two real-life quasi-experiments reveal that customer responses depend significantly on the context and that manufacturers may encounter substantially larger losses than retailers. Two further online experiments support the hypotheses on the existence of negative context effects for brand removals. Managerial implications can be derived and recommendations for further research are developed.     

Relationship intention and relationship quality as predictors of clothing retail customers’ loyalty

Retailers endeavour to establish and maintain strong relationships with customers in order to build customer loyalty. Unfortunately, such endeavours are not always successful as not all retail customers reciprocate retailers’ relationship efforts. Customers’ intentions to engage in relationships with retailers (i.e. relationship intentions) should thus be the starting point in building customer loyalty. Moreover, customers’ perceptions of the strength of their relationship with a retailer (i.e. relationship quality) should also be considered when building customer loyalty. The purpose of this study is to determine whether clothing retail customers’ relationship intentions and relationship quality, individually and in combination, predict their loyalty to clothing retailers. Data were collected from 511 respondents in South Africa’s greater Tshwane metropolitan area. From a hierarchical multiple regression analysis, it was found that clothing retail customers’ relationship intentions and relationship quality are individually, and in combination, predictors of their loyalty to the retailer. Results furthermore indicate that relationship quality mediates the relationship between relationship intention and customer loyalty. The findings highlight the importance of first determining customers’ relationship intentions, and then reinforcing positive perceptions of relationship quality when building customer loyalty.     

How to increase multichannel shopping satisfaction? An adapted Kano based stage-gate approach to select new technologies

Today, brick-and-mortar retailers with integrated online shops have many alternatives to increase their customers’ shopping satisfaction: They could invest in (for the retailers) new physical store technologies (e.g., beacons or magical mirrors if not implemented up to now), new online shop technologies (e.g., visual tagging or webcams), or in new less technology-based improvement options (e.g. events or product testing). We propose an adapted Kano based stage-gate approach to support multichannel retailers confronted with such selection problems. The approach is applied to a major European sporting goods retailer. 37 improvement options are pre-selected and evaluated by current and potential customers. It can be shown that instore returns, instore services, reserve&collect, click&collect, customization, product testing, and magical mirrors are drivers of satisfaction for the current customers and should be implemented in contrast to, e.g., geofencing or beacons. The potential customers are more technology-savvy, but show similar categorizations as a current customer segment and so confirm the selection.     

Third Party Customers Infecting Other Customers for Better or for Worse

In this article the effect of the displayed emotions of third party customers and purchase occasion on customers are examined, even when there is no direct interaction between customers. Three independent studies, including two experiments are employed. The first experiment examines the effects of both positive and negative displayed emotions of third party customers and purchase occasion on customer emotions and repurchase intentions, when there is no direct interaction between customers. The second experiment captures changes in the customers’ affective state on a moment‐by‐moment basis enabling differentiation between the effects of the service environment and the intervention of exposure to the displayed emotions of third party customers. Results show that customers are “infected” by the displayed emotions of third party customers even when there is no direct interaction between the customers. It is also demonstrated that the purchase occasion affects the type and intensity of emotions customers experience and the likelihood of repurchase. Implications for scholarly research and retailers are discussed.     

Marketing Sustainable Consumption within Stores: A Case Study of the UK's Leading Food Retailers

Sustainable consumption is a core policy objective within the UK Government's Sustainable Development Strategy and there is a growing awareness that retailers have a vital role to play in promoting more sustainable patterns of consumption. This article explores how the UK's top ten food retailers are communicating sustainable consumption agendas to their customers within stores in the towns of Cheltenham and Gloucester. The findings reveal that while these retailers are providing customers with some information on sustainable consumption the dominant thrust of marketing communication within stores is designed to encourage consumption. The article concludes with some reflections on how sustainable consumption fits into the large food retailers' business models.     

Retaining customers in UK financial services: The retailers' tale

Retaining customers offers major benefits to retailers of financial services, such as improved customer profitability and lowered acquisition costs. In spite of the importance to the sector in minimising customer ‘churn’, there has been limited investigation into the practices of customer retention. This paper reports empirical research into the retention of customers in traditional retailers of financial services in the UK to study the practices involved in retention. Following a pluralistic research design, data were generated by means of interviews with senior bank staff and by surveying staff involved either directly or indirectly with retaining customers. The study discovers key elements in the practice of retaining customers and also points to a number of potential difficulties as these organisations balance the activities of customer acquisition and retention.     

Swedish food retailers promoting climate smarter food choices—Trapped between visions and reality?

Food retailers are important actors in the development of a more environmentally sustainable food system. They are powerful in their procurement role and have the potential to promote and encourage consumers to buy climate smarter food. While food retailers have developed environmental visions, policies and goals, a major question is to what extent these commitments translate into action in the products sourced and promoted. This paper aims to explore the ways and extent to which food retailers assist consumers to make climate smarter food choices, more specific to reduce their meat consumption, and to identify potential and perceived difficulties towards doing this. The empirical data is based on interviews with 17 Swedish food retail representatives. The findings indicate that food retailers address climate change in their environmental policy statements and have environmental targets for retail operations, such as energy and transport efficiency and recycling of waste. Moreover, retailers promote and encourage consumers to buy organic, local, and seasonal food and to minimize food waste. No initiatives are taken to help consumers reduce their meat consumption. Yet, there is a growing consensus among scientists that meat production is a large contributor to greenhouse gas emissions. Food retailers seem reluctant to guide consumers to climate smarter food choices if it means reducing the meat range or the promotion of meat. To broaden the range of high quality and more expensive meat is seen as a more feasible option. The meat category is perceived as important to attract new and keep loyal customers.     

The store-as-a-brand strategy: The effect of store environment on customer responses

Despite their significance within the apparel industry, retailers selling just their own brand of apparel (single-brand apparel retailers) have not been examined for the relationship between their store environment and customer responses. This study explores the effect of store environment on customers’ internal evaluations and behavior toward single-brand apparel retailers. Further, to understand the store-as-a-brand strategy, this study examined whether customers have similar cognitive and affective perceptions toward the store versus merchandise. A mall intercept survey was conducted and a non-recursive structural equation model was employed to test the proposed hypotheses. This study found that social, design, and ambient cues as well as merchandise cues influence internal evaluations and ultimately approach behavior toward single-brand apparel retailers. This study also affirmed that the store-as-a-brand concept is valid for a single-brand apparel retailer.     

Is showrooming really so terrible? start understanding showroomers

The customer journey is more omni-channel than ever. In this scenario, so-called showrooming behavior emerges as a growing trend that is usually considered by retailers as a threat. The purpose of this research is to analyze whether showrooming, when compared with online buying behavior in which the customer does not visit the store prior to the purchase, has a positive effect on the price paid online by the customer. The empirical research is based on the database compiled by GfK, which contains detailed information about the shopping journey of 4067 customers who purchased products from different retail sectors. The results, derived from the estimation of several regression models, reveal that showroomers who use their smartphones in store are more likely to purchase products at a higher price, which explains why these customers can be of special interest to retailers.     

The nature of value created by UK online grocery retailers

The UK retail environment is extremely competitive, forcing retailers to constantly develop and enhance both their offerings and their formats. Probably the most significant changes taking place are coming from not the products being sold themselves, but rather when, how and where they are being sold. For example, new technologies such as the Internet, CD‐Roms, electronic kiosks and digital television are opening up new opportunities for retailers through remote purchasing and delivery. While a number of large retailers have made heavy investments into electronic retailing, such as Arcadia, Marks & Spencer, Tesco and Sainsbury, it is uncertain how they are going to use this technology to gain competitive or market advantages. Given the media attention which technologies such as the Internet has attracted, there is the danger that businesses may adopt an unfocussed use. This report identifies and evaluates the ways in which major UK grocery retailers are using the Internet to create value for their users over and above that which is offered by bricks and mortar stores. Web sites of three grocery retailers were evaluated via preselected criteria in order to assess how they created value for their customers. Applying Holbrook’s typology of consumer value, the findings of the research suggest that each of the retailers surveyed are similar in terms of the nature of the value they have created for consumers online, these being value‐as‐convenience and value‐as excellence.     

Erratum to: Competitive price-matching guarantees under imperfect store availability

This paper analyzes the role of verification of product availability in the context of competitive price-matching guarantees (PMGs). PMGs involve a retailer matching any lower price offered by competition for an identical item. Until now, researchers focused on the scenario where customers can receive the lower price with a simple proof (e.g., weekly flyers). However, in reality, retailers reserve the right to verify the availability at the competitor location; if the product is not available there, then the price-match request might be declined. We develop a price competition model to investigate the effects of verification of availability on price decisions and profit levels of competing retailers. In our model, demand is driven by the availability levels of retailers as well as the price-search cost and store-switching cost incurred by customers. Price-search cost leads to two customer segments: uninformed ones who have no knowledge about prices, and informed ones who are knowledgeable about prices. On the other hand, store-switching cost determines how many customers search for the product at an alternative location because of high price or unavailability at their preferred retailers. Our analysis reveals, among others, that the outcome of availability verification is linked to three factors: price-search cost, store-switching cost, and the reservation prices of customer segments. Verification of availability allows retailers to price discriminate customers who could not be discriminated otherwise, specifically those belonging to the informed customer segment. Furthermore, it is a significant profit-enhancing mechanism only if there are switching customers in the market. Interestingly, even though customers view the verification of availability as a hassle, it can actually result in them paying lower retail prices by increasing the level of retail price competition.     

Acquiring customers through online marketplaces? The effect of marketplace sales on sales in a retailer's own channels

Online retailers are increasingly using third-party online marketplaces (e.g., Amazon, Taobao) as an alternative sales channel to their website. While cross-channel sales elasticities have been established for many sales channel combinations (e.g., adding bricks to clicks), we lack an understanding of whether the use of third-party marketplaces grows or cannibalizes a retailer's sales. Practitioners argue that firms can build their e-commerce business through acquiring customers by selling on the marketplace. Indeed, a marketplace could complement a retailer's offering (e.g., acquiring new customer segments), although inventory effects might mitigate this complementarity. Alternatively, cannibalization might occur from losing customers from one's website to the online marketplace. The present research investigates which of the two opposing forces prevails using a time series of category sales data from one of the largest global marketplace sellers. The authors use vector autoregressive modeling to show that marketplace sales increase sales on a retailer's website (0.014% for every 1% in marketplace sales). This effect is strongest for categories with large choice and low product prices. Acquiring customers through the marketplace might be cheaper than through other sources (estimated at 24% of initial sales). However, online retailers should be aware that this strategy strengthens the marketplace and may have potential negative long-term consequences (e.g., through marketplace control of the customer relationship).     

The geography of lifestyle center growth: The emergence of a retail cluster format in the United States

Just as geographers have given much attention to the evolution of shopping malls and power center retail complexes, it is equally important for research in business geography to continue to provide developmental evidence as new and distinctive retail cluster formats emerge and grow. The lifestyle center is a unique type of retail complex that has experienced much expansion across the United States yet has not received much research attention from location researchers. This study provides answers to basic questions, including the geography of lifestyle center development, the relationship of lifestyle center development to traditional mall activity, and the characteristics of lifestyle center market areas in comparison with the trade areas of their mall counterparts. The results show that lifestyle centers are developing in distinctive locations and markets within American cities that are not well-served by traditional malls. The study results also establish that lifestyle centers have a significant bias toward location in large cities, representing a clear contrast with traditional malls and their locational orientation toward smaller centers. The study summarizes these findings and argues that the emergence of the lifestyle center format has important implications for retailers, commercial property developers, and local economic development officials.     

When Ethical Transgressions of Customers Have Beneficial Long-Term Effects in Retailing: An Empirical Investigation

The conventional wisdom, grounded in deontological ethics, is that retailers should extinguish unethical customer behavior. However, there exists an opposing teleological view that unethical behavior may be tolerated if its ultimate consequences are beneficial for all stakeholders. This is supported by a survey of retail managers conducted by the authors that revealed over 80% of the respondents are inclined to tolerate unethical customers whose actions have beneficial effects. The primary goal of this research is to investigate the boundaries of this teleological perspective, that is, whether ethical transgressions that appear to have negative short-term consequences for the retailer and other ethical customers can have beneficial longer-term consequences for all parties. We examine this question empirically with a longitudinal dataset, covering seventy weeks and over 48,000 accounts, from a popular Swiss online retailer. We focus on increased revenues and customer engagement as the benefit for the retailer. Our results show that customers registering multiple accounts in violation of the retailer’s policy comprise fewer than 11.5% of accounts, yet generate more than 27.6% of the retailer’s revenue. Specifically, their behavior leads to higher retailer revenues and greater engagement by other customers in the long-run. We discuss the implications of this insight for retailing managers as well as scholars.     

Competitive price-matching guarantees under imperfect store availability

This paper analyzes the role of verification of product availability in the context of competitive price-matching guarantees (PMGs). PMGs involve a retailer matching any lower price offered by competition for an identical item. Until now, researchers focused on the scenario where customers can receive the lower price with a simple proof (e.g., weekly flyers). However, in reality, retailers reserve the right to verify the availability at the competitor location; if the product is not available there, then the price-match request might be declined. We develop a price competition model to investigate the effects of verification of availability on price decisions and profit levels of competing retailers. In our model, demand is driven by the availability levels of retailers as well as the price-search cost and store-switching cost incurred by customers. Price-search cost leads to two customer segments: uninformed ones who have no knowledge about prices, and informed ones who are knowledgeable about prices. On the other hand, store-switching cost determines how many customers search for the product at an alternative location because of high price or unavailability at their preferred retailers. Our analysis reveals, among others, that the outcome of availability verification is linked to three factors: price-search cost, store-switching cost, and the reservation prices of customer segments. Verification of availability allows retailers to price discriminate customers who could not be discriminated otherwise, specifically those belonging to the informed customer segment. Furthermore, it is a significant profit-enhancing mechanism only if there are switching customers in the market. Interestingly, even though customers view the verification of availability as a hassle, it can actually result in them paying lower retail prices by increasing the level of retail price competition.     

Determinants of switching intention from web-based stores to retail apps: Habit as a moderator

Online retailers seek to motivate their customers to switch from web-based stores to retail apps as using the latter as a shopping channel has many benefits for retailers compared to web-based stores. This study aims to examine the drivers of customers' intention to switch from web-based stores to retail apps by applying the Stimulus-Organism-Response (S–O-R) model. The moderating role of habit was investigated. Data were collected from 389 Malaysian individuals through an online survey and analysed using the partial least squares technique. The results indicated that performance expectancy has a significant influence on switching intention and is driven by mobile characteristics. Furthermore, effort expectancy has a positive effect on both performance expectancy and switching intention and is triggered by visual complexity and aesthetic quality. The moderating effects of habit on the associations between performance expectancy, effort expectancy and switching intention were not supported. The findings extend the literature on retail apps by exploring the switching intention drivers and testing the moderating effect of culture, which have received less attention. The results enable retail apps' developers and marketers to strategise retail apps development and marketing activities in a way that encourages current web-based stores’ customers to use retail apps as a better alternative.     

Valuation and management of money-back guarantee options

In this article, we model money-back guarantees (MBGs) as put options. This use of option theory provides retailers with a framework to optimize the price and the return option independently and under various market conditions. This separation of product price and option value enables retailers to offer an unbundled MBG policy, that is, to allow the customer to choose whether to purchase an MBG option with the product or to buy the product without the MBG but at a lower price. The option value of having an MBG is negatively correlated with the likelihood of product fit and with the opportunity to test the product before purchase, and positively correlated with price and contract duration. Simulation of our model reveals that when customers are highly heterogeneous in their product valuation and probability of need-fit, and if return costs are low, an unbundled MBG policy is optimal. When customers have high likelihood of fit or return costs are excessive, no MBG is the best policy. When customers have small variance in product valuation, but vary greatly in likelihood of product fit, the retailer may prefer to offer a bundled MBG contract, extracting consumer surplus by charging a price close to the valuation level.