Emerging Market Retail: Transitioning from a Product-Centric to a Customer-Centric Approach

In an environment with digital disruptions, retailers must adopt a customer-centric approach to survive and compete effectively. Retailers need to be agile and forward-looking in adopting the relevant analytics and performance metrics to bring a customer-centric approach across upstream and downstream activities in the retail value chain. However, retailers in emerging markets (EMs) need clarity on the specific analytics and performance metrics in the value chain that will enable them to transition from their current product-centric state to the desired customer-centric state. Employing a triangulation approach (i.e., literature review, marketplace evidence, and managerial interviews) in the fragmented retail landscape of EMs, this study provides an organizing framework that explains: (i) the need for a customer-centric approach across the retail value chain, (ii) the specific performance metrics that need to be adopted across upstream and downstream activities in the retail value chain to enable EM retailers to achieve their desired customer-centric state, and (iii) the role of analytics in providing insights to achieve these performance metrics and improving monetary and non-monetary firm performance outcomes. We also provide firm-specific and macro-level conditions that can influence the EM retailers’ adoption of relevant analytics and explain the different paths retail formats can follow to adopt analytics. We present a strategy matrix that enables retail managers to identify the appropriate analytics to be adopted at different retail value chain stages to achieve desired performance metrics. We also highlight future research opportunities in retailing in EMs.     

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.     

Polygamous Store Loyalties: An Empirical Investigation

Grocery store loyalty has been traditionally viewed as a trait of consumers toward a particular store for their overall shopping needs. In this study, we argue that store loyalty shall be regarded as category specific trait, that is, a consumer could be loyal to store A in category one while at the same time be loyal to store B in category two. We name this consumer behavior polygamous store loyalties.We use an in-home scanning panel dataset that tracks purchases of 1,321 households in 284 grocery categories across fourteen retail chains over a 53-week period in a large US market. First, we provide model free evidence of polygamous store loyalties in the data, even though the overall store loyalty based on the traditional view is low. Next, we propose a model to separate category specific effects from overall store level effects. Finally, we discuss how retailers can use the results to gain a new perspective on store attractiveness to improve overall store patronage.     

零售情景下营销组合的基础与框架探索

在零售情景下,传统营销组合范式具有一定的局限性。这是因为传统营销组合框架是以制造商为视角构建起来的,而制造商与消费者交换的内容同零售商与消费者交换的内容是不同的。制造商向消费者提供的是价值方案,零售商向消费者提供的是合格价值方案的获取过程。因此,获取过程是零售商与消费者交换的基本内容。效率、乐趣、费用、沟通是消费者与零售商发生交换的四个必要条件,即零售营销的四项基本功能。零售营销活动的功能性归属分别是:定价属于费用类别,广告属于沟通类别,物理环境的设计与管理属于乐趣类别,商品组合、选址、商店布局、物流与结算属于效率类别。     

The effects of in-store themed events on consumer store choice decisions

Retailers are increasingly using in-store events to provide shoppers with unique experiences that will enhance shopping value and help differentiate their stores from competitors. However, relatively little is known about how consumers respond to experiential retail events in terms of their store choice decisions. The purpose of this research was to find out how in-store retail events affect consumers in terms of their store choice decisions. The paper presents findings from a discrete choice experiment that manipulated the presence of different types of in-store themed events in a do-it-yourself (DIY) category. Participants were 312 randomly recruited residents of Melbourne, Australia, who had recently shopped at a hardware store. The experiment was implemented as a mail-back survey. Using logit models the authors assess the effects of the in-store events along with those of various traditional store attributes, including store appearance, price image and distance, on consumer store choice decisions.     

The impact of retail store format on the satisfaction-loyalty link: An empirical investigation

Maintaining and improving customer loyalty is an important strategic goal for businesses as competition has intensified in almost all sectors of the economy. Retailers, in particular, feel the need to invest in customer loyalty more than ever before as channels and store format alternatives available for consumers to shop at have proliferated. However, current research in marketing provides little guidance to retail managers about developing and sustaining shopper loyalty across different store formats. Toward filling this gap, the present research examines the shopper satisfaction-loyalty link in two different store formats (supermarkets and hypermarkets). Using data from surveys of 505 Spanish shoppers at both types of retail formats, we examined how shoppers' attitudinal and behavioral loyalty develop differently. Our results reveal important differences and offer directions for the pursuit of different strategies by supermarkets and hypermarkets. The specific strategies, and the implications of this research for theory and practice are discussed.     

Evaluating the potential of agent-based modelling to capture consumer grocery retail store choice behaviours

Evolving consumer behaviours with regards to store and channel choice, shopping frequency, shopping mission and spending heighten the need for robust spatial modelling tools for use within retail analytics. In this paper, we report on collaboration with a major UK grocery retailer to assess the feasibility of modelling consumer store choice behaviours at the level of the individual consumer. We benefit from very rare access to our collaborating retailers’ customer data which we use to develop a proof-of-concept agent-based model (ABM). Utilising our collaborating retailers’ loyalty card database, we extract key consumer behaviours in relation to shopping frequency, mission, store choice and spending. We build these observed behaviours into our ABM, based on a simplified urban environment, calibrated and validated against observed consumer data. Our ABM is able to capture key spatiotemporal drivers of consumer store choice behaviour at the individual level. Our findings could afford new opportunities for spatial modelling within the retail sector, enabling the complexity of consumer behaviours to be captured and simulated within a novel modelling framework. We reflect on further model development required for use in a commercial context for location-based decision-making.     

Investigating the impact of shopper personality on behaviour in immersive Virtual Reality store environments

The increasing availability of immersive Virtual Reality (VR) hardware in private households has opened up significant opportunities for innovations in online retailing. Online retailers can develop realistic, albeit simulated, three-dimensional retail environments that use immersive elements to create a more exciting online shopping experience. Nevertheless, to date, very little is known about how observed shopper behaviour in immersive VR store environments compares to existing knowledge in the physical or other online retail research literature. To that end, this paper focuses on human personality traits and whether these translate to familiar observations of in-store shopper behaviour. Specifically, the research examined the ‘Big Five’ personality traits – agreeableness, conscientiousness, extraversion, neuroticism, and openness to experience, and their impact on purchase behaviours such as product inspection time, proportion of private label purchases, and impulsive buying. It is further investigated how the purchase behaviours impact the outcomes of the shopping trip. The results revealed a variety of expected relationships between purchase metrics and the outcomes of the shopping trip; however, in stark contrast to the findings of extant studies, shopper personality did not show any impacts on the investigated purchase behaviours. Further research is needed to determine whether this failure to replicate past studies of shopper personality was, in fact, due to differences in the store environment or rather due to the moving from survey-based method of shopper data collection to naturalistic observation. Nonetheless, this finding has important implications for e-retailing strategies and market research practices.     

Retailer Marketing Communications in the Digital Age: Getting the Right Message to the Right Shopper at the Right Time

The evolving retail landscape in the digital age has resulted in opportunities and novel capabilities for retailers. This paper identifies four key challenges facing retailers based on insights from practitioners and academics using the customer journey framework as a guide. It then considers evidence from both practice and theory on how contemporary retailers might best innovate in the face of these challenges, to get “the right message to the right shopper at the right time.” Historically, retail was largely constrained to focus on individual touchpoints as manufacturers drove the majority of communication decisions. More recently, with the ability of e-commerce to capture the shopper decision journey more comprehensively, retailers are better able to understand what the right message would be as well as where, when, and how to deliver it to reach the most responsive shoppers to achieve the retailer’s strategic objectives in each phase of the journey. It is within this context that this paper considers the following key challenges: 1) When is the right time to communicate with a given shopper?, 2) What is the right way to communicate with a given shopper?, 3) What is the right way to leverage in-store collateral?, and 4) How do we cultivate the right long-term relationship with a shopper?     

Exploring supermarket loyalty card analysis to identify who buys fairtrade

The aim of this paper is to show how supermarket loyalty card data from a panel of over 1.7 million shoppers can be analysed to provide insights to profile the fairtrade shopper in order to enhance making targeted marketing decisions. The paper demonstrates the huge marketing potential that loyalty-card-based shopper segmentation can bring to objectively describe who buys fairtrade products, compared to profiling shoppers through a claimed/reported behaviour data-set. A paired-samples t-test is used to test the degree of appeal of fairtrade tea, coffee, chocolate, drinking chocolates, banana and sugar categories in Tesco to life-stage and lifestyle shopper segments in terms of their retail sales values over 104 weeks. The results show that analysing loyalty cards based on actual behaviour provides a more detailed picture of how specific fairtrade food product categories appeal to the various life-stage and lifestyle shopper segments.     

How in-store educational and entertaining events influence shopper satisfaction

While recent years have seen an increased use of educational and entertaining events within the store environment, little seems known about how consumers value such events. This study investigates how the staging of education and entertainment-focused in-store events impacts on consumers’ value perceptions, arousal levels and store satisfaction. It is hypothesized that such events have a positive effect on store satisfaction but that their effects are moderated by a shopper’s motivational orientation. Findings from a scenario-based experiment among 786 shoppers from two retail categories (hardware and computer stores) provide support for this. The findings show that task-oriented consumers derive more value and satisfaction from an education-focused event than from an entertainment-focused event, while recreation-oriented consumers appreciate either type of event. The study findings imply that providing education themed events is a safer option for retailers than providing entertainment-focused events because education satisfies a wider range of shopper needs. Shoppers overall derive pleasure from entertainment but task-oriented shoppers tend to also see it as a hindrance to the convenience of shopping, with the result that for these shoppers the hosting of entertainment-focused events may result in reduced store satisfaction levels.     

In-store music and aroma influences on shopper behavior and satisfaction

Retail markets are increasingly competitive and retailers continuously look to differentiate their retail offering. One way to differentiate is by providing a pleasant and exciting shopping ambience. This paper experimentally tests the effects of music (volume high or low) and aroma (vanilla scent present/absent) on young fashion shoppers in a real retail setting. Results show that volume of music and the presence of a vanilla aroma both have a significant impact on shoppers' emotions and satisfaction levels. Additional analysis reveals that the arousal induced by music and aroma results in increased pleasure levels, which in turn positively influences shopper behaviors, including time and money spend, approach behavior, and satisfaction with the shopping experience. Direct effects of arousal on behaviors as well as an interaction effect between music and aroma on pleasure and time spent in the store are also present. The paper contributes to the better understanding of shoppers' emotions and shopper behaviors in response to in-store atmospherics and offers retailers practical insights into how to create competitive advantage by customizing the atmosphere in their stores.     

Revisiting customer analytics capability for data-driven retailing

Customer analytics is one of the most dominant strategic weapons in today's competitive retail environment. In spite of its strategic importance, there is scant attention to investigating customer analytics capabilities in the retail context. Drawing on a systematic literature review and thematic analysis, this study proposes a multidimensional customer analytics capability model by identifying relevant dimensions and sub-dimensions in retail settings. The principal contribution of this study is that the model links a customer analytics perspective to a resource-based view (RBV)-capability of the retailers by proposing six customer analytics capability dimensions and twelve sub-dimensions in the spectrum of market orientation and technology orientation. The customer analytics capability dimensions depict three crucial themes of marketing, such as value creation (offering capability and personalization capability), value delivery (distribution capability and communication capability), and value management (data management capability and data protection capability). By incorporating this capability dimensions, practitioners will likely be able to engage customers and enhance customer equity.     

Retailers’ Price Positioning and the Motivational Profiling of Store‐Brand Shoppers: The Case of Spain

In recent years, retailers have worked to advance store‐brand strategies, leading to greater success and higher congruence with the retailer's positioning. In this new competitive context, this research aims to characterize store‐brand shoppers in terms of motivation and benefits sought, as well as analyze, on the basis of congruence theory, the moderating role of a retailer's price positioning on store‐brand shopper characterizations. The empirical study combines survey and household panel information related to leading retailers in Spain; the findings reveal that store‐brand shoppers are motivated by their price sensitivity, whereas they are less sensitive to service quality and name brands. However, the retailer's price positioning exerts a moderating effect on shopper profiles: In less price‐oriented retail chains, store‐brand purchases seem motivated less by price and more by quality, brand awareness, and brand reputation.     

Taking advantage of the gluten-free opportunity: Assortment as the key driver for modern grocery retailers

Over recent years, gluten-free products have shown a significant increase in consumption internationally. Retailers from the modern grocery distribution have the opportunity to take advantage of this positive trend, thus benefitting remarkably in terms of sales and store patronage. The present work is based on the analysis of Italian IRI sell-out data from 2015 to 2019 and aims to verify the role of assortment as an effective retail marketing lever in stimulating gluten-free products sales share compared to that of gluten-containing counterparts. Applying different panel data techniques, we obtained that increasing their assortment share can significantly stimulate gluten-free products sales in general and, within this segment, private label sales in particular.     

To retrench or invest? Turnaround strategies during a recessionary time

By analyzing retail news published between 2008 and 2011, we examined retrenchment and investment strategies employed by retailers in the U.S. in response to the Great Recession. We found four categories of retrenchment (store closings, buyouts, bankruptcies, and pull backs) and five categories of investment (market expansion, product development, service development, strategic partnerships, and corporate social responsibility). Retrenchment decisions were constrained by retailers' financial strength, whereas investment decisions varied with firms' strategic orientations and resource capabilities. Findings of this study enhance theoretical understanding of underlying factors of specific retrenchment and investment decisions that retailers pursued during a challenging economic time.     

Responses to out-of-stocks and on-shelf availability in UK fashion retailing

The purpose of this study is to examine the attitudes and approaches adopted by fashion retailers when presented with an out-of-stocks (OOS) issue and to measure in store on-shelf availability (OSA) of one particular fashion retailer across a sample of stores across the United Kingdom. The research was carried out in three phases. The first two phases used participants' observation/mystery shopper techniques to determine shop-floor representatives' responses to an OOS situation in the jeans category of seven retailers and then to measure the OOS/OSA of a sample of 10 stores of a middle market fashion retailer in the United Kingdom. A comparison with the electronic inventory database readings was then carried out. The final phase involved interviews with head office management to explore possible differences between headquarters (HQ) policy and store operations. The first phase of the research revealed that all retailers had processes available to them at store level to solve OSA issues, but six of the seven retailers could not solve the problem. From the in-depth survey of OSA in the sample of stores, availability was on average 79% against a database availability figure of 90%. The difference of 11% is mainly related to inventory inaccuracy. The interviews with head office management did reveal that the differences in attitudes between HQ staff and store staff could be attributed to a lack of communication to train staff adequately on processes to solve OOS issues.     

How category characteristics affect the number of store brands offered by the retailer: a model and empirical analysis

Our research examines why retailers offer, not one, but multiple store brands in some product categories. More specifically, we are interested in how certain product category characteristics affect the number of store brands. We model a product category consisting of two incumbent national brands that may differ in strength. The retailer may introduce one or two store brands depending on which maximizes category profits. Our analysis suggests that the retailer is likely to carry two store brands in categories where (i) the national brands are similar in strength; and (ii) the price sensitivity between the national brands is low. Interestingly, the conditions that support the introduction of more than one store brand are quite different than the conditions that would facilitate the introduction of additional national brands. We provide empirical evidence that support our model-based predictions.     

Reciprocal Effects of the Corporate Reputation and Store Equity of Retailers

Retailers aim to strengthen their ability to influence consumer behavior by building corporate reputation and store equity: for instance, by making promotional investments. However, little is known about the directionality of consumers’ corporate and store associations, that is, how reciprocal relationships between consumers’ perceptions of corporate reputation and store equity affect store loyalty. To illuminate this issue, we draw upon a study with a cross-sectional design and two studies with longitudinal designs. We find that retail store equity interacts with corporate reputation and is a more important driver of increased loyalty than corporate reputation. We conclude that retailers should pay attention to reciprocal effects, especially in determining the relative allocation of investments across corporate and store levels.     

Developing a framework to improve retail category management through category captain arrangements

Manufacturers and retailers have divergent profit objectives. A manufacturer wants to maximize the profits of its own brands. The retailer, on the other hand, wants to maximize the profit of the entire product category. In spite of these apparently diverging profit objectives, both manufacturers and retailers are increasingly realizing that profit margins of both can be increased through cooperation rather than confrontation. Category management is one such cooperative strategy that often involves the appointment of a leading manufacturer as the “category captain”. A category captain advises the retailer on the best way to price, display, and promote products in a category, including those of the competitors. This arrangement, therefore, ensures retail efficiency but raises doubt about possible misuse of power by the category captain to circumvent fair competition. In this paper, we outline the antitrust concerns about this arrangement, and provide a framework that effectively addresses these concerns.