Effects of neighbourhood characteristics on store performance supermarkets versus hypermarkets

We investigate the impact of neighbourhood characteristics on the relative attractiveness of product categories within a store, with special attention for the differences between hypermarkets and supermarkets. We consider two questions. Firstly, is the impact of neighbourhood-specific factors on attractiveness of product categories smaller for hypermarkets than for supermarkets? Secondly, is there a difference in relative attractiveness of product categories between supermarkets and hypermarkets and to what extent is this difference dependent on kind of neighbourhood? For the impact of store and trading area characteristics on category and store performance, we use a framework that was originally presented in Campo et al. (J. Int. Res. Market 17 (2000) 225). Empirical application to national stores of a European retail chain confirms the differential impact of neighbourhood characteristics on supermarkets and hypermarkets. The research proves that geomarketing analysis can be useful for developing micromarketing strategies.     

The impact of location factors on the attractiveness and optimal space shares of product categories

In this paper, we investigate the impact of location characteristics on the relative attractiveness of product categories within a store, and formulate micromarketing implications for the allocation of store space to categories. We present a framework for the impact of store and trading area characteristics on category and store performance, which integrates and extends previous geomarketing research. Building upon this framework, we propose a tractable and flexible procedure for assessing location influences, and derive optimal space allocation rules for different location profiles. Empirical application to national stores of a European retail chain confirms the differential impact of location characteristics on categories' attractiveness. Tailoring the allocation of store space to these location-based differences in category appeal leads to a significant increase in overall chain profitability.     

The impact of weather on consumer behavior and retail performance: Evidence from a convenience store chain in China

Despite extensive use of weather data to adjust replenishment and inventory strategies in the retail industry, these companies do clearly know the effect of weather on consumer behavior and retail performance. How does weather affect consumers' purchasing behavior and thus retail performance? We study empirically these questions by analyzing more than 6 million transactions made by more than 1.62 million unique consumers at 146 convenience stores in a convenience store chain in China. We choose sun, rain, temperature, and air quality index as the main weather variables. We use the average number of items per order and the average price of each item in each order as indicators of consumer behavior, and use store daily sales as an indicator of retail performance. We found that under rainy weather, people will buy more products with higher item prices in one order. When temperature rises, people will buy fewer products with a lower item price in one order. In addition, sunny weather and rainy weather have a positive impact on daily sales than cloudy weather. Air quality has a negative impact on daily sales, while temperature has a positive impact on sales. Finally, we study the impact of weather on different product categories. We find that the results depend on the product category characteristics.     

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.     

Evaluating store location and department composition based on spatial heterogeneity in sales potential

In this paper, we extend a retail location evaluation model with the possibility to include the effect of department size adaptation at the store level. We relate department-level store sales to a store's competitive and demographic environment, thereby providing richer insights into the drivers of department sales than a model of just aggregate sales. Further, we accommodate heterogeneity in consumer characteristics over space by using zip code level data and unobserved spatial effects in department sales by including spatially autocorrelated error terms.Using spatial panel data for 30 clothing stores belonging to one Dutch retail chain, we demonstrate how to use the modeling approach to analyze and predict sales performance of new and existing stores. We show that the predictive performance of our model is superior to that of a benchmark model that does not include spatial autocorrelation.     

Using workplace population statistics to understand retail store performance

We explore the value of recently released workplace geographies and accompanying census-based workplace zone statistics (WZS) and an associated classification of workplace zones (COWZ). We consider how these data could support retailers in their operational and strategic decision-making, including the evaluation of retail demand and retail store performance in localities where trade is driven by non-residential demand. In collaboration with major UK grocery retailer The Co-operative Group we explore the relationship between workplace population composition and store trading characteristics using a series of case study stores within Inner London. We use empirical store trading data to identify store and product category level temporal sales fluctuations attributable to workplace populations. We also use census-derived flow data to identify the spatial origins of workplace population inflow. We identify that store performance exhibits characteristics attributable to demand driven by these populations. We conclude that workplace population geographies, WZS and the COWZ afford considerable potential for understanding drivers of store performance, observed store trading patterns and evaluation of retail store performance. We suggest that the next step is to build these populations and their micro geography spatial and temporal characteristics into predictive models and evaluate their potential for store performance evaluation and location-based store and network decision-making within this sector.     

The influence of a retailer's corporate social responsibility program on re-conceptualizing store image

The construct of retail store image is typically built based on a variety of the store's functional attributes. This conceptualization fails to consider the role of corporate social responsibility (CSR) polices and practices in forming store image. Results from a study of 460 consumers indicate CSR influences consumer store image. CSR is particularly effective at influencing store image when the retailer experiences a positive performance perception among its customers. Consumers shopping at such stores are more receptive to CSR programs, and experience significant increases in their level of satisfaction and loyalty to the store through the addition of these programs.     

The current and future sales impact of a retail frequency reward program

This research presents an empirical study of the impact of a retail frequency reward program on store sales. We examine both the “points pressure,” or short-term impact, and the “rewarded behavior,” or long-term impact. The points-pressure impact is due to forward-looking customers increasing their purchase levels in order to earn the reward. The rewarded-behavior impact is evidenced as purchases above baseline levels after an individual has received a reward and could result from either behavioral learning reinforcement or positive affect resulting from the reward. We investigate a turkey reward program that awarded free turkeys to shoppers who accumulated the required sales levels during an 8-week period. We find both a points-pressure and rewarded-behavior impact. These effects are statistically significant and managerially relevant in that the program is apparently profitable. The points-pressure impact is especially strong among customers who do not place value on frequent shopper programs that in general deliver immediate price discounts. The key implications are that frequency reward programs of the form, “buy x, then receive xx” can be profitable, are segmentation strategies, and can complement a store's overall frequent shopper program.     

An Assessment of When,Where and Under What Conditions In-Store Sampling is Most Effective

In-store product sampling is a commonly used promotional technique designed to give prospective consumers an opportunity to experience a product prior to purchase. While prior research has documented a positive relationship between short-term sales and perceptual measures of the customer shopping experience, little is known about the long-term impact of sampling or factors that moderate its success. In this paper, we develop an empirical approach that allows us to study the short-term and long-term effects of in-store sampling on both own and competitive products. We apply our approach to six store-level scanner data sets across four different product categories and show that in-store sampling has both an immediate (short-term) and sustained (long-term) impact on sales. We also show that the impact of sampling on sales is moderated by the characteristics of the store conducting the event, and that repeated sampling for a single product leads to a multiplicative increase in its long-term sales performance. We find that, unlike many types of in-store promotion, sampling results in a category expansion effect as opposed to a pure substitution effect. We contrast the immediate and long-term sales patterns for in-store sampling to those of product displays and discuss managerially relevant differences. Finally, we demonstrate incremental profit implications and store selection scenarios for different incremental costs of conducting the in-store events using constrained optimizations.     

Beyond presence: Creating attractive online retailing stores through the cool AR technology

Augmented reality (AR) is increasingly coming into the spotlight for its potential to improve the consumer experience through the creation of presence. This research aims to explore the theoretical mechanisms through which AR-based product presentation influences online store attractiveness and whether the effects differ in the purchasing contexts of hedonic and utilitarian product types. From the perspective of consumers' bidimensional experience, we find that AR increases online store attractiveness by creating perceived coolness (intrinsic attribute) and spatial presence experience (extrinsic attribute), which would further have a positive impact on consumers' purchase intention. The mediating mechanisms are different in purchasing contexts of various product types: for hedonic products, perceived coolness and spatial presence are parallel mediating factors leading to the improvement of online store attractiveness; while for utilitarian products, only the mediation effect of spatial presence presents. Our findings enrich the literature on AR marketing by proposing an insightful mediating force (i.e., perceived coolness) to complement the effect of presence, and explore the different purchasing contexts. We also provide managerial guidance for e-retailers to differentiate AR interface design for diverse product types to apply AR technology effectively.     

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.     

Bridge,Focus, Attack,or Stimulate: Retail Category Management Strategies with a Store Brand

We investigate a monopolist retailer's category management strategy where the main strategic decisions are how to horizontally position a store brand relative to the incumbent national brands and how to price the store and national brands for retail category profit maximization. We analyze a market composed of two consumer segments with differing tastes and heterogeneity with respect to willingness to pay and a product category consisting of two competing national brands and one store brand. We find that contrary to the existing literature, it is not always optimal for a retailer to position its store brand against the leading national brand; instead there are many situations where it is best to position the store brand close to the weaker national brand or to position it in the “middle” so it appeals to both national brands' target segments. In the process we identify four distinct category management strategies that a retailer can use with a store brand. In three of these the optimal store brand price is the brand's monopoly price, while in the remaining one strategy the price is lower. We also suggest an easy to implement means for a retailer to determine which strategy is best to use, depending on the particular competitive environment present before the introduction of the store brand and the relative quality of the store brand. We find that the store brand entry is most beneficial to the retailer when the national brands are moderately differentiated. Finally we show that introducing a store brand not only allows the retailer to garner a higher share of the channel profits through higher retail margins, but also often provides the retailer the benefit of increases in national brand unit sales as well as incremental sales from the store brand. JEL Classification: M310     

Two Studies on Using Specialty Advertising in Retail Sales Contests

Two studies were conducted to assess the impact of specialty advertising as a promotional tool in retail sales contests. In both cases, specialty advertising was directed toward the retail sales force rather than the consumer. It was felt that s~ecialtv advertisine could perform a reinforcement and reminder role as well as a mot: vating role for encouraging retail salespeople to participate in a contest. In the first study with Chick-fil-A, specialty advertising had an overall positive impact on employee performance. Total sales vol- ume increased in three of the four stores studied, while it increased in only two of the four stores that did not receive specialty advertis- ing. And while sales volume as a whole increased during the contest period, the largest percentage of increase occurred in those stores where specialty advertising was used. In the second study, the FanFair study, the effectiveness of spe- cialty advertising was very apparent. In both markets where special- ty advertising was used, Dallas and Phoenix, sales increases in graphics-the contest'objective-far exceeded total store sales. In the market where specialty advertising was not used, Milwaukee, sales of graphics were down much more than total store sales. Specialty advertising was found to be particularly cost effective in the Dallas market, where profitability far exceeded the cost of the specialties.     

Implications of Improved Information on Market Performance

The retail food market in Edmonton, Alberta represents an unusual market to study. The basic problem inherent in this metropolitan market area of 500,000 people, is the dominance of a single retail food chain whose food sales represent up to 65 percent of total food sales. Conventional economic theory would normally lead to the conclusion that market performance would be improved by a direct attack on the structure of the market which in turn would involve the absolution of a highly successful retail operation. However, the application of monopoly anti-trust laws was certainly not an alternative available to the research team, even if it was considered to be a feasible solution to the problem. Therefore an attempt was made by the authors to observe the impact of improved consumer market information on corporate performance. The following article documents the research and leads towards a time honored conclusion that additional market information would improve consumer welfare in a meaningful manner.     

Determinants of store patronage: The roles of political ideology,consumer and market characteristics

In this study, we investigate the roles of political ideology, demographic characteristics and market environment in determining households' store patronage behavior. We measure two key dimensions of store patronage—store format preference and store loyalty trait—of 23,092 U.S. households using purchase data from Nielsen Homescan panel. We use county-level vote share of the Republican and Democratic parties across three U.S. Presidential elections to measure political ideology. We obtain measures of demographic characteristics and market environment from the Nielsen panel and the U.S. Census Bureau. Using fixed-effect regression models, we find systematic association between political ideology and households’ store patronage. Our findings contribute to the growing literature in marketing on the effects of political ideology on consumer behavior and have important implications for store loyalty programs, cross-selling strategies and store location decisions.     

Sales promotion practices of consumer goods companies in an advanced developing country

In recent years, manufacturers of consumer and industrial goods as well as service firms have been increasingly thinking in global terms and paying more attention to sales promotion in their overall promotional programmes and strategies. The purpose of this paper is to investigate the consumer sales promotion practices of consumer goods producing companies in the advanced developing country of Turkey. It was discovered that sales promotion activities are gaining importance in overall promotional practices of Turkish companies, though there are differences in its use by type of industry, size of company, area of business and locus of decision-making within the firm. Furthermore, differences were detected between companies using sales promotions versus other forms of promotional techniques such as mass media advertising, personal selling and publicity. Study findings may be applicable to other developing countries that are at a similar level of socio-economic, market and technological development as Turkey.     

The impact of store flyers on store traffic and store sales: a geo-marketing approach

This paper analyzes the impact of the composition of a retailers’ weekly store flyer on store performance. The paper presents and tests propositions on how a store flyer’s size, its average discount size, and the allocation of store flyer space to category and brand types, affects store traffic and sales. The moderating impact of location variables—socio-demographics of trading area inhabitants, characteristics of the store and competition—is also discussed and empirically tested. The outcomes provide key insights for retailers with regard to the financial ramifications of store flyer competition.     

Integrative effects of firms' price and endorsement strategies on consumers' loyalty intention

This research examines the effects of price and brand endorsement that are adopted by firms from a consumer-based viewpoint, and provides practical brand management discussions as a reference for both manufacturer brands and retail store brands. According to the findings, manufacturer brands support high prices and boost those vivid impressions which are helpful in engendering consumer loyalty intention. Without a careful evaluation process, a brand-endorsing strategy may prove detrimental to the manufacturer. Retail store brands follow distinct pricing policies and carry out brand-endorsed strategies. Price/endorsement stimuli influence consumer brand loyalty through the partial mediating effect of brand impression. Manufacturers and retailers could define appropriate price premiums on products with a potential for a manufacturer–retailer brand co-branding as identified by market research, thus increasing the sales of both.     

Financial consequences of adding bricks to clicks

Many e-commerce retailers are adding “bricks to clicks” – that is, opening an offline channel in addition to their digital sales channel(s). Taking the perspective of such an online pure player, this research assesses the effects of offline channel additions on the financial performance (e.g., sales, profits) and customer behavior (e.g., basket size, return rate) in the extended channel network as well as the initial online channel of the retailer. Across two studies, one at the zip code level and the other at the customer level, we find that the channel addition of a fashion and lifestyle retailer is synergistic in terms of increasing not only overall sales but also profits. At the same time, the new offline channel does not significantly cannibalize the existing online shop, as new customers are attracted through the channel addition. The effects of channel additions, however, are influenced by characteristics of customers gained before the channel addition and of the trade area around the newly opened stores: among existing customers, those who bought more in the online channel do not react as positively to the addition of an offline channel, and trade areas with socioeconomic characteristics that are often viewed as disadvantageous for digital retailing (e.g., an older population, lower average income) show a stronger positive sales effect of a brick-and-mortar addition. The attractiveness of the offline channel for these customer segments highlights that adding bricks to clicks might be most attractive for those customers who were previously unwilling to purchase from an online-only retailer.     

Identifying factors affecting consumers purchase incidence at retail trade shows

The purpose of this article is to examine variables influencing purchase incidences at retail trade shows. To this end, retailer and consumer related antecedent variables are proposed. The retailer related variables are represented by store environmental cues of sales staff services, store atmosphere and product assortment. The consumer related variables are represented by impulse buying tendency and perceived time pressure. Drawing on relevant literature, hypotheses are developed to link each of these variables to purchase incidence. Data were collected using questionnaire from shoppers (N=95) at a large retail trade show. The hypotheses were tested using partial least square path modeling. The findings indicate that consumers’ favorable evaluation of retailers’ sales staff services, store atmosphere and product assortment led to more purchase incidences. The findings about the consumer related variables indicate that impulse buying tendency led to more purchase incidences whereas perceived time pressure led to fewer purchase incidences. Drawing on these results, several implications for practice and research are suggested.