Gains and losses of exclusivity in grocery retailing

Conventional wisdom dictates that convenience goods should be distributed as intensively as possible. Still, exclusivity arrangements are rapidly gaining way in grocery retailing. We discuss the possible performance outcomes of exclusivity deals, and propose a unified framework (i) to quantify the gains and losses of such arrangements in consumer-packaged-goods markets, and (ii) to decompose the total monetary gains and losses into a variety of sources. Our framework considers both the manufacturer and the retailer granted the exclusivity right, and accounts for the fact that both dyad parties may be active in multiple, inter-related, categories.     

Predicting future consumer purchases in grocery retailing with the condensed Poisson lognormal model

To identify the effect of marketing actions on consumer purchasing, analysts must disentangle the dynamic component of purchasing from expected period-to-period stochastic fluctuations. This is done by comparing marketplace observations to the conditional expectation of future purchasing. Current methods of deriving the conditional expectation contain systematic bias and rely on certain unrealistic modelling assumptions. We therefore propose a new model to predict future consumer purchases in grocery retailing. The new model is a mixture of Erlang-2, Poisson and lognormal distributions or a condensed Poisson lognormal model (CPLN). Using two grocery retailing datasets from the UK, we demonstrate that the CPLN model predicts future consumer purchases well with error of 7% and 9%, respectively. Compared with the previous benchmark model, the condensed Negative Binominal Distribution (CNBD), the CPLN model reduces error by 50% (7% versus 14%) and 67% (9% versus 27%), respectively. Theoretical and practical implications for retailers are discussed.     

A structural equation model of impulse buying behaviour in grocery retailing

PurposeEnvironmental changes, specifically the economic crisis and the growing penetration of digital technologies, have produced significant changes in shopping habits designed to create new paradigms for impulse buying behaviour. A new scenario seems to be opening up where customers enter the store much more prepared than in the past searching for products they had planned to buy. The purpose of this paper is to explore the determinants of impulse buying in a context of more planning and preparation for shopping.Design /methodology/approachThe data were obtained using a structured questionnaire from 316 respondents interviewed instore thanks to the cooperation of a leading Italian retail chain. We conducted a two-stage approach mall-intercept survey method to collect data. Firstly, we interviewed customers before entering the store, enquiring them about the pre-shopping preparation and shopping enjoyment tendency. Secondly, we interviewed the same customers at the end of their shopping trips, asking them to indicate which purchases were unplanned. Then, shoppers answered to questions regarding their general tendency to engage in impulse buying, the urges experienced to make impulse purchases, the level of positive and negative affect experienced during the shopping trip.FindingsIn the structural model tested with LISREL 8, we found that pre-shopping tendency influences directly impulse buying: confirming our hypotheses, a higher pre-shopping preparation lead to lower levels of impulse buying. Results also showed that the personality variables (shopping enjoyment tendency and impulse buying tendency) influenced impulse buying through positive affect and urge to purchase. Our research did not find support for the relationship between negative affect and urge. Finally, higher levels of urge to buy impulsively lead to higher levels of impulse buyingOriginality/valueFrom the review of past and recent literature, we have not found a model that considers the influence of pre-shopping tendency on impulse buying behaviour. This paper addresses this major gap in extant literature by including pre-shopping tendency among the individual characteristics (impulse buying tendency and shopping enjoyment tendency) taken into consideration by past contributions.     

Large format retailing in the US: a consumer experience perspective

Proponents of relationship marketing seek to develop and maintain long-term ties to their customers in the hope of having a loyal customer base. In this paper we examined large format retailing from the perspective of consumers’ experiences in these stores. Focus group interviews were conducted in two major US metropolitan areas and one medium size market. After analyzing the focus group content, several themes emerged related to patronage of large format retailers. These included the accuracy of prices when products were scanned and loyalty to store personnel based on familiarity. Large format supercenters were especially chided for their bigness and potential negative impact on smaller retailers. Attending to the details of the food retail business (accurate pricing, product availability, continuity of personnel) are ways in which consumers’ experiences in retail stores might be improved. Numerous choices and a diverse array of retail formats are available to consumers in the US market. Managerial implications are discussed in the light of a changing retail landscape.     

Barriers and enablers for innovation in the retail sector: Co-innovating with the customer. A case study in grocery retailing

This article aims to analyze innovation barriers and drivers in the retail sector and report on a successful product innovation case study of a leading grocery retailing firm in Spain. The firm, Mercadona, successfully launched an original co-innovation initiative with its customers consisting of bringing consumers to co-innovation labs set up by the company, having them analyze, in a home environment setting, how they use the firm's products and what suggestions they have for alternative methods, improvements, or completely new developments. The research findings were conclusive that a combination of customer focus culture, brand development, and cooperation with suppliers was crucial for the success of the project. Technology contributed as well as a supportive tool of the communication with consumers. The method followed a new and unique ethnographic approach.     

Neighborhood effects and trial on the internet: Evidence from online grocery retailing

For traditional retailers the customer pool is largely bounded in space, whereas an Internet retailer can obtain customers from a wide geographical area. We examine customer trials at Netgrocer.com, and drawing on studies in marketing and economics conjecture that exposure spatially to proximate others (through direct social interaction or observation), can influence decisions of those who have yet to try. Trials arise from utility-maximizing behavior and the model is estimated as a discrete time hazard. The data span: (1) 29,701 residential zip codes, (2) 45 months of transactions since inception, and (3) zip code contiguity relationships. The estimated neighborhood effect is significantly positive and economically meaningful.

Income and time pressure: a person-situation grocery retail typology

A person-situation segmentation framework is proposed. The demographic variable 'income' and the situational variable 'time pressure' were integrated and applied to grocery retail shopping. Using a combination of individual scanning data and a mail survey, we divided a sample of moderate to frequent grocery shoppers in a large Belgian retail organization into four grocery-shopping segments - 'money-poor, time-rich', 'money-poor, time-poor', 'money-rich, time-rich' and 'money-rich, time-poor'. Significant differences existed between these segments in several demographic, behavioural and attitudinal characteristics, including: demographic - age, composition and size of household, number of children at home, marital status, location, education and occupation; behavioural - amount spent in the store, buying pattern for different product categories and different task definitions; attitudinal - overall attitude towards grocery shopping and different grocery-shopping attribute saliences.     

Power,policy networks and planning: the involvement of major grocery retailers in the formulation of Planning Policy Guidance Note 6 since 1988

This paper explores a neglected issue in the study of retail strategy and store location by considering the nature of policy networks operating at the interface between retailers and central government. It argues that informal networks, coupled with the economic power of retailers and the legitimization of their activities with reference to the 'consumer interest', have served to provide retailers with an influential avenue through which they can exert power over the nature of the regulatory environment within which they operate. The paper considers the limited extant 'evidence' of the operation of such networks before moving on to outline the results of a case study. The case study reflects on new store development in the UK grocery sector since 1988 as a backdrop to an analysis of the form of policy networks operating at the interface between government departments and retail organizations. It also explores the role of other stakeholders in this process. The existence of a number of such networks is described and their role explored with reference to the involvement of retailers in the formulation and evolution of Planning Policy Guidance Note 6 on retail development.     

Using word of mouth data from social media to identify asymmetric competition in food retailing

Competition between food retailers is often assumed to be asymmetrical, whereby one retailer may compete with another retailer but not vice versa. Little is known about how (a)symmetric competition among retailers currently is. One way to investigate this is to use word of mouth data. A mixed methods analysis of customer comments on social media confirms the existence of asymmetric competition among German food retailers, mainly between supermarkets and discounters. Overall, consumers compare competitors frequently on the basis of their assortments, the price-performance ratio as well as quality and freshness. The results have implications for competition policy and strategic management.     

Consumer service and loyalty in Spanish grocery store retailing: an empirical study

The purpose of this paper is to investigate the effects of consumer service on loyalty in retail establishments. Based on a theoretical discussion regarding the relationship between waiting time, product quality, store atmosphere and loyalty, an empirical research was conducted to test the proposed relationships. Multiple‐item indicators from previous studies were used to measure the constructs. Results from the study provide empirical support, suggesting that consumer service through three dimensions influences loyalty. Research results suggest that consumer service in retail establishments can be viewed as a threshold factor in order to maintain satisfied and loyal customers. Additionally, managers should consider that loyalty depends on waiting time, product quality and store atmosphere. The present study provides useful information on the relationship between consumer service and loyalty in retailing.     

Beyond convenience: the future for independent food and grocery retailers in the UK

The UK's independent food and grocery retail sector's competitive advantage of 'convenience' has been eroded in recent years as major retailers increase opening hours and develop their own convenience trading formats. As a result, large numbers of independent retailers are closing. A UK-wide survey was undertaken to identify other sources of competitive advantages, and the changes needed to stop or reverse the decline in this sector. Exploratory semi-structured interviews led to the development of a questionnaire on six major issues affecting the sector. 'Snowball' sampling, using industry partners, provided 142 respondents. The provision of a 'social shopping experience' emerged as a key competitive advantage that could be developed. Improving vertical and horizontal trading alliances, and the wider use of information technology, provided other options.     

Brand personality appeal in retailing: Comparing fashion- and grocery retailing

In a mature retail market, branding can offer retailers opportunities for setting themselves apart. This study examines the construct ‘brand personality appeal’ (BPA; Freling et al., 2011) in retailing. Two consumer surveys are administered, on fashion retailing (n = 104) and grocery retailing (n = 101), focusing on (1) store personality, (2) BPA, and (3) retailer brand equity. A SmartPLS estimation shows that ‘enthusiasm’ is a personality trait that appeals to consumers regardless of the retail context, whereas ‘sophistication’ matters more in fashion retailing and ‘unpleasantness’ in grocery retailing. BPA is a significant driver of retail brand equity, regardless of the retail context.     

Manufacturer rebate and channel coordination in O2O retailing

Many manufacturers are opening their own online channels due to the growth of e-commerce leading to intensive channel competition with their offline retailer partners. This research proposes an innovative coordination mechanism to lessen channel competition and help enhance the profits of all parties. First, two strategic mechanisms (i.e. a manufacturer rebate to offline consumers and the quantity discount) are proposed and studied. Our results show that although a manufacturer rebate offered to offline consumers helps mitigate the online-to-offline (hereafter O2O) competition conditionally, a quantity discount, unexpectedly, cannot be used to mitigate channel competition effectively. A new mechanism - the combination of the manufacturer rebate to offline consumers combined with a quantity discount to retailers – is developed to lessen channel competition. We find that compared to the first two mechanisms, the combination mechanism, surprisingly, provides a significant advantage in creating greater profits for the entire supply chain. Furthermore, compared to the benchmark O2O model, the combination mechanism also helps create a Pareto situation and thus is an optimal mechanism to be used to mitigate channel competition effectively.     

Understanding the role of situational factors on online grocery shopping among older adults

This paper seeks to identify the situational factors that drive the adoption of online grocery shopping among older adults. A two-step research process is employed. First, exploratory qualitative research is carried out to identify situational factors that older adults take into account when deciding whether to buy groceries online. This is followed by a conjoint experiment to determine which situational factors are considered most important when making such a decision. The sample consisted of 9 participants in the in-depth individual interviews and 206 respondents in the conjoint experiment. The findings indicate that health, mobility issues, and distance to a store are the most important situational factors driving older adults to buy groceries online. Moreover, the findings confirm that the adoption of online grocery shopping among older adults is a result of a complex trade-off of situational variables. The findings contribute to managerial practice by providing online grocery retailers with insight that can be applied when designing promotional programs targeted at older adults.     

The role of warehouse club membership fee in retail competition

There are several explanations as to why warehouse clubs charge membership fees and how the fees play a role in the competitive landscape of the retail grocery market. We provide another insight into the nature of the membership fee using a model of price competition between a warehouse club and a supermarket. We show that the warehouse club's membership fee is an optimal competitive reaction to the supermarket's promotional activity. The more frequent the promotion is, the lower is the membership fee. However, the larger the promotion depth is, the higher is the fee. We show that the cherry-picker segment plays a key role behind these results. Our analysis not only provides a justification of warehouse club membership fees by discovering its duality with the cherry-picker segment but also gives managers several guidelines on yearly fee and retail price decisions.     

Economies of scale in grocery retailing in Finland

This paper considers the question of store-level economies of scale in grocery retailing. Hedonic price and cost functions are used in modelling the price and cost structure of retailers, but without making the assumption of constant mark-ups, as normally done in hedonic price studies. The main result of the paper is that store-level economies of scale do exist in grocery retailing: large stores have on average 10% lower costs per sold unit than small stores. The second major finding is that most of the benefits from scale economies are passed on to consumers: the price level of large stores is 10% lower on average than of small stores.     

Virtual store layout: an experimental comparison in the context of grocery retail

Interface design and the interaction between customer and computer are factors critical to business effectiveness over the Web. A key aspect of conventional retailing is store layout; an analogous aspect in virtual retail is virtual store layout. This paper reports on an experimental investigation into the use of three different layouts in online grocery retailing: freeform, grid, and racetrack. These three most common conventional retailing layout types were transformed into virtual layouts for computer-mediated interfaces. Subjects in Greece and the UK participated in a laboratory experiment: they were given a planned shopping task with money to spend, and performed their shopping through a virtual store with layout as the manipulated variable. The results show that layout significantly affects online consumer behavior, but that predictions generated from the literature of conventional retailing about differences in the outcome of layouts do not generally hold in a virtual setting. Some of the findings can be explained by reference to research in Human Computer Interaction (HCI).     

The grocery supply chain in the UK: improving efficiency in the logistics network

The UK grocery supply chain has experienced considerable change in the last 30 years and is now considered to be one of the most efficient in the world. It is, nevertheless, acknowledged that further improvements in supply-chain efficiency can be achieved. Using the results of a pioneering survey of transport operations in the food sector, this paper assesses the potential for further cost savings. The results of a second survey of senior managers indicates that efforts to improve vehicle utilization in this sector will be subject to the conflicting pressures of quick response replenishment and traffic congestion.     

Retail Store Loyalty Management via an Analysis of Heterogeneity of the Service Elements

This paper follows a line of research opened up by a series of authors who use a marketing approach for the study of retail service productivity. Without departing from the line of reasoning established by these authors, the main purpose of this paper is to detect possible differences in marketing productivity within and between different types of retailing services, using a research model that includes both the firm's effort and that of the customer. The two services selected for this purpose are grocery outlets and petrol stations.     

Antecedents of brand citizenship behavior in retailing

There has been increased interest in retail branding yet there is a dearth of internal branding research in this industry. The purpose of this study is to explore the antecedents of Brand Citizenship Behavior (BCB) in a retail environment. The role that the frequency of employee contact with customers plays will also be examined. A further aim is to give guidance to retailers on how they should develop an internal branding management strategy. A conceptual model provides a foundation for the study. A literature review of the brand citizenship behavior and the related constructs was undertaken to inform the model. The results show support for the hypothesized relationships. Significant differences between managers and associates as well as between full-time and part-time associates were found. Recommendations are presented to retailers.