Category Management and Coordination in Retail Assortment Planning in the Presence of Basket Shopping Consumers

This paper studies the assortment planning problem with multiple merchandise categories and basket shopping consumers (i.e., consumers who desire to purchase from multiple categories). We present a duopoly model in which retailers choose prices and variety level in each category and consumers make their store choice between retail stores and a no-purchase alternative based on their utilities from each category. The common practice of category management (CM) is an example of a decentralized regime for controlling assortment because each category manager is responsible for maximizing his or her assigned category’s profit. Alternatively, a retailer can make category decisions across the store with a centralized regime. We show that CM never finds the optimal solution and provides both less variety and higher prices than optimal. In a numerical study, we demonstrate that profit loss due to CM can be significant. Finally, we propose a decentralized regime that uses basket profits, a new metric, rather than accounting profits. Basket profits are easily evaluated using point-of-sale data, and the proposed method produces near-optimal solutions

Determinants of Shopping Behavior of Urban Consumers

This study explores the influence of geo-demographic settings of commercial centers, customer attractions in shopping malls, and route to shopping of urban shoppers. The present research analyzes retailing patterns in urban areas in reference to customer orientation strategies, product search behavior and enhancing the customer value. Interrelationship among urban retailing, marketplace ambiance, conventional shopping wisdom of customers, long-term customer services, and technology led selling processes are also addressed in the study based on empirical survey. Broadly, this study makes contributions to the existing research in urban retailing towards factors determining shopping attractions, routes to shopping, and establishing the customer-centric strategies of the firms.Shopping mall, multi-channel retailing, consumer behavior, customer-centric strategy, market attractiveness, customer satisfaction

Large-Scaled Chain Stores versus Small-Scaled Local Stores of the Local Production for Local Consumption

* Revised： [15-16, 2015]* Revised：Large-Scaled Chain Stores versus Small-Scaled Local Stores [15-16-Rev., 2015]* Revised： [15-16-Rev.2, 2015

Large-Scaled Chain Stores versus Small-Scaled Local Stores of the Local Production for Local Consumption

* Revised： [15-16, 2015]* Revised：Large-Scaled Chain Stores versus Small-Scaled Local Stores [15-16-Rev., 2015]* Revised： [15-16-Rev.2, 2015

Optimizing Consumer-Centric Assortment Planning under Cross-Selling Effects

Central to modern-time, consumer-focused retailing is the ability to provide attractive and reasonably-priced product assortments for different customer profiles. To this end, retailers can benefit from the use of data analytics in order to identify distinct customer segments, each characterized by their buying power, shopping behavior, and preferences. Further, retailers can also benefit from a careful examination of alternative procurement options and cost levers associated with products that are considered for inclusion in the assortment. Issues of assortment planning lie at the interface of operations and marketing. Profitable planning trade-offs can be identified using an optimization methodology and are simultaneously driven by consumer preferences and supply cost considerations. This dissertation proposes and investigates novel, integrated optimization models for assortment planning with the following overarching objectives: (i) To reveal insights into assortment decisions under product substitutability or complementarity and multiple customer segments; (ii) to improve the computational tractability of (nonlinear discrete) optimization models that arise in such contexts and to demonstrate their efficacy for large-scale data instances. In the first essay, we investigate the joint optimization of assortment and pricing decisions for complementary retail categories with relatively popular products having high and stable sales volumes, such as fast-moving consumer goods. Each category comprises substitutable items (e.g., different coffee brands) and the categories are related by cross-selling considerations that are empirically observed in marketing studies to be asymmetric in nature. That is, a subset of customers who purchase a product from a primary category (e.g., coffee) can typically opt to also buy from one or several complementary categories (e.g., sugar and/or coffee creamer). We propose a mixed-integer nonlinear program that maximizes the retailer\u27s profit by jointly optimizing assortment and pricing decisions for multiple categories using a deterministic maximum-surplus consumer choice model. A linear mixed-integer reformulation is developed, which effectively enables an exact solution to large, industry-sized problem instances using commercial optimization solvers. Our computational study indicates that overlooking cross-selling between retail categories can result in substantial profit losses, suboptimal (narrower) assortments, and inadequate prices. The demonstrated tractability of the proposed model paves the way for store-wide optimization of categories that exhibit significant complementarity, which retailers can infer from market basket analysis. The second essay addresses an assortment packing problem where a decision maker optimizes the assortment and release times of products that belong to different categories over a multi-period planning horizon. Products in a same category are substitutable, whereas products across categories may exhibit complementarity relationships. All products have a longevity over which their attractiveness gradually decays (e.g., electronics or fashion products), while being positively or negatively impacted by the specific mix of substitutable or complementary products that the retailer has introduced. Our proposed 0-1 fractional program employs an attraction demand model and subsumes recent assortment packing models in the literature. We highlight the effect of overlooking cross-selling and cannibalization on the profit using an illustrative example. We develop linearized reformulation that afford exact solutions to small-sized problem instances. Furthermore, a linear programming-based heuristic approach is devised and is demonstrated to yield near-optimal solutions for large-scale computationally challenging problem instances in manageable times. Model extensions are discussed, especially in the context of the movie industry where exhibitors have to decide on the assortment of movies to display and their optimal display times

Assortment Size and Performance of Online Sellers: An Inverted U-Shaped Relationship

This paper investigates the role of assortment size in sellers’ performance in the e-commerce context, which has been primarily associated with lowered search costs and switching costs. However, in contrast to the findings in the literature, our theoretical analysis postulates an inverted U-shaped association, showing that performance of online sellers increases and then decreases as the assortment size becomes larger. The nonlinear effect can be effectively explained by the interplay between the benefits derived from simultaneous consumer utility and the liabilities derived from the competition-intensifying effect. Additionally, the optimal level of assortment size is reduced when market density or product uncertainty is high. Using a data set of 10,000 online sellers from a large e-commerce platform, our hypotheses concerning the inverted U-shaped curve and moderation effects of market density and product uncertainty are statistically supported. Our research contributes to the assortment literature by revealing the special effects of assortment size in the online retailing context, and provides practical implications for online sellers’ assortment planning and optimization under both general settings and specific conditions

Virtual store atmosphere in internet retailing: Measuring virtual retail store layout effects on consumer buying behaviour

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel University.The research presented in this dissertation is concerned with the effects of the "virtual store atmosphere" on consumer buying behaviour within the context of Internet retailing. More specifically, the focus of this research is to investigate whether the virtual store layout, as a major virtual store atmosphere determinant, affects consumer buying behaviour during shopping activity within a virtual grocery store over the Web. The present research is of a multidisciplinary nature and belongs to the field of Internet Retailing, in which there is not to date an exhaustive established theory available as the case is for conventional retailing. Therefore, the relevant literature covers the established theories in the areas of Marketing, Retailing and Consumer Behaviour along with current research in Internet retailing. Moreover, Human Computer Interaction (HCI) served as an important theoretical tool as far as Web site design principles and guidelines are concerned. The research hypotheses were mainly generated based on the conventional retail store layout literature review. They were tested through a laboratory experiment employing a causal research approach. To that end, a virtual retail laboratory store employing the three most common conventional retailing layouts (i.e., grid, freeform, and racetrack) was developed in three versions (i.e., one version per layout), following the concept and rules applied in each specific layout type. Therefore, the layout was the only manipulated variable (treatment), since all other potential influencing factors remained the same. The findings of the present study indicate that conventional retailing store layout theory is not applicable on its present form in the context of Internet retailing. Furthermore, the layout was found to affect consumer buying behaviour regarding "perceived usefulness towards searching for and buying shopping list products," "perceived ease of using the store," "perceived entertainment during shopping activity" and "time spent for shopping." However, it was found that the layout does not significantly affect "promotion effectiveness" and "impulse purchases." Based on the research findings, the "freegrid" layout (i.e., a new layout type) was introduced as an emerging layout for Internet retailing. The suggested layout contributes toward the Internet retailing theory development, as well as toward the provision of direct managerial implications. Finally, the present research provides several future research directions dealing with the virtual store atmosphere effects on consumer buying behaviour

Distribution service : competition within and among retail formats

Distribution service provision is an important instrument for the creation of availability. The book addresses in five parts the role of distribution service in individual channel member decision making in a competitive retailing environment through theoretical and empirical modeling and analysis. The empirical applications all concern the Dutch domestic cut flower market. The book starts in part I with development of a new and integrative conceptualization for distribution service elaborating on views from logistics, economics, and psychology. The second part of the book addresses the theory underlying consumer evaluation of and choice from assortments. It provides a theoretical framework of consumption goals, situational, and contextual variables, including retailer distribution service provision, as determinants of consumer evaluation of and choice from assortments. Several hypotheses are tested in an empirical study. Extended multinomial logit modeling of the experimental choice data has been used as a tool for optimization of retail assortments. Part III investigates the role of retail distribution service provision in consumer post-purchase evaluation processes and extends existing research on consumer post-purchase evaluation. Part IV focuses on the role of distribution service in vertical and horizontal strategic interactions between channel members, particularly between manufacturers and retailers, and its consequences for the emergence of different channel structures and retail formats. A game-theoretic model has been developed for retail competition with respect to price and distribution service and its consequences for the emergence of differentiated retail formats. Finally, part V discusses research implications and future research challenges.</p

An assessment of the sustainability of E-fulfilment models for the delivery of fast moving consumer goods to the home

Online retail sales are growing rapidly and have captured a significant proportion of the retail market in many countries. Although companies are under mounting pressure to reduce their environmental impact, the environmental effect of the different online distribution strategies remains unclear. Most previous studies of this subject have only included partial effects and consequences. To enable a more holistic understanding, this study proposes a more inclusive framework of environmental assessment based on life cycle analysis. This was applied to fast moving consumer goods (FMCG). Previous studies have shown that the last mile delivery contributes significantly to the environmental impact of online retailing, mainly because of the nature of the home delivery operations, including narrow time windows and short order lead times. If consumers were to buy products online on a subscription basis and give the supplier more control over the replenishment process there might be less need for fast deliveries, creating opportunities to improve the efficiency of home deliveries and reduce their environmental impact. The study classified different forms of subscription arrangement, assessed their relative attractiveness to consumers and examined their likely impact on the supply chain. Consumer views on subscriptions were surveyed by means of focus group discussions and interviews. To assess the likely supply chain impacts of subscriptions, the literature on vendor-managed inventory was consulted. A Life-Cycle Assessment (LCA) model was built to quantify and compare the environmental impact of various e-fulfilment models for FMCG products in the United Kingdom. This study reveals that the method of execution have a large influence on the environmental impact. In store-based retailing, the energy consumption within the supermarket is a significant contributor to the total greenhouse gas emissions. On the other hand, some forms of home delivery, involving for example the use of parcel networks with no pre-agreed time-slots and relatively high rates of delivery failure and customer collection, are also carbon-intensive. This contribution of consumer trips to the total footprint is much smaller in case of van-based deliveries where pre-agreed time-windows are used. Regardless of the business model, the total carbon footprint per item depends heavily on the number of items per delivery. Consequently, companies or consumers looking to decrease the environmental impact of online shopping should maximise the number of items per delivery. The study concludes with an assessment of the strengths, weaknesses and possible environmental improvements of each of the efulfilment methods, taking account of the possible role of subscriptions