A Nested Logit Model of Strategic Promotion

Retailers use sales "price promotions" for a number of potential reasons. There is relatively little research, however, on their strategic role among frequently consumed perishable products. Using a two-stage, nested logit model of retail equilibrium, we show that promotion will be most effective (ie. increase store-level sales) if products are highly differentiated, but stores are relatively similar. To test this hypothesis, we an oligopolistic model of promotion rivalry with category-level scanner data from the four largest supermarket retailers in a major U.S. metropolitan market. The results show that promotion has a greater impact on store share than product share, because the elasticity of substitution among stores is larger than the elasticity of substitution among products. Consequently, promotion has its greatest value in driving demand for differentiated products among stores that are similar. This finding supports the observed trend toward premium private label products being offered by supermarket retailers.Research Methods/ Statistical Methods,

Analytical Modeling Framework to Assess the Economic and Environmental Impacts of Residential Deliveries, and Evaluate Sustainable Last-Mile Strategies

In the last decade, e‐commerce has grown substantially, increasing business‐to‐business, business‐to‐consumer, and consumer‐to‐consumer transactions. While this has brought prosperity for the e-retailers, the ever-increasing consumer demand has brought more trucks to the residential areas, bringing along externalities such as congestion, air and noise pollution, and energy consumption. To cope with this, different logistics strategies such as the introduction of micro-hubs, alternative delivery points, and use of cargo bikes and zero emission vehicles for the last mile have been introduced and, in some cases, implemented as well. This project, hence, aims to develop an analytical framework to model urban last mile delivery. In particular, this study will build upon the previously developed econometric behavior models that capture e-commerce demand. Then, based on continuous approximation techniques, the authors will model the last-mile delivery operations. And finally, using the cost-based sustainability assessment model (developed in this study), the authors will estimate the economic and environmental impacts of residential deliveries under different city logistics strategies.View the NCST Project Webpag

Designing a location model for face to face and on-line retailing for the UK grocery market

The vast and rapid expansion of internet usage has generated widespread online sales, making the UK one of the leading countries for e-commerce. Until now there has been no clear understanding or analysis of the spatial variations of online activities. Many studies have,however, examined the variance in online buying among different demographic groups usually based on limited survey information. These variations have often been explained by reference to two theories – efficiency theory and diffusion of innovations theory (Rogers, 1995). This lack of research to date is also manifest in the lack of consideration of online sales in traditional store location methodologies. The aim of this research is to establish a new model for site location which includes e-grocery shopping on the UK retail sector. Having explored the literature around the geography of e-commerce and the surveys of geodemographic usage, the thesis explores data unique to the academic sector- namely Sainsbury’s store revenue (for both physical and online channels) and customer data based on their loyalty card (interaction data). The analysis of these data sets establishedfour major trends in the relationship between online share and store provision with insights into the substitution of online and physical channels in areas with limited accessibility to physical grocery stores. Using this information, a new, revised SIM is built and calibrated to include estimates of revenue for both face to face and online stores. It is hoped this will provide an important addition to the existing kitbag of techniques available to retail store location planners

Designing a location model for face to face and on-line retailing for the UK grocery market

The vast and rapid expansion of internet usage has generated widespread online sales, making the UK one of the leading countries for e-commerce. Until now there has been no clear understanding or analysis of the spatial variations of online activities. Many studies have,however, examined the variance in online buying among different demographic groups usually based on limited survey information. These variations have often been explained by reference to two theories – efficiency theory and diffusion of innovations theory (Rogers, 1995). This lack of research to date is also manifest in the lack of consideration of online sales in traditional store location methodologies. The aim of this research is to establish a new model for site location which includes e-grocery shopping on the UK retail sector. Having explored the literature around the geography of e-commerce and the surveys of geodemographic usage, the thesis explores data unique to the academic sector- namely Sainsbury’s store revenue (for both physical and online channels) and customer data based on their loyalty card (interaction data). The analysis of these data sets establishedfour major trends in the relationship between online share and store provision with insights into the substitution of online and physical channels in areas with limited accessibility to physical grocery stores. Using this information, a new, revised SIM is built and calibrated to include estimates of revenue for both face to face and online stores. It is hoped this will provide an important addition to the existing kitbag of techniques available to retail store location planners

The impact of postharvest research

While research on the improvement of agricultural production has received considerable attention and funding, until recently postharvest activities have not attracted much attention from international research organizations. However, there is an emerging consensus on the critical role that postharvest systems can play in meeting the overall goals of food security, poverty alleviation and sustainable agriculture particularly in developing countries. This study provides preliminary evidence on the impact of postharvest research on these goals; furthermore the study argues that postharvest research at international agricultural research organizations is justified by its international public good nature.postharvest technology ,food security ,Poverty alleviation ,Research institutes ,postharvest technology ,

When the Bank Comes to You: Branch Network and Customer Multi-Channel Banking Behavior

Customers today increasingly interact with their banks using digital channels, lifting the necessity for banks to rethink the distribution of physical branches and customer behavior in a multi-channel environment. Using approximately 1.2M anonymized individual-level data from a large commercial bank in US over 6 years, our paper investigates the traditional channel – bank branches – and the impact of its network change (branch opening or closure) on customer multi-channel preferences and other banking behavior. Our results show that both branch opening and closure are associated with decreasing transactions through offline channels and increasing transactions in online banking. Hence, branch network change is likely to result in customer migrating from offline channels to online banking. In addition, we find that opening branch is associated with customers’ adoption of additional banking products in a short term. Interestingly, closing a branch does not lead to more account closures by customers

Context Effects as Customer Reaction on Delisting of Brands

The delisting of brands is frequently used by retailers to strengthen their negotiating position with the manufacturers and suppliers of their product assortment. However, retailers and manufacturers have to consider the risk of potential reactions when customers are faced with a reduced or modified assortment and thus, different choice. In this paper, two studies are presented which investigate customers` switching behavior if a (sub-)brand is unavailable and key determinants of the resulting behavior are discussed. Various conditions are tested by taking into account context theory. The results reveal that customer responses depend significantly on the context. A real-life quasi-experiment suggests that manufacturers may encounter substantially larger losses than retailers. Managerial implications for both parties can be derived and recommendations for further research are developed.Consumer decisions, delisting, context effects, switching behavior, retailing, logistic regression

Is online retail killing coffee shops? Estimating the winners and losers of online retail using customer transaction microdata

Is online retail a complement or substitute to local offline economies? This paper provides the first evidence that consumers use time saved from online retail to increase their trips for time-intensive services like coffee shops. I use new, detailed data on the daily transactions of millions of anonymized customers. I then estimate a discrete choice model of consumer trip choice, which embeds time use mechanisms and accounts for correlations in trip utility shocks. I show that the model matches key features of observed behaviour that are missed by more standard models, such as the disproportionate increase in trips to nearby coffee shops when consumers switch to online groceries. Model counterfactuals are used to forecast changes in future trip demand and outline strategies, which offline retailers can use to compete against online retail. For consumers, I find that the welfare gains from online grocery platforms go disproportionately to high-income consumers

Essays on the value of locations in the retail industry

My dissertation empirically studies firms' strategic behavior in the retail food industry, focusing on the value of desirable locations. In Chapter 2, I study the effect of in-store promotion strategies on consumer demand in the ready-to-serve wet soup category in supermarkets. By building a flexible consumer demand model, I analyze the effect of in-store promotions on price elasticity. Using the information on the in-store promotions in a scanner dataset, I find that in-store displays make consumers less sensitive to price changes while store flyers and price tags make consumer demand more elastic to price changes. This result implies that in-store displays benefit smaller manufacturers relatively more, leading to a less concentrated product market. In Chapter 3, I investigate promotional allowances in order to study the value of in-store displays in the supermarket industry. Building upon the consumer demand model in Chapter 2, I build a structural model of profit maximization by both retailers and manufacturers. I find that the manufacturers in the ready-to-serve wet soup category provide retailers with monetary incentives in exchange for in-store promotion opportunities. On average, in-store displays cost roughly 8 cents per product to manufacturers. I also find that promotional allowance practices make in-store displays unaffordable to smaller manufacturers. As a counterfactual analysis, I study the effect of banning promotional allowances in a representative market and provide important implications for antitrust issues. In Chapter 4, I study the ownership allocation problem in the franchising industry. Specifically, I empirically investigate multi-unit franchising in a fast food franchise. Multi-unit franchising, owning several units of the same chain, has been prevalent in the fast food industry. In this chapter, I present the ownership allocation pattern by utilizing a large dataset with ownership information on businesses in the state of Texas. By focusing on a company without any company-owned units, I find that not only economies of scale but also economies of density in the unit network are important in understanding franchising ownership allocation

Retail globalization and household welfare:evidence from Mexico

The arrival of global retail chains in developing countries is causing a radical transformation in the way that households source their consumption. This paper draws on a new collection of Mexican microdata to estimate the effect of foreign supermarket entry on household welfare. The richness of the microdata allows us to estimate a general expression for the gains from retail FDI, and to decompose these gains into several distinct channels. We find that foreign retail entry causes large and significant welfare gains for the average household that are mainly driven by a reduction in the cost of living. About one quarter of this price index effect is due to pro-competitive effects on the prices charged by domestic stores, with the remaining three quarters due to the direct consumer gains from shopping at the new foreign stores. We find little evidence of significant changes in average municipality-level incomes or employment. We do, however, find evidence of store exit, adverse effects on domestic store profits and reductions in the incomes of traditional retail sector workers. Finally, we show that the gains from retail FDI are on average positive for all income groups but regressive, and quantify the opposing forces that underlie this finding