How Cannibalistic is the Internet Channel?

During the past decade, irrational exuberance has turned into a possibly equally irrational pessimism about what the Internet can accomplish. The fear of getting ruined through cannibalization losses has recently deterred many firms from deploying the Internet as a distribution channel. But do Internet channels really cannibalize firms' entrenched channels, or is this widely held assumption exaggerated? To answer this question, we apply recent structural-break time-series econometrics to quantify the impact of an Internet channel addition on the long-run performance evolution of a firm's established channels. Using a database of 85 Internet channel additions over the last ten years in the British and Dutch newspaper industries, we find that the often-cited cannibalization fears have been largely overstated. The Internet therefore need not be disruptive to established companies and channels. This does, however, not imply that firms enjoy free play in setting up Internet channels. In cases where the newly established Internet channel too closely mimics the entrenched channels, substantial cannibalization is more likely to take place.cannibalization;internet channel;structural-break time-series analysis

Frito-Lay - Supply Chain Impact Analysis

The snack food company Frito-Lay relies on Route Sales Representatives (RSRs) to stock and maintain shelves of snack foods in every store. Frito-Lay currently does not have a system which can accurately predict cannibalization, or the effects of a store opening or closing on other stores of the same chain in the area. The goal is to sort through 1900 stores in a given metropolitan area to see the effects of cannibalization. In order to tackle the problem, a Microsoft Access program was created to filter stores based on location or whether the store was open for the full three-year duration or not. The analysis of an opening or closing store is divided between the long-term and short-term effects. An examination of the long-term effects begins by focusing on eliminating seasonal and yearly trends. Seasonal trends are deemed to be insignificant due to the lack of a dominant oscillation within the year. Next, yearly trends are eliminated by performing an individual regression analysis between the introduced store and a nearby store and tracking the sales changes on control charts. A scatterplot is created using the distance between the neighboring store and the introduced store versus the sales changes. A trend line is fitted to the data, but little correlation can be seen. The long-term effects are inconclusive because the model does not incorporate different factors that could affect sales numbers. The short-term effects were analyzed using a combination of control charts, percentage changes, and sales averages before and after the store’s introduction. The most statistically significant interactions were same-store cannibalization for mass merchandisers and supermarkets. This supports the already-standing practices by Frito-Lay

Omni-Channel Retail and the New Age Consumer: An Empirical Analysis of Direct-to-Consumer Channel Interaction in the Retail Industry

It is indisputable that the internet has become a necessary component of contemporary multi-channel retail, as more consumers are choosing to purchase goods online each year. As online spending continues to grow, many have called into question the future of brick-and-mortar retail. This thesis seeks to empirically prove that brick-and-mortar retail remains not only relevant, but indispensable in direct-to-consumer business models. The basis of this conjecture is the idea of channel synergism, in which online and brick-and-mortar operations are complementary. This theory is predicated on the emergence of the omni-channel retail, which is characterized by the integration of the various direct-to-consumer (D2C) channels to support cross-channel consumer interaction. To empirically test this hypothesis, key operating metrics were examined over the five year period from 2007 to 2011. By examining profitability trends and several D2C channel relationships, empirical support is developed to substantiate the claim that brick-and-mortar operations are not being driven into obsolescence by the growing prevalence of e-commerce transactions

Three Essays on “Energy , Environment, and Developmental Economics”

This dissertation examines topics related to renewable energy development and investment planning, energy markets, environment degradation and economic development. The substantial ecological costs of deforestation are well known and considered globally important due to biodiversity loss, land degradation, soil erosion, and contributions to climate change. The first essay focuses upon understanding the tradeoff between development and deforestation in Africa. In the second essay, spatial analysis and Geographic Information System (GIS) are applied to determine potential locations for wind farms development in the state of West Virginia. Lastly, the third essay examines the role of wind power penetration on wholesale electricity market. The first essay explores the relationship between economic growth and deforestation in African countries. During the past half-century, the continent of Africa has suffered massive losses of forested areas due to the changing structure of economies, increasing population, and expanding globalization. This research examines statistical evidence for the Environmental Kuznets Curve (EKC) hypothesis as applied to deforestation occurring within Africa from 1990 to 2016. Changes in forest cover data are explained with Generalized Method of Moments (GMM) estimators to overcome the endogeneity problems arising from reverse causality between deforestation and explanatory variables. The empirical results of a panel GMM confirm the EKC hypothesis is valid for deforestation in Africa with a turning point estimated to be US $3,000. Heterogenous panel non-causality findings suggest that Africa could deter and reverse deforestation through appropriate land-use and forest products trade policies, and the consequences of these policies would not impact their economic growth. In the second essay, a multi-criteria decision analysis employing Analytic Hierarchy Process (AHP) and GIS are used for assessment of potential sites for future utility-scale wind farms in West Virginia. Worldwide, demand is increasing for renewable energy. While wind power is a proven, sustainable energy source, siting can be challenging. Identifying potential sites for wind turbines is a significant step in renewable energy resource planning. Wind turbine site suitability is primarily dependent upon wind speed at a location along with other environmental, social, and economic factors. It is critical to arrive at a robust wind farm decision to improve public acceptance, preserve the environment, and maintain pristine habitats. This research builds upon previous studies and contributes to the literature by incorporating two important components into siting: (1) inclusion of critical wildlife habitat for birds and bats as an elimination criterion within the AHP, and (2) the participation by wind power experts in the AHP decision-making process. By incorporating expert opinions with the weighing of ten siting factors, about 70,000 hectares of land are identified as \u27highly suitable\u27 for wind power development throughout the state of West Virginia. This area represents the potential to yield an estimated 29,000 MW of future utility-scale wind power capacity, which is larger than the current coal dominated electricity generation capacity in West Virginia. The third essay examines the wind power penetration impacts on wholesale electricity markets. Using data from two wholesale electricity markets (Pennsylvania – New Jersey – Maryland (PJM) and Electric Reliability Council of Texas (ERCOT)), four energy policy questions are addressed: (1) How much does wind power integration impact wholesale electricity prices under different markets? (2) Does the merit-order effect (MOE) exist at different quantiles of wholesale electricity prices? (3) What drives the day-ahead market (DAM) and real-time market (RTM) prices at different market conditions in both markets? (4) Does the increasing penetration of wind power undermine its market value along with the market values of other generating technologies? To answer these questions, quantile regression is used to obtain coefficient estimates that indicate wind penetration has unequal impacts on wholesale electricity prices and market values across quantiles, reinforcing the need for this type of analysis. The empirical analyses confirmed the existence of the merit-order effect across different quantiles of the conditional distribution of wholesale prices for both DAM and RTM, implying that the increasing deployment of wind power for electricity generation significantly suppresses the wholesale electricity prices in the PJM market. Contrary to the PJM estimations, merit-order effects are confirmed across quantiles of wholesale prices for only the DAM in the ERCOT market. Furthermore, the findings show that as wind generation expands within the market, the revenue earned by wind power producers reduces across all quantiles of the conditional distribution of its unit revenue. Specifically, each additional GWh increase in electricity from wind is associated with a fall in its unit revenues across quantiles by an amount that ranges from approximately$0.01/MWh to $0.06/MWh. Results also confirm cross-cannibalization impacts such that each additional GWh increase from wind is associated with decreased gas and baseload unit revenues across all quantiles ranging from$0.02/MWh to $0.06/MWh. Contrary to unit revenue results, there is weak evidence of increasing wind supply\u27s cannibalization effect for value factor as positive impacts occur below the 90% quantile and negative impacts occur at quantiles 90% and greater. The negative impacts of wind power on gas and baseload generators demonstrate the need for corrective policies

How cannibalistic is the internet channel? A study of the newspaper industry in the United Kingdom and the Netherlands

Winner fo the 2002 IJRM Best Paper Awar

Assessing the principles of spatial competition between stores within a retail network

Abstract This study investigates the impact of driving time and retail agglomerations on consumer store choice within a retail network. A pairwise comparison of confluencing store trade areas is conducted based on loyalty card information and exit questionnaires for six retailers operating in different product categories in Belgium. Results show that there is a stronger emphasis in the preference hierarchy on driving time towards a store for the daily goods retailer. Moreover, there is varying intra-network spatial competition depending on the type of location strategy pursued by the different retailers. Results show that for some retailers retail agglomeration effects are more outspoken than for others. However, impact of driving time on consumer intra-network store choice was independent of retail agglomeration size. Finally, results indicate that opening stores outside the pursued location strategy should be approached with care as significant impacts on sales cannibalization can emerge within the store network. These findings are important for crafting an overall expansion strategy for expansion managers as well as for marketing managers occupied with network changes at operational level