Intra- and Interformat Competition Among Discounters and Supermarkets

The price-aggressive discount format, popularized by chains such as Aldi and Lidl, is very successful in most Western economies. Its success is a major source of concern for traditional supermarkets. Discounters not only have a direct effect on supermarkets’ market shares, they also exert considerable pressure to improve operational efficiency and/or to decrease prices. We use an empirical entry model to study the degree of intra- and inter-format competition between discounters and supermarkets. Information on the competitive impact of new entrants is derived from the observed entry decisions of supermarkets and discounters in a large cross-section of local markets, after controlling for a number of local market characteristics. In our modeling framework, we endogenize the retailers’ entry decisions, and allow for asymmetric intra- and inter-format competitive effects in a flexible way. We apply our modeling approach to the German grocery industry, where the discount format has stabilized after two decades of continued growth. We find evidence of intense competition within both the supermarket and discounter format, although competition between supermarkets is found to be more severe. Most importantly, discounters only start to affect the profitability of conventional supermarkets from the third entrant onwards. This may explain why many retailers rush to add a discount chain to their portfolio: early entrants may benefit from the growth of the discount-prone segment without cannibalizing the profits of their more conventional supermarket stores

La entrada de un supermercado de descuento duro: efecto sobre precios

In this paper we study how an incumbent supermarket reacts when entry by a new operator is announced but does not know the product variety that the entrant will offer. We use a database obtained from a special survey for supermarkets in Gran Canaria to estimate how incumbents reacted to entry in the products sold and not sold by the new entrant (LIDL). We show that there is evidence that prices for all goods prior to entry were initially lower in supermarkets close to the future entrant compared to supermarkets further away. However, after entry incumbents' prices for products not sold by the entrant actually rose near the entrant's new stores, compared to a suitable control group of supermarkets farther away.En este trabajo analizamos cómo reacciona un incumbente ante la entrada de un nuevo operador del que desconoce la variedad de productos que éste ofrecerá. Para ello utilizamos una base de datos proveniente de un trabajo de campo propio de supermercados en Gran Canaria en orden a estimar dicha reacción en términos de precios, tanto para productos vendidos como no vendidos por el entrante (LIDL). Nuestros resultados apuntan a una bajada generalizada de precios antes de la entrada por parte de los incumbentes afectados por dicha entrada. Sin embargo, dichos supermercados afectados aumentaron los precios de aquellos productos que finalmente no fueron vendidos por el entrante

The entry of a hard discount supermarket : price effects

In this paper we study how an incumbent supermarket reacts when entry by a new operator is announced but does not know the product variety that the entrant will offer. We use a database obtained from a special survey for supermarkets in Gran Canaria to estimate how incumbents reacted to entry in the products sold and not sold by the new entrant (LIDL). We show that there is evidence that prices for all goods prior to entry were initially lower in supermarkets close to the future entrant compared to supermarkets further away. However, after entry incumbents' prices for products not sold by the entrant actually rose near the entrant's new stores, compared to a suitable control group of supermarkets farther away.En este trabajo analizamos cómo reacciona un incumbente ante la entrada de un nuevo operador del que desconoce la variedad de productos que éste ofrecerá. Para ello utilizamos una base de datos proveniente de un trabajo de campo propio de supermercados en Gran Canaria en orden a estimar dicha reacción en términos de precios, tanto para productos vendidos como no vendidos por el entrante (LIDL). Nuestros resultados apuntan a una bajada generalizada de precios antes de la entrada por parte de los incumbentes afectados por dicha entrada. Sin embargo, dichos supermercados afectados aumentaron los precios de aquellos productos que finalmente no fueron vendidos por el entrante

Aplicación de teoría de juegos para la evaluación estratégica de formatos comerciles hard discount

The objective of the present investigation was to apply game theory to evaluate commercial strategies in hard discount commercial formats. The study was classified as quantitative, a survey was carried out and the game theory technique implemented in SoftProsp was applied. As a result, it was obtained that most consumers prefer to use powdered detergent. Regarding the determination of the price, the result where both stores play their dominant strategies is {50 | 50}, which would be the solution to the game. For the application of promotions, when implementing the process of iterative elimination of strictly dominated strategies, it is obtained that the balance of the game is the combination of strategies A2 (Deferred Gifts) and D2 (Discount Coupons). Finally, it is concluded that the evaluation of promotional strategies of the hard discount through game theory, allowed to establish that the equilibrium of the game occurs when the ARA Stores apply the deferred gift strategy and the D1 Stores apply the discount coupon strategy, because the crossing of these strategies is optimal for each player.El objetivo de la presente investigación fue aplicar teoría de juegos para evaluar estrategias comerciales en formatos comerciales hard discount. El estudio se tipificó como cuantitativo, se realizó una encuesta y se aplicó la técnica teoría de juegos implementada en SoftProsp. Como resultados se obtuvo que, la mayoría de los consumidores prefieren utilizar el detergente en polvo. En cuanto a la determinación del precio, el resultado donde ambas tiendas juegan sus estrategias dominantes es {50 | 50}, por lo cual sería la solución del juego. Para la aplicación de promociones, al implementar el proceso de eliminación iterativa de estrategias estrictamente dominadas, se obtiene que el equilibrio del juego es la combinación de estrategias A2 (Regalos diferidos) y D2 (Cupones de descuento). Finalmente, se concluye que la evaluación de estrategias promocionales de las hard discount mediante la teoría de juegos, permitió establecer que el equilibrio del juego se presenta cuando las Tiendas ARA aplican la estrategia de regalos diferidos y las Tiendas D1 aplican la estrategia de cupones de descuentos, debido a que el cruce de estas estrategias, es óptima para cada jugador

Interformat price competition of multi-product retailers: Evidence for German grocery retailing

Agribusiness,

IS CATEGORY MANAGEMENT IN SMALL SUPERMARKETS WORTH THE EFFORT?

Category management (CM) is an important tool to strengthen the relationship between manufacturers and retailers. This process has been associated with large corporate retailers; however, some recent researches show that CM is open to companies of any type or size. This possibility is important in emerging markets, where neighborhood supermarkets are still representative and are often considered an alternative for manufacturers to achieve higher margins compared to big chains. In this context, the aim of this research was to analyze the results of a CM initiative in small neighborhood supermarkets from a manufacturer perspective. Data for the study comes from a food manufacturer in Brazil that implemented a CM process with 180 small retailers. A quantitative analysis was conducted in order to analyze the effect of the program on the food manufacturer’s sales and market share. Our analysis suggests an overall positive effect of the program on both, sales and market shar

Applying netnography to the obtaining of the map of positioning for companies of food retail

© Cuadernos de Gestión, 2004 Reproducción autorizada siempre que se cite la fuente, salvo que se indique lo contrario. En aquellos casos en que sea necesaria una autorización previa para la reproducción o el uso de datos textuales o multimedia (sonidos, imágenes, programas, etc.), dicha autorización cancelará la autorización general antes citada y mencionará las posibles restricciones de uso.[ES] Las comunidades online se han convertido en un lugar de encuentro muy popular para los consumidores que les permite compartir información. En este artículo se presenta una técnica de información novedosa como la netnografía, y se aplica para determinar cuál es el posicionamiento de las empresas de distribución alimentaria. Tras la recogida y análisis de 506 mensajes válidos de la comunidad online Ciao, se pudo conocer qué atributos se asociaban a seis establecimientos de alimentación analizados. Mercadona se asocia con la calidad de su marca de distribuidor y una escasa variedad de marcas/productos. Las tiendas discount, Lidl y DIA, destacan por la posibilidad de mejora en la limpieza del establecimiento y la localización de los productos. Los hipermercados, Eroski, Alcampo y Carrefour, son destacados por su variedad de marcas/productos, y alejado del domicilio. También se ha identificado a los competidores más directos de cada empresa, encontrándose una competencia entre los formatos de venta del mismo tipo (intratipo). El uso de la netnografia, técnica relativamente reciente, supone la mayor originalidad del trabajo. Además, las conclusiones obtenidas, que son coincidentes con estudios anteriores, muestran que la netnografía puede ser una fuente de información para determinar cuál es la imagen comercial y el posicionamiento de las empresas.[EN] Online communities have become a popular meeting place for consumers that allows them to share information. This article presents a marketing research technique as netnography, and applied to determine the positioning of food distribution companies. After collection and analysis of 506 valid messages Ciao online community, were able to learn which attributes are associated to six food establishments analyzed. Mercadona is associated with the quality of its private label and a narrow range of brands / products. Discount stores Lidl and DIA, highlighted by the possibility of improvement in the cleanliness of the establishment and location of products. Hypermarkets, Eroski, Carrefour and Alcampo, are renowned for their variety of brands / products, and away from home. Also been identified to direct competitors of each company, being a competition among the retail formats of the same type (intratipo). The use of netnography, relatively recent technique, is the largest original work. Furthermore, the conclusions that are consistent with previous studies show that the netnography can be a source of information to determine brand image and positioning of companiesClemente-Ricolfe, J.; Escribá Pérez, C. (2014). Aplicando netnografia a la obtención del mapa de posicionamiento para empresas de distribución alimentaria. Cuadernos de Gestión. 14(1):57-74. doi:10.5295/cdg.110322jcS577414

Konkurrensen från lågpriskedjorna

Titel: Konkurrensen från lågpriskedjorna Seminariedatum: 2013-06-04 Kurs: NEKH01 Nationalekonomi: Examensarbete kandidatnivå 15hp Författare: Mia Quarfood Handledare: Joakim Gullstrand Nyckelord: Lågpriskedjor, svenska livsmedelsmarknaden, ICA, priskrig Syfte: Att undersöka huruvida lågpriskedjor sätter press på ICA-butiker att sänka sina priser. Teoretiskt ramverk: Teorier kring anpassande prissättning, oligopolmarknader, priskrig och lågpriskedjornas effekter diskuteras. Empirisk metod: Ekonometri används som grund för analysen. Data kring prisnivåer hos ICA-butiker för olika svenska kommuner har hämtats från PROs prisundersökning för år 2007. Dessa uppgifter har matchats med information från Delfi Marknadspartner för samma år som innefattar uppgifter kring lågpriskedjornas antal, säljyta och omsättning samt kommunspecifika variabler. Relationen mellan ICA-priser och olika mått på konkurrensen från lågpriskedjor har sedan kunnat testas med hjälp av ekonometriprogrammet EViews. Tester har utförts för två typer av varukorgar; en med återkommande varor från tidigare prisundersökningar och en med nya varor för år 2007. På sätt kan det testas huruvida det skapas skillnader i resultaten beroende på om ICA-butikerna kan förutse vilka varor som kommer att inkluderas i prisundersökningen. Resultat: Resultat visar att en negativ relation mellan ICAs prisnivå och lågpriskedjornas marknadsandel kan statistiskt bekräftas för varukorgen med de återkommande varorna. Därmed kan slutsatsen dras att ICA påverkas av lågpriskedjornas prissättning trots sin roll som dominerande aktör. Resultat visar även att antalet lågpriskedjor passar bäst som mått på deras konkurrens. Relationen för varukorgen med de nya varorna kunde däremot inte statistiskt bekräftas, med anledning att korgen var för begränsad

Competitive convergence in retailing

This article’s objective is to study the influence of a new hybrid format in the retail distribution sector and this emerging market context is defined as competitive convergence. To attain this objective, 1150 surveys of retail distribution professionals were conducted. These surveys aid in distinguishing retail formats and indicate their competitive position allowing us to generate positioning maps of the Spanish retailing. In addition, Cramer’s coefficient V was used as an association measure between qualitative variables and latent class analysis (LCA) modelling was used to build a segmentation analysis of the competing offer. This analysis shows how retail formats evolve and adapt their competitive variables, even adopting characteristics from different formats (competitive convergence). Supermarkets dominate the Spanish retailing and a hybrid retail format’s better competitive position in aspects commonly associated with other formats supports. Spanish retailing provides an example of the non-static nature of retail formats and business models