Local Competition and Impact of Entry by a Dominant Retailer

This paper analyzes the competition between two spatially differentiated multi-product retailers who encounter entry from a dominant discount retailer. Our primary objective is to determine how entry affects the pricing and relative profits of the incumbent stores and the role played by the location of the entrant. The new entrant has partial overlap in product assortment with the incumbents and is assumed to have lower procurement costs for the common goods. Consumers are heterogeneous in their location, economic status (shopping costs and valuations), as well as purchase basket or the types of products demanded. Results show that in the post entry equilibrium, the prices for the products not offered by the discounter are higher than the pre entry prices. More interestingly, contrary to the conventional wisdom we find that the store that is closer to the new entrant is better off compared to the incumbent located further away. The intuition for these results is that the discounter with its low price draws away the poor consumers – the price sensitive segment – out of the market for the items it carries. This in turn softens price competition between the incumbents for these items. Furthermore, the new entrant’s unique product offering attracts more consumers to visit the location it occupies, which introduces positive demand externalities to the neighboring retailer, leading to an increase in sales for the non-competing products. We provide empirical evidence for our results and discuss implications for retailers facing competition from large discount stores.entry; retail competition; agglomeration

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

Agribusiness,

Manufacturers and Retailers in the Global Economy

We develop a general-equilibrium model to capture key features of the retailing and of the manufacturing industry in order to understand how these two industries interact and how labor is allocated between them. We show that the observed shift in employment from manufacturing to retailing, the rise in retailer product assortment and the emergence of slotting allowances in many retail markets are consistent with the global integration of product markets, while higher retail market concentration is best explained by technological change in retailing. We also identify a novel benefit from market integration consisting of efficiency gains in the vertical distribution chain.international trade, product variety, retailing, slotting allowance, multi-product firms

The Future of Retail Operations

Retailing consists of all the activities associated with the selling of goods to the final consumer. In this article, we review the research on retail operations published in Manufacturing & Service Operations Research (M&SOM) since 1999. We then discuss the current retail landscape and the new research directions it offers, in which M&SOM can play a prominent role

Marketing

Marketing is a human activity aimed at customer satisfaction through exchange. The main objective of the course is a formation of a system of knowledge about the nature and content marketing as a philosophy of business activity in the market economy and competition in preparation for the adoption of qualified decisions in marketing

Beyond promotion-based store switching: Antecedents and patterns of systematic multiple-store shopping (revised version).

In this paper, we demonstrate both theoretically and empirically that single-purpose multiple store shopping is not only driven by opportunistic, promotion-based motivations, but may also result from a longer term planning process based on stable store characteristics. We find that consumers may systematically visit multiple stores to take advantage of two types of store complementarity. In the case of 'fixed cost complementarity', consumers alternate visits to high and low fixed cost stores to balance transportation and holding costs against acquisition costs. 'Category preference complementarity' occurs when different stores offer the best value for different product categories, and may induce consumers to visit these stores together on combined shopping trips. In both cases, multiple store shopping leads to a shift from share-of-customers to share-of-wallet retail competition.Multiple store shopping; Spatial competition; Store choice; Planning; Processes; Characteristics; Complementarity; Cost; Costs; Category; Preference; Value; Product; Shopping trip; Competition; Choice; Patterns;

Manufacturing in the 1990s - productivity, flexibility and innovation

The article outlines the evolution of large multinationals as a result of the appearance of new market demands. Companies having to meet specific market demands, are shown to possess certain characteristics, related to the market demands concerned. The analysis shows that innovativeness will, in all probability, be the new market demand in the 1990s, in addition to the already existing ones of efficiency, quality and flexibility. Descriptions of ideal types illustrate the evolution of companies as they move from the Efficient Firm to the Quality Firm on to the Flexible Firm to, finally, the Innovative Firm. The phase model also includes the symptoms of crisis, when moving from one phase to another. Skipping phases appears to be difficult, if not impossible. The same holds true for moving to the next phase, while the organization has not finished with the preceding phase

Complementarities, Below-Cost Pricing, and Welfare Losses

We analyze below-cost pricing in retail markets and examine its impact on social welfare as well as on suppliers' incentives to invest in quality. Considering negotiations about a linear wholesale price between the retailer and her suppliers, we find that below-cost pricing aggravates the double marginalization problem and causes welfare losses compared to a regime where below-cost pricing is banned. Furthermore, suppliers have stronger incentives to invest in high quality products if a ban of below-cost pricing is enforced.Complementarities, Retailing, Below-Cost Pricing