On Shelf Availability: A Literature Review & Conceptual Framework

On-Shelf Availability (OSA) is a key performance indicator for the retail industry, greatly impacting profit and customer loyalty. Strong competition in the industry causes retailers and suppliers to put heavy emphasis on improving performance in an effort to satisfy consumers and keep them coming back to their store or product. Over 40 years of research has been done on OSA and its complement, out-of stock (OOS), however very little progress has been made in improving performance in these areas, leading to the belief that gaps in extant research exist. In order to solve the OOS problem, the key drivers of OOS events must first be identified and then addressed. This paper focuses on identifying the drivers of poor OSA performance through a three step process. First, a comprehensive literature review was performed to identify the drivers of OOS addressed in existing literature. Second, interviews with industry professionals revealed potential drivers of poor OSA performance that have been explored at an industry level. Finally, the two lists were examined against each other and the potential drivers identified in the interviews that had yet to be researched were highlighted. This paper gives strategic direction for future research to help solve the OOS dilemma facing manufacturers and retailers today

PAYING FOR SHELF SPACE: AN INVESTIGATION OF MERCHANDISING ALLOWANCES IN THE GROCERY INDUSTRY

This research examines the behavior of manufacturers and retailers in the presence of merchandising allowances. Merchandising allowances are fees manufacturers pay retailers to encourage them to allocate certain in-store promotional activities to the manufacturers' brand. According to estimates, retailers collect billions of dollars in these allowance payments annually. Using a three-stage game, I formulate a vertical structural model that endogenously models manufacturer, retailer, and consumer behavior. Manufacturers compete with each other, using merchandising allowance payments, in order to obtain premium shelf space at retail outlets. Retailers, given allowance offers, choose display configurations and then set retail prices. Consumers observe the display and retail prices and determine whether to purchase one or no units of the good. I estimate the model with a method of moments technique using IRI scanner data from the ketchup industry. In addition to estimating consumer tastes parameters, the model yields predictions of the underlying wholesale prices and the merchandising allowances each manufacturer offers. I use the parameter estimates to conduct a counterfactual simulation of how agents might respond when the use of merchandising allowances is no longer permissible. I find that while merchandising allowances increase retail profits, total welfare is lower due to the allowances.Industrial Organization, Marketing,

Strategic Implications of Retail Pricing in the U.S. Fluid Milk Market

We explore brand level strategic interactions between skim/low fat and whole milk brands by estimating detailed price elasticity matrix using quadratic almost ideal demand system for eight major U.S. cities. Results of our analysis suggest that the market and demand behavior of skim/low fat and whole milk brands are different. Demand for skim/low fat milk is more elastic than in the case of whole milk. Highly inelastic demand for large number of Private label whole milk brands suggests 'loss leader' pricing strategy by the retailers. Such pricing strategy does not seem to be the norm in skim/low fat milk market.Agribusiness,

Evaluating Labor Productivity in Food Retailing

New store formats including competition from supercenters (driven by Wal-Mart), warehouse clubs, and mass merchandisers have emerged as a major threat to traditional grocery chains. A key issue in the food retailing sector is to understand how the earnings of employees respond to the evolution of new retail store formats and store organizational characteristics. The elasticity of complementarity for food retailers measures how changes in store size affect use of full-time and part-time employees. The evidence for constant returns to scale suggests that the Hicks elasticity of complementarity is the appropriate measure to assess input substitutability for food retailers. As store size increases the marginal value of labor rises and firms hire more part-time employees, along with a smaller increase in full-time workers.elasticity of complementarity, employee compensation, food retailing, inverse price elasticities, Agribusiness, Labor and Human Capital,

Evaluating Labor Productivity in Food Retailing

Competition from new store formats including supercenters, warehouse clubs, and mass merchandisers has emerged as a major threat to traditional grocery chains. A primary objective of this paper is to understand how the store-level performance is related to the workforce composition of full-time and part-time employees chosen by the food retailer along with benefits and incentives provided to employees. The elasticity of complementarity for food retailers measures how changes in store size affect use of full-time and part-time employees. Larger store size increases the marginal value of labor, and firm hiring decisions shift to expanded use of part-time employees.elasticity of complementarity, employee compensation, food retailing, inverse price elasticities, Food Consumption/Nutrition/Food Safety, Labor and Human Capital, Productivity Analysis,

Can in-store displays improve category sales and brand market share in online stores? A study on the overall effectiveness and differences between display types in an online FMCG context.

Our study investigates the overall effects of in-store displays (ISD) on category sales and brand market share in an online shopping context, and compares the differences in effectiveness between ISD types. Using data from an online grocer, we examine three online ISD types that match with traditional ones: first screen (entrance), banner (end-of-aisle) and shelf tag (in-aisle) displays. Empirical results for 10 categories confirm that online ISD may substantially increase brand market share and to a lesser extent, category sales. Our results also demonstrate that not all types are equally effective. First screen displays clearly have the strongest effect on market share: they benefit from their placement on the ‘entrance’ location, central on-screen position and direct purchase link. While they only feature 1 SKU, banner displays typically feature all SKUs of a brand, yet, are placed on border-screen positions on traveling-zone pages without a direct purchase link. Based on our results, the advantage of banner displays does not weigh up against the advantages of first screen displays in most cases. Shelf tags, finally, may be very useful in attracting attention to interesting promotions, but appear to have no or at most a limited effect on their own.in-store displays; online grocery shopping; market response analyses;

Can in-store displays improve category sales and brand market share in online stores? A study on the overall effectiveness and differences between display types in an online FMCG context

Our study investigates the overall effects of in-store displays (ISD) on category sales and brand market share in an online shopping context, and compares the differences in effectiveness between ISD types. Using data from an online grocer, we examine three online ISD types that match with traditional ones: first screen (entrance), banner (end-of-aisle) and shelf tag (in-aisle) displays. Empirical results for 10 categories confirm that online ISD may substantially increase brand market share and to a lesser extent, category sales. Our results also demonstrate that not all types are equally effective. First screen displays clearly have the strongest effect on market share: they benefit from their placement on the ‘entrance’ location, central on-screen position and direct purchase link. While they only feature 1 SKU, banner displays typically feature all SKUs of a brand, yet, are placed on border-screen positions on traveling-zone pages without a direct purchase link. Based on our results, the advantage of banner displays does not weigh up against the advantages of first screen displays in most cases. Shelf tags, finally, may be very useful in attracting attention to interesting promotions, but appear to have no or at most a limited effect on their own.marketing ;

Estimating the Market Demand for Value-Added Beef: Testing for BSE Announcement Effects Using a Nested PIGLOG Model Approach

This paper estimates an AIDS model and corrects for first-order autocorrelation using retail meat data. We fail to reject the null hypothesis of no BSE announcement effects.Demand and Price Analysis,

Optimizing Incentive Plan Design: A Case Study

We study effects of a firm's attempt to optimize an existing incentive scheme to increase sales growth for direct store delivery workers. Before optimization workers reported Ratchet Effects that lowered productivity. The altered incentive plan offered higher compensation for increased sales relative to a sales growth target, and lower compensation for failing to meet the target. We gathered data on performance and attitudes at pilot and control sites before and after the change. Relative to control sites, sales growth increased in the pilot sites by two percent, a meaningful contribution to firm profits. We find no change in distortion of effort or manipulation of the performance measure. Workers did not substantially change number of hours worked, though allocation of time across tasks changed slightly. Despite increased productivity, workers continued to report Ratchet Effects after the change. We also find that an unplanned price increase midway through a fiscal year affected the extent of Ratchet Effects that year.incentives, ratchet effect