Abstract
In attempts to differentiate their store imagery, grocery retailers frequently introduce new products, which are often rich in extrinsic attributes such as claims regarding healthiness and environmental sustainability. This paper explores retailers’ pricing strategies for product attributes of haddock in the United Kingdom. The results show that retailers’ pricing strategies vary, in particular for extrinsic product attributes such as eco-labels and country-of-origin. The high price premium generated from the most advocated eco-labels and an emphasis upon promotion strategies appear to play a role in the success of high-end retailers, and may have implications for any heightened competitive responses by larger retail chains in the future.
Highlights
The grocery retail market has become increasingly competitive and is characterized by high costs and limited demand growth [1,2,3,4,5,6,7]
This paper provides a novel contribution to the sustainability and hedonic price modeling literatures by examining whether retailers differ in their strategies and pricing of eco-labels and other product attributes on a range of haddock products in the U.K. retail market
The selection of a similar base product facilitates comparisons of price premiums of different product attributes of haddock sold in the two retailer groups
Summary
The grocery retail market has become increasingly competitive and is characterized by high costs and limited demand growth [1,2,3,4,5,6,7]. In the United Kingdom, the largest grocery retailers increased their market shares by investing heavily in new stores during the 1990s [6], but are facing strong competition from both smaller high-end retailers and discounters. The increased competition between the U.K. retailers is mostly supply-driven, but to a certain extent is driven by consumer demand [8]. By competing on price via, for instance, price-matching guarantees [8]; use of loss leaders to attract consumers and deter competitors [9]; high-quality and private labels [1]; emphasizing fresh products; wider assortment; location; store design; and size of store to realize economies of scale along the supply chain [10,11]. An important dimension of this evolution has been various claims related to environmentally sustainable production practices [13,14,15,16,17]
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