Large Grocery Retailer Research Articles

Measuring the impact of stock-keeping unit attributes on retail stock-out performance

Stock-outs are one of a retail chains’ biggest problems because they lead directly to lost sales, reduced profits, and the potential loss of customers. This research applied probit regression to determine the relationship between various stock-keeping unit (SKU) attributes and retail stock-out performance. The data sample came from a large grocery retailer in Serbia and included two high-risk product categories consisting of a total of 115 SKUs and 98 stores. For the identification of stock-outs, a perpetual inventory aggregation method was used. Regardless of the category observed, the variables that were identified as having a detrimental impact on stock-out performance include stock-out at the distribution center, promotion, and high sales speed. On the other hand, a beneficial effect in terms of a reduced number of stock-outs was observed when the ordering process was performed using an automated ordering system.

United We Stand: The Impact of Buying Groups on Retailer Productivity

In diverse industries, from grocery retailing to health care, retailers join buying groups to achieve better terms with suppliers. The authors track the buying group membership of Europe's largest grocery retailers over a 15-year period and evaluate why some buying groups are better than others in increasing retailer performance and why different members belonging to the same group do not always benefit equally from their membership. They find that, on average, buying groups indeed generate scale advantages for their members: group scale increases group members' productivity and sales and decreases their cost of goods sold. Still, bigger is not always better. Retailers benefit less from buying group scale when the group is more heterogeneous in terms of member size and when it extends its scope across too many markets. Moreover, the smaller a member is within the group and the more it overlaps with fellow members, the less it benefits.

The French Grocery Retail Company Intermarché Develops the ‘Click and Drive’ Model

The purpose of this case study is to let the readers identify the key success factors of the French grocery retail companies’ drive-through model. A case study approach is used to describe clearly issues confronting Intermarché, the third largest French grocery retail company, to the important and fast drive-in model development. The large French grocery retailers are investing heavily in the ‘click and drive’ format in order to avoid having to make home deliveries and bear the substantial costs associated with the ‘last mile’. Investing in selected drive-in locations is a cheaper way for them to expand their area of coverage than investing in new outlets. But they still have to deal with a new and difficult format, which presents a number of challenges from the strategic, logistic and marketing points of view. This case study provides an insight into the success of the grocery ‘click and drive’ (or drive—or drive-in) model developed by French grocery retail companies and allows understanding the basis of their competitive advantages. It can also help large grocery retailers to achieve their development objectives and counter the stagnation of traditional retail formats in Western Europe.

Kroger Uses Simulation-Optimization to Improve Pharmacy Inventory Management

The Kroger Co. is the largest grocery retailer in the United States. It operates 2,422 supermarkets and 1,950 in-store pharmacies. Improving customer service is at the heart of Kroger's business st...

Kroger Uses Simulation-Optimization to Improve Pharmacy Inventory Management

The Kroger Co. is the largest grocery retailer in the United States. It operates 2,422 supermarkets and 1,950 in-store pharmacies. Improving customer service is at the heart of Kroger’s business strategy. Toward this end, Kroger’s operations research team, in collaboration with faculty from Wright State University, developed an innovative simulation-optimization system for pharmacy inventory management. In pharmacy applications, traditional standard statistical distributions fall short of providing accurate pharmacy demand distributions. To overcome business resistance to complex formulas, this simulation-optimization approach uses empirical distributions to model demand, provides end users with a visual intuitive experience, and delivers optimal or near-optimal results in milliseconds through local search heuristics. The system was implemented in October 2011 in all Kroger pharmacies in the United States, and has reduced out-of-stocks by 1.6 million per year, ensuring greater patient access to medications. It has resulted in an increase in revenue of $80 million per year, a reduction in inventory of more than $120 million, and a reduction in labor cost equivalent to $10 million per year.

E‐commerce: exploring the critical success factors

PurposeThe objective of this piece of qualitative research is to identify the key success factors (KSFs) of the grocery “click and drive” (or drive or drive‐in) model developed by French grocery retail companies and to understand the basis of their competitive advantages.Design/methodology/approachThe authors compare the conclusions of a review of the literature with an analysis of the various grocery drive‐in approaches developed in France. These approaches are studied by applying a multi‐method qualitative perspective comprising semi‐structured interviews with managers and e‐consumer focus groups.FindingsThe research confirms – with the exception of the quality of customer reception, which is particularly valued by managers and consumers – the main key success factors identified in the literature, and reveals a real consensus among the main operators on those KSFs and on the nature of the kind of core competences required in order to obtain competitive advantages.Research limitations/implicationsThe comparison of the real profitability of “drive‐in” sales outlets and a more precise evaluation of the advantages of an integrated multi‐channel approach would provide more accurate results. Moreover, the authors have limited this study to an analysis of the French experience. The research implies that French grocery retailers should develop, along with a more differentiated logistical system, an improved approach to customer relations marketing. Moreover, it implies that “click and drive” outlets enable traditional grocery retailers to sharpen their competitive edge.Originality/valueThis article provides an original analytical approach to the identification of the critical success factors of large grocery retailers developing drive‐in services. In answering this research question, the study should also help large grocery retailers to achieve their development objectives and counter the stagnation of traditional retail formats, especially the hypermarket.

Environmental improvement of product supply chains: A review of European retailers’ performance

Retailers are beginning to accept responsibility for the environmental impacts of their product supply chains. This paper: (i) summarizes the challenges faced by retailers to drive environmental improvement across private-label food, textile, furniture and household chemical products; (ii) provides a review of 25 major European retailers’ best practice actions. Retailers drive environmental improvement of supply chains using third party environmental certification (e.g. Forest Stewardship Council), product performance labelling, environmental requirements for suppliers, and supplier improvement programmes. Proactive retailers go beyond product labelling to use widespread product certification and extensive collaboration with suppliers to drive systematic environmental improvement across product groups associated with high environmental burdens. Quantitative data on sales shares of improved products are patchy but indicate large variations in performance across retailers. Specialist retailers and smaller cooperative retailers tend to be front-runners in supply chain improvement, whilst very large and price-led grocery retailers tend to be laggards. These differences partly reflect logistical and market positioning difficulties for the latter types of retailer to shift towards sustainable sourcing, but also different perspectives on responsibility. Front-runner retailers accept a high degree of responsibility for supply chain sustainability compared with laggard retailers who tend to place the onus on consumers to drive environmental improvement across supply chains.

Do Women Managers Ameliorate Gender Differences in Wages? Evidence from a Large Grocery Retailer

Women's disadvantages in labor market outcomes are often attributed to the preponderance of men at or near the top of organizational hierarchies. While theories of homophily predict that women in positions of power ameliorate gender differences in wages for employees under them, status characteristics theory suggests that women face comparable disadvantages when working under men and women. Despite the existence of competing theoretical perspectives, there is little empirical work investigating the effect of women in positions of organizational power on gender inequality among their subordinates. This study makes an important contribution to this literature by using employment records from 3,707 employees at a large U.S.-based grocery retailer over nine years to examine how the gender gap in wages varies in establishments with male and female managers. Consistent with status characteristics theory, the authors find no significant differences between male and female managers in terms of gender-based wage inequality among their employees.

A Comparison of Contract Types for Procuring Trucking Services: A Case Study of A Large Swedish Retailer

AbstractWe found that a large Swedish grocery retailer was missing a structured approach for deciding on contract type when procuring trucking services in shipper-forwarder relationships. In this context, we identified four contract types: dedicated services, periodical services, truckload services, and less-than-truckload services. From previous literature, we found that trucking costs, utilization, and coordination costs impacted prices when tendering for trucking services. Thus, the purpose of this article is to compare the four contract types for trucking services based on trucking service costs, which includes a tradeoff between utilization and coordination costs. Using an applied research project, we worked together with the grocery retailer to compare contract types. Our results show that it is possible to compare contract type using trucking costs, utilization, and coordination costs associated with each contract type.

Recording discrepancies in Nielsen Homescan data: Are they present and do they matter?

We report results from a validation study of the Nielsen Homescan consumer panel data. We use data from a large grocery retailer to match transactions that were recorded by the retailer (at the store) and by the Homescan panelist (at home). The matched data allow us to identify and document discrepancies between the two data sets in reported shopping trips, products, prices, and quantities. We find that the discrepancies are largest for the price variable, and show that they are due to two effects: the first seems like standard recording errors (by Nielsen or the panelists), while the second is likely due to the way Nielsen imputes prices. We present two simple applications to illustrate the impact of recording differences, and we use one of the applications to illustrate how the validation study can be used to adjust estimates obtained from Nielsen Homescan data. The results suggest that while recording discrepancies are clearly present and potentially impact results, corrections, like the one we employ, can be adopted by users of Homescan to investigate the robustness of their results to such potential recording differences.

The constitution of networks

The idea of a constitution of networks may be a useful addition to our ways of understanding what happens within the business landscape. We describe a constitution of networks as a system of values, norms, rules and other conventions that are shared by actors in business networks. Whether by intention or not, the constitution of networks provides a framework within which interaction among actors takes place. We argue that companies invest in the selection and replication of interaction practices that evolve over time as customs or common use. This involves interaction aimed at developing or accessing resources for future use in the relationships between actors. In this way, the constitution of networks circumscribes the actors' appreciations and expectations about how they and others should conduct business. This study is based on empirical research conducted between 2002 and 2005 in business networks of consumer goods in the United Kingdom. Significant actors include multinational consumer goods companies, large grocery retailers, consumers and public authorities.

The Role of Relational Embeddedness in Retail Buyers' Selection of New Products

Retailers face considerable risk in introducing new products because of high failure rates. Given the proliferation of new products juxtaposed against finite shelf space, retail buyers are confronted with a choice problem. To enhance understanding of this issue, the authors examine the role of buyer-salesperson and firm-firm relationships using data collected in the context of actual new product selection by retail buyers at two large grocery retailers in the United States. The findings indicate that buyer-salesperson and firm-firm relationships have a greater influence on new product acceptance when a new product's attractiveness is modest than when the new product is very unattractive or very attractive. At modest levels of product attractiveness, the likelihood of new product acceptance can increase by as much as 60% when the buyer has a strong relationship with the salesperson. The study provides insights into the complex interplay of marketing relationships and product attractiveness in retail buyers' selection of new products.

A Comparison of Online and Offline Consumer Brand Loyalty

In this study we compare consumer brand loyalty in online and traditional shopping environments for over 100 brands in 19 grocery product categories. The online purchase data come from a large traditional grocery retailer that also operates an online store for its products. The offline data corresponds to the exact same brands and categories bought in traditional stores by a panel of homes operated by ACNielsen for purchases made in the same city and over the same time period. We compare the observed loyalty with a baseline model, a new segmented Dirichlet model, which has latent classes for brand choice and provides a very accurate model for purchase behavior. The results show that observed brand loyalty for high market share brands bought online is significantly greater than expected, with the reverse result for small share brands. In contrast, in the traditional shopping environment, the difference between observed and predicted brand loyalty is not related to brand share.

Card Loyalty. A New Emerging Issue In Grocery Retailing

In the 1990's all the largest grocery retailers have introduced loyalty cards with the specific goal of acquiring consumer knowledge. The use of loyalty cards as a knowledge tool has become so critical that retailers offer customers rewards in return for card subscription and continuous use, because knowledge accumulates only if consumers keep on using the cards they have subscribed. These cards have opened a rich debate in marketing literature, which is still going on. All the analyses of card data have however assumed that consumers are card loyal, that is they use the card they have subscribed. Is card ownership and use tangible evidence of consumer loyalty? The paper offers a framework for testing the feasibility of this fundamental assumption. The framework is applied to the loyalty card database of an Italian supermarket to answer three questions: 1. Who are the heaviest users of the card? 2. Is their shopping behavior different from that of light users? 3. Who are the key cardholders? Answer Tree (SPSS package) is the technique used to operate the empirical analysis.

An investigation of the potential existence of "food deserts" in rural and urban areas of Northern Ireland.

Food Deserts have recently beenidentified in the United Kingdom. They havebeen defined by Tessa Jowell, UK GovernmentHealth Minister, as an area ``where people donot have easy access to healthy, fresh foods,particularly if they are poor and have limitedmobility.'' The above definition is particularlyrelevant in Northern Ireland, where it isestimated that 32% of households do not haveeasy access to a car and it is recognized thatcertain groups in Northern Ireland are amongstthe poorest consumers in the United Kingdom.The phenomenon has been further exacerbated bythe effect of large grocery retailers locatingon the periphery of towns and the subsequentdisplacement effect of independent retailers inthe town center. The resultant effect is suchthat disadvantaged consumers cannot accessfresh, quality, nutritious foods at anaffordable price. Preliminary researchindicates that certain consumer groups areexcluded from equitable shopping provision –possibly to the detriment of their healthstatus. Research methodology includes aconsumer questionnaire, consumer focus groups,interviews, and comparative shopping exercisesthat confirm an inability among vulnerableconsumer groups to achieve an affordable,healthy diet. This was further complicated bynon-car owners' and lower-income family unitsneeding to shop locally and more frequentlythan their higher-income, car-ownercounterparts. This was demonstrated with theuse of shopping diaries. Future research to beconducted includes a large-scale survey acrossNorthern Ireland to ascertain accessibility,availability, and affordability of qualityfresh foods and to distinguish the consumergroups who are most vulnerable.

Space allocation in UK grocery retailing

Space allocation is usually explained through the use of optimization models. This study examines the perceptions of experienced managers in major UK grocery retailers relating to effective space utilization. From the literature, initial telephone survey and interviews, 48 variables relating to the same issue were identified. These then formed the basis of a questionnaire, which was postally administered to managers within the space planning function in six of the UK’s largest grocery retailers. Thirty completed questionnaires were returned. Principal components analysis was used to explore interrelationships among the variables. Of the 48 variables 18 were identified as most important. The 18 variables accounted for over 80 per cent of the total variance. These variables were associated with six underlying components. These six components (and the associated variable scores) were then examined using structural equation modelling. An SEM model was developed with a combined goodness of fit index of 0.85. The developed model is very different from the relations posited in existing space planning systems.

Banks, grocers and the changing retailing of financial services in Britain

The entry of the three largest grocery retailers into retail financial services marks an escalation of competition in financial services retailing in Britain. This paper explores the increasingly porous boundaries between banking and retailing, focusing on changes in the economics of information gathering, shifts in the production, marketing and consumption of retail financial services, and a series of changes in the competitive and regulatory environment of grocery retailing. The paper argues that grocery retailers’ moves into financial services raise important issues concerning both the management of strategic alliances and their impact on social inclusion and exclusion. The paper elaborates on this argument by examining four potentially problematic issues arising from the alliances between banks and retailers: the shifting geographies of financial services provision, the development and maintenance of brand leadership, the production and use of management knowledge and consumers’ access to financial services.

Budgens plc: coping with competition in UK grocery retailing

Five years ago, Budgens plc, Britain’s tenth largest grocery retailer, established an alliance with REWE of Germany to develop a discount format in the south of England ‐ Budgens’ heartland ‐ to exploit what was perceived as a growth area in the UK as the other multiples had tended to vacate this sector of the market. Budgens had no experience of discounting and thus an alliance with REWE, a large German discount operator, was an attractive proposition. The article explains why and how the alliance developed and, importantly, assesses why the experiment was relatively short‐lived. Essentially, it illuminates the problems of attempting to pursue both differentiation and cost/price leadership strategies.