Retail Channel Research Articles

Reconciling conflict of interests in a green retailing channel with green sales effort

In this paper, we address conflicting objectives in a two-echelon retailer-manufacturer green retailing channel (GRC) with two types of substitutable green and non-green products. In the investigated model, the government pays (charges) the manufacturer a certain amount of subsidies (penalties) for producing green (non-green) products. The retailer can implement a green sales effort program to encourage customers to purchase green items instead of non-green products. In so doing, the retailer can transfer an uncertain amount of non-green demand to the green demand, while the total demand over both products remains constant. However, while producing green products is advantageous for the manufacturer due to governmental interventions, this is not the case for the retailer. To mitigate this conflict, we develop a game-theoretical model and a coordination mechanism that reconciles both members' interests. By applying the novel revenue-cost sharing along with a buyback (RCS&B) contract as an incentive mechanism, we mitigate conflicts and coordinate ordering and sales effort decisions throughout the channel. Our results show that the RCS&B contract may be quite effective in managing conflicting objectives toward aligning both GRC members’ interests. The proposed contract creates an economically viable, ambidextrous GRC by devising Pareto-improving solutions.

Optimizing the competitive service and pricing decisions of dual retailing channels: A combined coordination model

In recent decades, many firms have broadened their single-channel supply chains (SCs) into dual-channel supply chains (DSCs), endeavoring to gain more market shares. However, due to the resulting competitive situation, the successful performance of DSCs is closely related to the marketing activities conducted by the competitive channels. This study explores the optimality of competitive green service and pricing decisions of the retailing channels of a consumer electronics DSC; therefore, it contributes to the literature on dual-channel systems coordination which often focuses on optimizing the price-only strategies. Since the pricing decisions of the involved parties is a key issue affecting the level of services, this study proposes a combined two-part tariff contract to simultaneously optimize these decisions so that the sustainability targets of the system are met. Moreover, it uncovers the environmental and economic benefits of utilizing warranty replacement service of the online channel of DSC in favor of promoting demand and closing the online loop, in contrast to the prior studies, which have often investigated the demand-promotion effects of warranty. Results of implementing the model showed that the coordination scheme is sophisticated enough to synchronize the economic, environmental, and social gains of the system, leading to significant improvements in the performance indices. The results provide the DSC managers with insights into the way of optimizing the DSC marketing decisions and also utilizing warranty services towards achieving environmental and economic aims in the industries where providing warranty is an indispensable strategy.

The Effects of the COVID-19 Pandemic on the Mass Market Retailing of Wine in Italy.

The purpose of this study was to provide a detailed framework of wine purchases in supermarkets during the COVID-19 pandemic. The unexpected diffusion of the virus and the restrictions imposed in Italy to prevent its spread have significantly affected the food purchasing habits of consumers. By analyzing the scanner data of the wine sales in the Italian mass market retail channel, this study was intended to show whether and how the dynamics triggered by the pandemic have modified the overall value and type of wine purchases, focusing on prices, formats, and promotional sales. In particular, this study explores sales in two separate periods, namely March–April (the “lockdown”, with general compulsory closing and severe restrictions) and June–July 2020 (the “post-lockdown”, in which some limitations were no longer effective). The analysis of wine sales during lockdown and post-lockdown and the study of the variations compared to the sales of the previous years showed some significant changes in purchase behavior. The results could provide managers, researchers, and policy makers with extensive insights into the purchasing patterns of consumers during this unprecedented time and reveal trends that may characterize the structure of the future wine demand.

Downstream information sharing and sales channel selection in a platform economy

We investigate an online retailer’s information sharing strategy with a supplier who has already sold products through the online retailer’s retail channel. The supplier now decides whether or not to open a commission channel on the retailer’s online marketplace. When engaged in the commission channel, the supplier can directly sell his products to customers by paying a fixed entry fee and a proportional commission fee to the online retailer. We show that the online retailer may have an incentive to share the demand information with the supplier, and such an action may induce the supplier to establish the commission channel. This inducement effect sheds some new intuitions to the literature. Several extensions are considered to verify the robustness of our results. In specific, we also consider a variation of the model in which the supplier leads by making the channel establishment decision before the online retailer’s decision on information sharing, and we identify the firms’ preferences between the two models. Moreover, even with a fully competitive market or with an exogenous wholesale price, our results hold qualitatively.

Product quality control strategy of dual distribution channel structure in three-echelon supply chain

Based on the three-stage Stackelberg dynamic game model, we study how to make product quality control strategy in the three-echelon supply chain consisting of the manufacturer, retailer and customer under retailer dual-channel structure and manufacturer dual-channel structure. In two decision models (decentralized decision, centralized decision), we analyze the demand price elasticity, market share ratio, revenue sharing ratio and quality cost coefficient how to influence the product demand, product quality level, retail price and direct price in different channels, expected revenue functions of manufacturer and retailer, consumer surplus and product quality control strategy. We find that firstly, the retail price and direct price are positively related to product quality level, and the product quality level is negatively related to the demand price elasticity in traditional retail channel and the demand price elasticity in internet channel. What's more, the retailer’s retail price in traditional retail channel will be higher than direct price in internet channel. Thirdly, in the case of centralized decision, the manufacturer's product quality level, retail price, joint expected revenue and consumer surplus will all rise, but the direct price will fall. Fourthly, when the manufacturer entrusts the third-party platform to build the internet channel, the manufacturer's product quality level, retail price, direct price, expected revenue, and consumer surplus will all decrease. Finally, we conduct the simulation analysis by MATLAB 2018, which verifies the validity and credibility of our conclusions and points the direction for the specific application of the model in practice.

Optimizing decisions for a dual-channel retailer with service level requirements and demand uncertainties: A Wasserstein metric-based distributionally robust optimization approach

This study explores a dual-channel management problem of a retailer selling multiple products to customers through a traditional retail channel and an online channel to maximize expected profit. The prices and order quantities of both the online and the retail channels and the delivery times of the online channel are the decision variables. The demand for each product and each channel is assumed to be random and dependent on the prices of both channels and on the online delivery time. In addition, to ensure an adequate performance, service level requirements are considered and are modeled as joint chance constraints. Wasserstein uncertainty sets using the Wasserstein metric for demand probability distributions centered at the empirical distributions on the observed demands from the historical data are constructed in a data-driven approach. Accordingly, a data-driven distributionally robust joint chance constrained model is developed based on the data-driven Wasserstein uncertainty sets. A conservative CVaR approximation is used for the distributionally robust joint chance constraints. Through mathematical manipulations, the developed model is transformed into a bilinear program, which can be approximated by a mixed integer quadratic programming model using piecewise affine relaxations of the bilinear terms and can be solved efficiently. Numerical experiments are performed to illustrate the effectiveness and practicality of the proposed data-driven distributionally robust optimization approach to deal with demand uncertainties. The effects of the key parameters such as delivery time sensitivity, price sensitivity and customer channel preference are analyzed and managerial insights are provided. The results show that the decisions obtained by the proposed approach are robust to hedge against demand uncertainties. The proposed model and solution approach can provide effective decision supports for retailers selling products through an online channel and a traditional retail channel without reliable demand distribution information. Furthermore, compared with the L1-norm and the L2-norm, the L∞-norm is verified to perform better when used in the Wasserstein metric for constructing the Wasserstein uncertainty sets.

Channel differentiation strategy in a dual-channel supply chain considering free riding behavior

The emergence of e-commerce has compelled original brand manufacturers to adopt cross-channel strategies. This research investigates how a manufacturer facing free riders should decide on channel differentiation strategy, i.e., selling homogeneous or differentiated products through his own online channel and via an independent retailer. We consider horizontal differentiation across channels and identify the optimal strategy. In addition, we develop an agent-based model with vertical and horizontal differentiation to derive managerial insights for more complex situations. We have analytically found: (1) consumers are more likely to engage in free riding when faced with differentiated products than homogeneous products, as the price gap across channels is larger under the former scenario; (2) the manufacturer should offer differentiated products if the free rider's online factor is high. Similarly, if the retailer's service cost is low (high), and online (offline) shopping cost is low, differentiated products should be offered. (3) Under different conditions, offering homogeneous or differentiated products could respectively be a win-win strategy for the manufacturer and the retailer. (4) The proposed channel differentiation strategies remain robust to the horizontal differentiation decision and integration of the retail channel. Through agent-based computational experiments, we derive several insights. Namely, (1) if consumers are highly heterogeneous, the manufacturer should horizontally differentiate products across channels; (2) the manufacturer should narrow the vertical differentiation between the two products in dual channels; and (3) the manufacturer should differentiate products if consumers are familiar with the products.

Factors Affecting Consumers' Online Choice Intention: A Study Based on Bayesian Network.

In China, the mature development of online retail channels provides consumers with multiple consumption choices, and the factors that affect whether consumers choose to search or purchase online are numerous and complex. In this context, this paper reports on experimental research regarding consumers’ willingness to choose channels based on the two-stage decision-making theory. Using structural equation modeling, the factors influencing consumers’ online search intention and purchase willingness and the relationship between them are studied. In particular, the perceived benefits, channel trust, and channel transfer costs are explored. Furthermore, a Bayesian network is used in order to analyze the degree of influence of each factor quantitatively. It is found that online trust is an important factor affecting consumers’ online search intention, and the most important factor for consumers’ online purchase intention is their perceived benefits of online shopping. At the same time, there is a positive relationship between online search intention and purchase intention. This study can provide management decision support for online retail enterprises and help to promote the healthy development of online shopping.

Conducting tobacco industry informant interviews: lessons and implications for commercial determinants of health research.

Investigating and exposing tobacco industry tactics to oppose and interfere with tobacco control policymaking is crucial to advancing public health. Whilst past investigations of tobacco industry activities have largely focused on secondary sources of information, such as publicly available tobacco industry documents, the collection of first-hand evidence from key informants has been an under-utilized method in tobacco industry monitoring. This article provides a detailed account of a methodological approach to systematically recruit former tobacco company employees as key informants for a study that aimed to gather information on the marketing tactics tobacco companies use in the Australian retail channel. Given the success of our study methodology in uncovering new information about tobacco company practices, we propose that key informant interviews with former industry employees should be a priority method for research investigating the role of commercial actors in influencing public health outcomes. To offer guidance to researchers who may wish to undertake a similar methodological approach, we also provide a reflective account of the elements of success and the lessons learned from this research.

Effects of Increased Omnichannel Integration on Customer Satisfaction and Loyalty Intentions

ABSTRACT We examine how the integration of retail channels affects crucial firm outcomes, such as customer satisfaction and loyalty intentions, with a particular focus on the impact of different levels of offline-to-online channel integration. Across three experimental studies, one of them in an operating physical store, accommodating comparisons of several omnichannel configurations, increasing the level of omnichannel integration positively influences customer satisfaction and loyalty intentions. Flow experience mediates the effects. The impact of increasing the level of omnichannel integration on customer satisfaction and loyalty intentions is more pronounced among consumers who perceive the channels as complementary and for consumers with a goal-directed shopping orientation. This article contributes to extant omnichannel literature by experimentally investigating the impact of increasing levels of omnichannel integration—as compared to adopting a binary, “either-or” approach—and by demonstrating that omnichannel retail environments provide a fertile ground for flow experiences in physical stores. Furthermore, this article establishes the role of perceived channel complementarity and shopping orientation as boundary conditions for the realization of flow in omnichannel retail environments.

Dual-channel remanufacturing closed-loop supply chains under carbon footprint and collection competition

Due to economic and environmental advantages, transferring from linear systems into circular economies has been accelerated, especially in developed countries, which affects companies’ relations. Among different tools and methodologies, the closed-loop supply chain (CLSC) model as an established approach has shown its efficiency in reflecting these relations regarding the consumers’ behavior. Because of the complexity, limited studies have considered the effects of different factors simultaneously on different CLSC network designs. This is the first attempt to study the effects of carbon emission and remanufacturing simultaneously on a dual-channel in both forward and reverse logistics, while there is competition on collection. Accordingly, a novel format for the demand function is suggested and employed. The decisions regarding the optimal pricing and collection strategies of CLSCs were investigated, within which the manufacturer is responsible for the remanufacturing process and selling the remanufactured products directly to the customer through the online channel. In contrast, new products are sold via the traditional retailer channel, imposing relevant costs. We explore the effect of different dual-collection settings when there is competition between collector parties under three possible options (i.e., Manufacturer-Retailer, Manufacturer-Third-party, and Retailer-Third-party). The considered demand for both new and remanufactured products addresses consumers who have different willingness to choose the remanufactured items and are sensitive to the produced products’ carbon footprint. The behavior of the formulated CLSC models is studied by game theory regarding decision variables, and each player's profit is discussed through systematic comparison. We analytically show that considering all the effects, third-party entry is not in the manufacturer's interest. The findings show that consumers’ willingness to choose remanufactured products is generally more influential on prices and profits than their sensitivity to the carbon footprint.

Customer Loyalty to Modern Retail Channel A Study in The Context of Covid-19 Pandemic in Vietnam

This study was conducted for the purpose of maintaining the sustainable loyalty of customers towards modern retail channel in the context of the Covid-19 pandemic. The data used in the study were collected from 215 customers who went shopping at convenience stores, mini-marts and others made purchase by means of online shopping via the supermarkets’ websites during the Covid-19 pandemic in Vietnam. The result shows that there are five (5) factors positively affecting customers’ loyalty including perceived value, trust, service quality, personality traits, and commitment, among which perceived value has the strongest impact on customer loyalty. In addition, the study also shows that the switching cost factor moderates the relationship between customer trust and loyalty. Based on the result, the study proposes a number of managerial implications for the managers of modern retail channel from which to have suitable business methods and marketing strategies to meet the requirements of different types of customers, thereby increasing customer loyalty, gaining competitive advantage, and bringing sustainable business performance to businesses during the new normal and post-pandemic period. © 2021, SRAC - Romanian Society for Quality. All rights reserved.

Quantum Game of Dual-channel Supply Chain under Free-riding Behavior

Based on the perspective of the quantum game, this paper explores when the online direct sales channel takes the free-riding behavior after the retail channel provides high-quality experience and services and how the dual-channel supply chain establishes a commodity pricing strategy. The retailer’s selling price follows a decreasing function of the free-riding behavior coefficient. while the online direct selling price does an increasing function of the free-riding behavior coefficient. Under centralized decision-making, there is no quantum entanglement, so the quantum game solution is consistent with the classical game solution. Under decentralized decision-making, the optimal price and profit of the quantum game are higher than those of the classical game when the quantum entanglement degree is greater than zero. When the quantum entanglement tends to be infinite, the optimal price of the quantum game finally remains in convergence. The quantum game theory is a more optimal decision-making method than the classical game theory.

The interplay between blockchain adoption and channel selection in combating counterfeits

This study explores the interplay between blockchain technology (BCT) adoption and channel selection in combating counterfeits and examines the impact of this interaction on consumer surplus (CS) and social welfare (SW). Firstly, analytical models are developed to examine four scenarios (with and without BCT adoption and two channel scenarios). Secondly, the impacts of BCT adoption and channel selection decisions on CS and SW are analyzed. Finally, we relax our assumptions to consider the presence of the dual-channel sales model, risk-averse consumers, and expert consumers. The main findings are as follows: (1) Genuine companies should sometimes sell through dual sales channels before adopting BCT; however, they should always sell through a single sales channel after adopting BCT. Furthermore, BCT changes the optimal single sales channel from the retailer channel to the direct sales channel when the proportion of deceptive counterfeits in the direct sales channel is relatively high. (2) Both consumers and the whole society will benefit from the deployment of BCT when all sales channels of a company are either less reliable or highly unreliable. (3) BCT is valuable in combating counterfeits, especially when the risk aversion level of consumers is not sufficiently low or the proportion of expert consumers is sufficiently low.

When value- and experience-related trade promotions influence retailers’ sales: the moderating role of retail format strategy and channel structure

PurposeAs manufacturers and retailers aim to increase return on marketing investments, value-vsexperience-related trade promotions gain attention. These two trade promotions become complicated in the presence of different retail format strategies (generalistvsspecialist) and channel structures (direct to retailervsdistributors). Building on trade promotion literature, this study aims to show the main effect of value-related and experience-related trade promotions on retailers’ sales and the moderating role of different retail strategies and channel structures.Design/methodology/approachThe authors use unique panel data from 8 personal care brands with 1,920 observations to test the hypotheses. The authors investigate how consumer goods manufacturer sells products using different channels structures and retail strategies. Estimated panel regressions provide the empirical evidence and robustness analyzes provide extra confidence to the findings.FindingsResults reveal higher retail sales when the manufacturer invests in value-related trade promotions rather than experience-related trade promotions. The results also demonstrate how the manufacturer successfully invests in trade promotion by adequately accounting for channel structure and retail strategy. While temporary price reduction’s positive effect on retail sales is enhanced in generalist retailers (e.g. supermarket stores), shelf display’s positive impact is enhanced in specialist retailers (drug stores).Research limitations/implicationsThe authors used unique panel data accounting for 15 months, limiting the findings. The results supported the investment allocation decisions in each period. However, future research may evaluate the effectiveness over a longer period and thoroughly address each investment’s seasonal effects.Practical implicationsThe authors unveil how retailers achieve higher sales with value-related trade promotions when compared to experience-related trade promotions. The authors also shed light on the way manufacturers design their relationships with generalist and specialist retailers by working in direct and indirect channels. Trade promotions yield better results when the direct channel structure couples with a retailer’s generalist strategy.Originality/valueThe empirical findings help manufacturers achieve success in trade promotions by developing an equitable evaluation to contrast value- and experience-related promotions accounting for generalist and specialist retail strategies and direct and indirect channels.

A Modified Customization Strategy in a Dual-Channel Supply Chain Model with Price-Sensitive Stochastic Demand and Distribution-Free Approach

With the advancement of technology, many companies provide customization facilities to customers. This facility provides a vast variety to customers which enhances the level of customer satisfaction. This approach helps various technologically advanced companies to increase their profit. In this paper, a dual-channel supply chain model is developed with the aforementioned customization strategy with the target of increasing the profit of the firm. In dual-channel, the core or standard product is provided to the customer through a traditional retail channel, whereas the customized product is made available through the online channel. This article incorporates a modification in the existing dual-channel policy on the number of customers that switch between the offline and online channels. Moreover, a preassigned threshold value is also assumed which signifies the decrease in demand that takes place if the difference between the selling price of offline and online channels crosses a fixed specified threshold value. In addition to that, due to fluctuation and uncertainty of demand, both variability and randomness may occur simultaneously. Thus, the price-sensitive stochastic demand is considered to develop the dual-channel centralized supply chain model with customization. A max-min distribution-free approach is applied to deal with the randomness and variability of demand. The model is analyzed and validated with numerical experiments and graphical analysis. Consequently, the article concluded that it is better to adopt a dual-channel supply chain policy for better profitability than the traditional single-channel supply chain as this firm will be able to provide customized products to customers. Moreover, if the difference between the selling prices of the offline and online channels is greater than the preassigned threshold value, then the shifting of customers takes place depending upon the factor that which channel’s selling is less in comparison to another.

Discussion on the Transformation Strategy of the General Welfare Service Ministry of MND-The Case of Taiwan

The Army Welfare Service (AWS) has been one of the important policies promoted vigorously by the R.O.C. (Taiwan) government. With the full implementation of the Mercenary System, how to improve the quality of welfare work will resonate with all the military officers and soldiers of the National Army, and its effect will directly affect the effectiveness of recruiting. Among them, the welfare stations and military camp stations created by the General Welfare Service Ministry of the Ministry of National Defense (MND) R.O.C. in various regions are the only service organizations in the National Army that can directly benefit military officers, soldiers and their families. In the face of the rapid growth of retail channel operators and changes in the overall sales pattern in the current market, how should the General Welfare Service Ministry of MND’s business model transform to meet the needs of consumers on the product side and the shopping model. This research explores the literature to understand how the General Welfare Service Ministry of MND R.O.C. can effectively transform its business model under the prerequisite of limited sales objects, so as to adopt more flexible business models and marketing strategies that can resonate with consumers, and ensure product quality and expand service categories at the same time, creating a win-win situation between the General Welfare Service Ministry of MND R.O.C. and consumers. 
 
 This study adopts a qualitative research method, and conducts in-depth interviews with three different types of subjects that are closely related to the transformation of the General Welfare Service. It is hoped to explore the value of the research, and provide specific transformation recommendations to be used as a reference for the future decision-making by the General Welfare Service Ministry of MND R.O.C. This study found that in addition to emphasizing product quality and price lower than the average market price, it should also focus on product promotion, and comprehensively upgrade the interior of the store with modern designs to attract young consumers. In addition, through the establishment of the NRA’s own brand image, the use of big data to create more diversified promotion methods, the provision of on-line payment consumption options and other active operational transformation measures, it can ensure sustainable operation and continue to benefit service recipients.

Additive omnichannel atmospheric cues: The mediating effects of cognitive and affective responses on purchase intention

In today's channel-centric retail ecosystem the right mix and orchestration of online and offline stimulus is paramount towards providing an optimal store atmosphere and shopping experience. Applying the S-O-R framework, this research explores additive omnichannel atmospheric cues stimuli, in order to discover their impact on affective (i.e., pleasure, arousal and dominance) and cognitive (i.e., store environmental quality perception) states and their consequential effect on consumer responses in the form of purchase intention. Employing a four-condition repeated measures experimental design in a physical store, utilizing mobile, IoT and social media channels (Study 1), as well as a between-subjects online lab experiment (Study 2), this research sheds light into the affective and cognition-mediated causal mechanisms that influence shopping outcomes. This work reveals that combining stimulus from all retail channels within the physical store (i.e., omnichannel atmospheric cues) increases consumers' pleasure, arousal and the quality of the environment as a whole, which in turn positively influences purchase intention. However, the impact of dominance is only prominent at the more controlled, laboratory setting, in which purchase intention increases while dominance attenuates.

Committed or contingent? The retailer’s information acquisition and sharing strategies when confronting manufacturer encroachment

Unlike most studies focusing on the manufacturer’s channel strategy, we investigate how a retailer strategically acquires and shares consumer quality preference information when confronting manufacturer encroachment. As a follower, the manufacturer decides the quality level and sales quantity based on the information he holds. Considering the retailer’s flexibility in acquisition timing, we focus on two formats, namely committed acquisition and contingent acquisition, depending on whether the retailer commits to her acquisition decision before or after the manufacturer’s quality investment. Assuming the manufacturer provides identical product through different selling channels, we find that when the manufacturer’s direct selling efficiency is high, contingent acquisition is always a weakly dominant strategy, while the retailer is suggested to commit to acquire information if and only if the direct selling efficiency is low and the acquisition cost is relatively high. If the consumer quality preference is acquired, information sharing occurs only when the direct selling efficiency is sufficiently high, via which the retailer can induce a lower expected wholesale price, gain a higher market share, and achieve a “win-win” situation. With the information advantage, the retailer can always obtain a positive profit in the distribution channel, while the inefficient manufacturer may stop selling in the direct channel when consumers have a low preference for quality. Our result explains why, despite manufacturers directly obtain profits from their own channels, they still sell products through retail channels and even treat them as main distributive ways. Based on the above equilibrium outcomes, we derive the retailer’s optimal strategy for information management, whereby the retailer can not only induce the highest product quality, but also the highest consumer surplus as compared to other acquisition strategies. Our work can guide retailers to better implement information strategies when confronting manufacturer encroachment.

Empirical Investigation of Omni-channel Customer Behavior: Multiple Mediation Effects of Website and Mobile Interactivity

While existing retail research has focused on retail channels in isolation from a single or multi-channel retailing perspective, there is a need to investigate shopping behavioral intention from an omni-channel and customer-centric retailing perspective. The main of this study is to analyze the customer omni-channel behavior under multiple mediating effects of website and mobile interactivity. Data collected from valid 287 respondents via both online and paper form. Partial least squares structural equation modeling (PLS-SEM) and Smart-PLS software have been used to test proposed hypotheses. The result underlined the significant positive effects of technology literacy, attitude towards website interactivity and attitude towards mobile device interactivity on customer’s behavioral intention. Moreover, website interactivity and augmented reality have highest impact attitude towards website interactivity and attitude towards mobile device interactivity respectively.