Retail Channel Research Articles

Pricing and production decisions in a dual-channel closed-loop supply chain with (re)manufacturing

The development of information technologies and e-commerce has allowed many companies to set up online platforms to sell their products in dual-channel supply chain (SC) networks. The double competition between new and remanufactured products within channels and across competing channels affects manufacturer and retailer pricing decisions. However, the current state of the literature shows a gap in the modelling and analysis of a dual-channel SC with both cross-channel competition and channel costs. To fill this gap, this paper develops a model for a CLSC in which the manufacturer sells new products through a retail channel and also directly through its online channel. The manufacturer may also sell remanufactured products in its online direct channel if it decides to produce them. The results indicate that: (i) the manufacturer’s production and optimal pricing strategies depend on both production and channel selling costs; (ii) remanufacturing is not considered by the manufacturer when the unit manufacturing cost is sufficiently low and the retailer’s channel cost is sufficiently high; (iii) the introduction of remanufacturing hurts the retailer’s profit only when the unit manufacturing cost is sufficiently high; and (iv) selling the new product online mitigates the effect of remanufacturing on the retailer, and thus a high customer’s acceptance of the remanufactured product can benefit the retailer.

GEO-SPATIAL ANALYSIS AND RETAIL: BRINGING SATELLITE DATA AND CONSUMER DETAILS TO INDIAN RETAIL

Geographic Information Systems or to cover a broader aspect of Geo-Spatial analysis, are changing the way businesses are done across the world. The number of satellites that was launched in the latter half of the previous century and all the investment that went into geographic and spatial is now bearing fruits trying to minimize the error rates in the business models. The “birds eye” is slowly becoming an important planning and strategic tool for management to take decisions. One industry that is reaping most of this innovation globally is the retail industry. Use of data in the retail industry is not new as retailers have been using a variety of data set from finding new locations to getting in more footfalls. They have been playing around data and draw insights to learn about customers and provide them with better service. But with changing times and retail business models, those data sets provide a limited scope to judge and make decisions. This is creating demand for new data sets that can provide access to deeper and more precise consumer-behaviour data. While the Indian market is witnessing a rapid change in retail consumer behaviour and newer and newer retail channels are being established, the geospatial analysis could be a big boon for businesses to clobber down their error rates as well as help them maximize their sales and generate a formidable customer base.

Quality differentiation in a dual-channel supply chain

In this paper, we investigate a dual-channel supply chain with a retailer (she) and a manufacturer (he) who manufactures a high-quality product and a low-quality one. The manufacturer can distribute the high-quality and low-quality products in a direct channel (e.g., its own online channel) and an indirect channel (e.g., a traditional retailer channel) respectively, or the opposite. Our analyses reveal that the manufacturer's optimal distribution strategy depends on the product type. If the product's customer demand is more sensitive to quality level than production cost, it can be classified as the demand type. For a demand-type product, it is optimal for the manufacturer to sell its premium product through the direct channel to attract more demand. Otherwise, the product can be classified as the cost type and it is optimal for the manufacturer to sell its premium product through the traditional channel. In this way, the relatively high manufacturing cost can be shared with the retailer. Furthermore, we demonstrate the robustness of our results by analyzing an alternate demand model for the dual channels. Finally, we find that the manufacturer's optimal quality differentiation is detrimental to the retailer. Hence, we extend our basic model and show that the retailer can adopt an effective countermeasure by introducing an alternative supplier, even when the supplier charges a higher wholesale price.

Common Retailer Channel Revisited: The Role of Supply Network Size

This study is motivated by the ubiquitous practical existence of common retailer distribution channels (e.g., a grocery store offering multiple brands of the same product). Demand interdependence (product substitutability) among various brands is critical and thus we investigate its impact on firms’ profits. Using an economic framework with manufacturers operating as Stackelberg leaders, our analysis reveals unique and substantive insights dependent on the underlying market demand structure, and in some cases, the extent of supply coverage. For the Spence–Dixit–Vives demand structure, we find that competing manufacturers prefer to offer brands with low levels of substitutability while retailer’s preferences are moderated by the interaction effect between the number of competing brands and level of product substitutability (essentially the retailer prefers high levels of substitutability when the number of brands is “small," and vice versa). For the Shubik–Levitan demand structure, manufacturers may prefer high or low levels of product substitutability depending on the extent of supply coverage while the retailer always prefers high levels of product substitutability. These findings offer useful prescriptions for category management and persuasive advertising.

Does extended warranty depict competitive advantage to a retailer in a retail-e-tail channel supply chain

For a strong presence of online channel with superior policy traditional brick and mortar channel is losing its footprint rapidly. Under this situation does retail channel survive? To analyze this paper considers a retail-e-tail channel supply chain, where the retailer sells an extended warranty policy purely for its existence given the fierce price competition with the e-tail channel. It is realized that by selling a properly designed extended warranty policy the retailer generates a higher rate of profit margin than the manufacturer. Longer duration of extended warranty at a lower price attracts more customers to buy through the retail channel and hence enhances the retailer’s profit margin. Two different coordination contract mechanisms, namely, all unit quantity discount along with franchise fee, and revenue sharing contracts are proposed to resolve channel conflict and asymmetric Nash bargaining product is used for a particular profit split. It revels under any circumstance the retailer denies manufacturer’s warranty cost-sharing proposal for a better pay off.

Does Social Media Marketing and Brand Community Play the Role in Building a Sustainable Digital Business Strategy?

This study investigates the effects of customer relationships on a brand’s social network website (BSN) for virtual and physical retail channels in the digital business environment. The authors also further explore the sustainable customer relationships with virtual and physical retail channels (i.e., consumer–community identification, CCI; and consumer–retailer love, C-R Love) and customer attitudinal/behavioral loyalty toward a retailer (re-purchase and word of mouth, WOM). The authors develop a framework to describe and examine the connections among customer relationships for BSN, CCI, C-R Love, and user loyalty for a retailer. Furthermore, it tests the mediating effects of virtual (i.e., CCI) and physical (i.e., C-R Love) channels on the correlation between BSN relationships and customer loyalty. The model and hypotheses in this study employ structural equation modeling with survey data. The study shows that partial customer relationships in BSNs directly or indirectly influence CCI and C-R Love, and both CCI and C-R Love positively influence re-purchase intentions and WOM communications. This study contributes a unique model for a process by which the customer relationships in BSNs can affect a sustainable retail loyalty through the virtual/physical channels. This finding can be viewed as pioneering and as setting a benchmark for future research.

Mall experiences are not universal: The moderating roles of national culture and mall industry age

Faced with rising competition from innovative retail channels, the primary competitive advantage of shopping malls lies in the unique set of experiences they can provide. A widely accepted assumption in the mall literature is that the contribution of mall experiences to equity and loyalty is stable, positive, and universal. Here shoppers from four countries (England, France, Israel, and Morocco) reported their mall experiences (seductive, social, and recreational). These experiences impact loyalty through mall equity differentially in each country. National culture and mall industry age moderate positive mall outcomes, challenging previous assumptions about standardization across countries as the best approach to mall management.

Exploration of retail design in integrated bricks & clicks environment

The purpose of this paper is to explore the emerging themes within the discipline of retail design. The advent of multiple channels within the physical retail channel (showrooms, kiosks) and digital retail (mobile applications, e-commerce marketplace) pose challenges in the form of consistency of communication of brand identity and values. The research is a combination of thematic maps and qualitative interview techniques. Purposive sampling was considered for the selection of participants. In total 45 interviews have been taken of the various stakeholders – retailers, retail designers, communication designers and customers. Three broad themes emerged from the analysis- Technology, Design Elements and Communication, each having a number of sub-themes. 1. The themes that have emerged are based on views of minor representative of each category 2. Interviews from the social media and ecommerce marketplaces could have been taken. This can be the future research area. 1. The effects of deployment of AR/VR, 3D on the consumer decision-making is still not fully realized by the designers. 2. The consistency in brand imagery across channels can act as market differentiator. 3. The marketing communication managers should seek to enhance brand salience 4. The integration of customer data across various touchpoints (Big data) will be a distinguishing feature in near future. 5. Not all social media platforms are equal in creating and sustaining brandstorm and e-wom (word of mouth). This study is an attempt to make contribution in the area of retail design in the multichannel retail ecosystem. The themes that emerge out of the study are expected to assist in developing the framework wherein the brand image can be communicated consistently across channels.

Mobile payment and online to offline retail business models

Mobile payments are services that use mobile devices to make payments. When digitalization moves across channel boundaries, online to offline channel retail will expand. Online to offline retailing will become the future retail owner stream and retail operators will move from cross-channel or multi-channel to omni-channel. This study investigates a market survey in Taiwan developing a data mining analytics including clustering analysis and association rules based on a snowflake schema database design. The role of mobile payment is determined in terms of new retail payment mechanism that promotes a better consumer purchase experience in an online to offline business environment.

The small, inventory free retail format: The impact on consumer-based brand equity and purchase behavior

The purpose of this study was to examine the role of brand experience, as conceptualized by Brakus, Schmidt, and Zarantonello’s (2009), in fostering Consumer Based Brand Equity (CBBE) elements associated with the new store format and their impact on consequent purchase intention through multiple retail channels. A survey sent to a national sample of female consumers regarding Nordstrom Local, a small, inventory-free retail store in the U.S., resulted in 406 usable responses. Structural equation modeling was used to test the hypothesized relationships among variables where nine of the ten proposed hypotheses were supported. The findings of this study support that the brand experience of a small, inventory-free retail format can be effective in fostering CBBE, which has a positive impact on purchase intention. Furthermore, patronizing a small, inventory-free retail format appears to influence purchase intention consummated through the retailer’s other channels. This appears to be the first empirical study to explore the impact of the small, inventory-free retail format on consumer responses. The findings may aid industry professionals in identifying successful strategies that appeal to changing preferences of today’s consumer.

Dynamic cooperative advertising strategy in OAO supply chain with customer return

Nowadays many manufacturers are increasingly adopting their own online direct channel and the offline retail channel to sell their products as the quick development of e-commerce and third party logistics. To gain more and more market share, the manufacturer and the retailer implement unconditional return strategy, which does not affect secondary sales. We build a differential game model for the optimal advertising and the optimal advertising cost sharing proportion for centralized and decentralized OAO (Online and Offline) supply chain considering customer returns rates. We further analyze how the returns rates affect the optimal decisions of the manufacturer and the retailer. The results show that the returns rates, the brand reputation and the influence factors of retail channel goodwill on demand of online direct channel strongly influence the optimal advertising decisions. Furthermore, the retailer does not support for the manufacturer advertising efforts in Stackelberg game. Compared with the centralized OAO supply chain, the decentralized system results in channel inefficiency. To coordinate the channels, we design a two-way advertising cost-sharing contract. By this contract, each member of the supply chain reaches a win-win situation and is willing to cooperate. Numerical studies verify the conclusions of this paper.

Conformance Quality of the Dual-Channel Tourism Supply Chain under Tourists’ Quality Preference

ABSTRACT The arising of unprofessional service in package tour makes conformance quality control increasingly important. This paper constructs a game model of dual-channel tourism supply chain composed of a traditional tour retail channel and an online channel under tourists’ quality preference. Focus on the condition that tour retailer provides extra service as differentiation strategy, the impacts of conformance quality on the decision-making of centralized and decentralized systems are analyzed with mathematical analysis, as well as the equilibrium conformance quality and the coordination strategy. This paper further compares the conformance quality and profits in centralized, decentralized, and coordinated systems and provides a sensitivity analysis of tourists’ quality preferences with numerical analysis. The results indicate that the conformance quality produces different impacts on the two channels. Decentralized structure is the dominant strategy, while centralized structure is more conductive to conformance quality control. The two-part tariff strategy is proposed and demonstrated to be effective in improving conformance quality. Tourists’ quality preferences are conductive to increasing the equilibrium conformance quality under certain conditions. This study provides guidance to the sustainable development of dual-channel tourism supply chain.

An Integrated Randomized Pricing Strategy for Omni-Channel Retailing

ABSTRACT Omni-channel supply chains provide customers with increased convenience to experience products and gather price information. Having more information under omni-channel retailing means customers can strategically choose where to purchase (which retail channel) and when to purchase (purchase now or later), which makes channel integration a challenge for omni-channel retailers. This paper focuses on the joint pricing optimization for omni-channel retailers. Specifically, we propose a randomized pricing strategy for omni-channel retailers by considering manufacturer’s wholesale price, customers’ discrepant perception between two channels, and customers’ strategic-waiting behavior. Under this strategy, while the retailer offers a fixed price in the offline channel, it may randomly provide a discount according to a preset probability in the online channel to discriminate between customers and gain more profit. This study explores how the manufacturer’s wholesale price and strategic customer behavior affect the randomized pricing strategy and profits for both omni-channel retailer and manufacturer. We show that if a randomized pricing strategy exists, it can benefit both the retailer and manufacturer. Finally, hiding the promotion probability is not always beneficial to the retailer. However, the retailer can benefit from price differentiation. Therefore, this study also provides guidelines to develop effective pricing strategies for omni-channel retailing.

Pricing and Distribution Strategies in a Dual-Channel Supply Chain

Internet has revolutionized distribution channels. Online orders are forwarded to the brick-and-mortar store to make the fulfillment, which is a new distribution strategy in a dual-channel supply chain. However, there is little research on the value of using such distribution strategy in dual-channel setting. To fill this gap, this article considers a manufacturer marketing a product through a dual-channel supply chain, comprised of an online channel and an offline retail channel. We develop a game theory model to investigate the pricing decisions and the distribution strategies, as well as to examine the impacts of the new distribution strategy on price competition and the dual-channel supply chain member's profits. By comparing the results of the traditional distribution strategy and the new distribution strategy, we find that the new distribution strategy can soften price competition when the proportion of the revenue generated by the direct channel is high enough, while if the proportion is low enough, it may intensify price competition. We also find that the supply chain members can achieve a win-win situation when the wholesale price is higher, and the proportion is greater under the new distribution strategy.

Understanding the Strategic Consequences of Customer Privacy Concerns: A Meta-Analytic Review

Despite noteworthy advances in theory and retail practice, the extant scholarship on customer privacy concerns is scattered across a wide range of academic domains and remains fragmented, in terms of both conceptual breadth and empirical results. This lack of convergence creates a pertinent need for a comprehensive synthesis to guide to further theory-building and managerial practice with respect to customer concerns about privacy. Unlike earlier meta-analysis studies, this paper reports on a comprehensive meta-analytic review of customer privacy concerns literature, which focuses on strategic retail-relevant variables. Based on 1,103 effects in 304 papers, we offer several key insights that are pertinent to retail scholars and managers who wish to empirically capture and mitigate the impact of customer privacy concerns. We identify two substantive moderators—retail channels and data sensitivity—that wield significant influence in attenuating or strengthening the impact of customer privacy concerns on key retail outcomes. Retail researchers should also consider the significant influences of the research setting, including region, measurement scale, participant selection, and research design. Considering these findings, we conclude the paper by offering a future research agenda that identifies key areas requiring further scrutiny.

The Optimal Pricing of Dual-Channel Supply Chain with the Third Party Product Recovery and Sales Effort

The optimal pricing of dual-channel supply chain with the third party product recovery and sales effort is considered in this paper. The optimal selling pricing of direct channel and retail channel in the forward supply chain and the optimal collection pricing of retail channel and the third party in the backward supply chain are given for the general case under the centralized and decentralized model. Then, the effect of sales effort of the retailer and the optimal pricing strategy with sales effort under the centralized and decentralized model are provided and analyzed. Finally, the comparative analysis of four situations is carried out by numerical results.

An Economic Analysis of Paddy Value Chain in Thanjavur District of Tamil Nadu

In view of the economic importance of value addition the present study was taken up in Thanjavur district of Tamil Nadu, India to estimate value chain of paddy. The aim of the study is to identify the existing value chain and create new chain in the study area. Random sampling technique was used to select 60 farmers. The result showed that, the recovery of main and by product during rice milling was 60 per cent of rice, 10 per cent of broken rice, 15 per cent of rice bran, 10 per cent of husk and 5 per cent waste from one tonne of paddy. In value chain for rice production, the share in value addition was 26.42 per cent for rice millers, 0.16 per cent Rice bran crude oil, 0.09 per cent for Rice bran refined oil, 0.05 per cent for traders, 6.41 per cent rice retailers and 0.04 per cent for rice bran refined oil retailers. In value chain for flaked rice industry, the share in value addition was 14.71, 0.28, 0.08, 0.09, 8.04 and 0.08 per cent for Flaked Rice Industry, Rice Bran Crude Oil, Rice Bran Refined Oil, traders, flaked rice retailers and rice bran refined oil retailers in channel respectively. Finally the study concluded that, the value addition in the existing value chain was ` 5096 which can be increased to ` 9530 through proposed model.

Dual-channel green supply chain management with eco-label policy: A perspective of two types of green products

The deterioration of the ecological environment has prompted new requirements for the development of the supply chain. People urgently need to solve the problems of building a green supply chain and formulating reasonable environmental policies. This research considers a green supply chain management problem that includes both retail and direct channels. The government sets a product green standard and offers an environmental subsidy to the manufacturer. Only when the product satisfies the standard can the manufacturer obtain an eco-label. In this study, we focus on two types of green products with different green technologies. This paper is dedicated to revealing the impact that this eco-label policy has on different products. Using game theory and mathematical programming methods, we obtain the optimal prices in the two channels, as well as the optimal green standard and subsidy. By analyzing the results, we find that a growing green standard can increase the environmental benefits of development-intensive green products continuously. However, it is not always good to set increasing green standards for marginal cost-intensive green products. Therefore, the performances of the two types of products are different. These findings allow the manufacturer and the retailer to design suitable strategies for different products. Moreover, these findings also provide guidance to the government when implementing an eco-label policy.

Pricing Decisions on Online Channel Entry for Complementary Products in a Dominant Retailer Supply Chain

This study considered the supply chain that two manufacturers sell green complementary products to a dominant offline retailer. We investigated whether a manufacturer (the integrated manufacturer) should add an online channel and examined how it affects channel members’ decisions and profits. We formulated the power structure as the retailer-Stackelberg model and analyzed the pricing decisions for the supply chain. The results demonstrate that the integrated manufacturer prefers not to add the online channel when online and offline market bases are comparable and the level of complementarity is moderate. The integrated manufacturer gains more power at the expense of the offline retailer and the other manufacturer (the traditional manufacturer) when the complementarity between the offline and online channel is the same as offline channels with the addition of a new online channel; furthermore, the retailer earns less, while the traditional manufacturer’s profit hinges on the complementarity between the online and offline channels. It is beneficial for the offline retailer to balance the online and offline market bases of product 1 by improving the sales environment of the physical store. The integrated manufacturer can benefit from varying their marketing actions to decrease the degree of complementarity between the retail and online channels for the two products, while the traditional manufacturer can be better off from the online channel introduction by taking steps to increase the complementarity of the two products between the offline channels.

Farmer preferences in contracting with modern retail in Indonesia: A choice experiment

AbstractUnderstanding the preferences of smallholder farmers for contracting can help in making contracts more sustainable. This paper presents the results of a choice experiment (CE) among smallholder farmers in Indonesia to assess their preferences for accepting contracts with modern retail. The CE was based on attributes of actual sales transactions in modern retail and traditional retail channels. A total of 301 vegetable smallholder farmers participated, consisting of 173 farmers participating in traditional markets and 128 in modern retail markets. A random parameter logit model estimates that, in general, smallholders do not prefer contracting with modern retail over spot market selling in traditional retail channels. Most contract attributes are perceived as negative by smallholders. A willingness‐to‐accept analysis shows that farmers are critical of most contract attributes, particularly those related to quality requirements. Producer organizations (POs) reduce transaction costs and increase smallholders' preference toward contracts. Contract designs that reduce transaction cost, mitigate risks for farmers, provide fair prices, and involve POs are more likely to attract smallholders to modern retail channels. [EconLit Citations: D23, O13, Q13].