Retail Strategy Research Articles

Evaluating the ending‐9 pricing strategy along the online shopping funnel

Ending‐9 prices are extremely popular among retailers, leveraging consumers’ perception biases. However, despite the popularity of this pricing strategy, understanding of its impact on online retailers is still limited. This is particularly true given the complexity of online retail where consumers need to traverse a shopping funnel, consisting of decisions with shopping cart and purchases. This study aims to answer the following three questions: First, do consumers hold a perception bias toward prices with online retailers? Second, whether and how effective is this bias in shifting consumer decisions? Third, what is an alternative pricing strategy for online retailers, to better leverage consumers’ perception bias? The results of a structural model reveal the impact of a perception bias on consumer decisions, toward both the shopping cart and purchases, at the online retailer. However, while ending‐9 prices exert a sizable impact on shopping cart additions (by nearly 20%), the impact on final purchases is marginal (by less than 4%). A possible reason could be that even if each individual product adopts its ending‐9 price, the cost of the shopping cart (which can involve multiple items) might still not preserve such a pricing structure. Consequently, a firm's ending‐9 pricing strategy for each individual product cannot effectively induce consumers’ perception bias toward the cost of the shopping cart, leading to very limited carryover in lifts from shopping cart additions to purchases. Motivated by these observations, we consider an alternative strategy in which the online retailer adjusts the cost of the shopping cart to end in 9, in addition to its current ending‐9 pricing strategy for individual products. By doing so, the retailer can induce perception bias for both the shopping cart and purchases. Our simulation results suggest that such a strategy not only promotes purchases (by 16%) but also helps reduce shopping cart abandonment (by 3%), the latter of which has become a critical concern for many online retailers.

Selling mode choice and blockchain adoption in an e-commerce platform with information disclosure

Many e-commerce platforms, such as Amazon and JD.com, consider product information disclosure as a crucial retail strategy. However, due to potential consumer distrust in the disclosed information, these platforms may employ blockchain technology to validate the information and alleviate consumers’ doubts. This study presents a game-theoretical model to investigate the interaction among the manufacturer’s choice of selling mode, the platform’s decision regarding blockchain adoption, and information disclosure strategies in the presence of information asymmetry. Optimal pricing and information disclosure strategies are derived, and the impact of various parameters on the equilibrium results is analyzed. We find that the consumers’ privacy concerns and blockchain implementation costs both have negative effects on the equilibrium retail price, disclosed information amount and profits of the manufacturer and platform. Moreover, we also find that the introduction of blockchain has different effects on a platform’s pricing and information disclosure strategies depending on the market size. In addition, conditions are identified under which the manufacturer selects the optimal selling mode and the platform makes an optimal decision on blockchain adoption. The findings demonstrate that the cost of consumers’ privacy concerns and the commission rate play significant roles in determining the equilibrium selling mode selection and blockchain adoption strategies.

"Sustainable Strategies in the Food Supply Chain: Evaluating Environmental Impact with Life Cycle Assessment"

This study aims to evaluate the environmental impact of various sustainable strategies implemented within the food supply chain, utilizing Life Cycle Assessment (LCA) as a core methodology. The paper begins by identifying critical points in the food supply chain where sustainability practices can be integrated, ranging from agricultural production to processing, distribution, consumption, and waste management. Through a comprehensive review and application of LCA, the research quantifies the environmental benefits and trade-offs of adopting practices such as reduced use of chemical inputs, implementation of circular economy principles, and enhancement of logistics and packaging solutions. The findings demonstrate that strategic interventions in the supply chain can significantly reduce carbon footprints, water usage, and waste generation, contributing to the overall sustainability of the food system. The study further discusses the implications of these strategies for stakeholders, including policymakers, producers, retailers, and consumers, highlighting the importance of collaborative efforts in achieving sustainable outcomes. Additionally, the paper explores the challenges and opportunities in scaling these practices, considering technological, economic, and social factors. The research contributes to the growing body of knowledge on sustainable food systems and offers practical insights for implementing LCA in evaluating and improving environmental performance in the food supply chain.

Computational Analysis of Superfood Representations in News Media

ABSTRACT What do berries, avocado, quinoa, and ginger have in common? These food items are often regarded as superfoods, a marketing term that overstates the importance of single food items for one’s health and wellbeing. In the present paper, we set out to investigate how purported superfoods are represented in the discourse of online news. We use computational language models to extract the unique topics and terms used to discuss superfoods. Our results show that news coverage is dominated by many specific claims about the healing properties of superfoods. The structural topic model further demonstrates that articles mentioning superfoods are more likely to include topics about a) nutrients, physical appearance, and health in the same context, b) retail strategies, and c) scientific research about the health benefits of superfoods. These results illustrate complex representations of superfoods in news media.

What should be the best retail strategy to deal with an unequal shipment from an unreliable manufacturer?

Unreliability of the manufacturer is a challenging issue for a retailer in order to provide service to consumers and meet the market demand. Due to the unreliability of the manufacturer, the lead time increases, causing shortages. In turn, the retailer faces huge shortages and losses. The lead time can be minimized by reducing the flow time during work-in-process. To reduce the holding cost of the retailer under an increasing demand, the single-setup-multi-unequal-increasing-delivery is introduced by the unreliable manufacturer. But delivered products to the retailer variable demand are lower in volume than the ordered products. Due to the variable demand that is selling price and service dependent, the number of shipments during transportation increases for the single-setup-multi-unequal-increasing-delivery policy. The main goal of this research is to manage unequal shipments from the unreliable manufacturer for gaining more profit. The stochastic optimization approach is considered for the analytical solution. The quasi-closed-form solution is determined for the decision variables of the model. The study is illustrated both numerically and graphically. Results prove that the retailer can still control the profit if the manufacturer can reduce the flow time of the production and maintain a perfect retailing strategy. The research shows that the single-setup-multi-unequal-increasing-delivery policy is 1.14% more profitable than the single-setup-multi-delivery policy, and 8.53% more profitable than the single-setup-single-delivery policy.

Understanding the Influencing Mechanism of Users’ Purchase Intention and Mediating Effect of Trust in Streamer: A Socio-Technical Perspective

Purpose This study primarily aims to investigate the role of trust in the streamer in the formation path of purchase intention and the influencing factors of both trust in the streamer and purchase intention. Theoretical framework: Given that live streaming e-commerce possesses strong social attributes and requires technological means to facilitate remote social interactions, we have chosen to adopt the socio-technical theory as the theoretical foundation for this study. Design/methodology/approach: This study employs an empirical research approach and utilizes random sampling to distribute questionnaires to users of the Douyin platform. We select users who have an intention to purchase or have prior purchasing experience on the live streaming platform for our survey. Findings: According to the findings of the study, identification, two-way communication, and visibility have a significant impact on purchase intention. Trust in the streamer serves as a mediating factor in the relationship between these three variables and purchase intention. Synchronization cannot directly influence purchase intention and cannot impact purchase intention through trust in streamer either. Research, practical & social implications: For theoretical implications, prior research rarely delved into how trust in a streamer affects purchase intention. This study addresses this gap and helps researchers explore this field further. It explores the role of trust in streamer in shaping purchase intention, also offering practical strategies for retailers to enhance trust. Originality /value: This study innovates by breaking down trust into trust in the streamer to examine its impact on purchase intention formation. Future research can explore trust from different perspectives, offering new insights into trust in live streaming commerce.

Which retail strategy for shelf life products can satisfy consumers under game policy?

Under the game competition, it is very difficult to maintain all retail strategies for shelf life fast-moving consumer (FMCG) goods products with the random demand. Due to random demand, a truncated distribution is, a conditional distribution, generated by constraining the domain of another probability distribution. This study focuses on retail management in the service sector of a manufacturer and retailer. The demand rate and ordering quantity are probabilistic and follow a doubly truncated exponential distribution with a short shelf life, but it can be extended using specific preservative measures. The model considers shelf life as a decision variable and addresses products with an extendable shelf life. The mathematical representation of the model is provided to determine the optimal policy for production and replenishment in a Nash equilibrium decentralized game. The concept is demonstrated using mushrooms as an example of fast-moving consumer goods, and results suggest that the retailer can increase their profits by extending the product's shelf life by 4.2 days beyond its original shelf life which is 2 days.

Half a decade in two years: household freight after COVID-19

ABSTRACT E-commerce growth as experienced during the COVID-19 pandemic was only expected to occur by 2025–2030. Online shopping increased in intensity and diversity. At the same time, retailers diversified their operations and opened online channels, also in sectors that previously showed reluctance to make this shift. These evolutions resulted in an expansion of household freight in terms of volume, geography, and organisation. Hence, half a decade of innovation in the e-commerce sector was needed in the span of two years. This manuscript summarises the repercussions for household freight since the pandemic's start. Given that interactions between consumers, retailers, and logistics service providers drive the e-commerce system, this manuscript combines these different literatures into a holistic framework, going beyond traditional siloed research on last-mile logistics, retail strategies, or online shopping behaviour. We found that logistics has come to the forefront: logistics service providers now need to provide tailored services and come in direct contact with consumers. As a result, we need (i) to gain insights into the new geography and dynamics of household’s freight origins and destinations; (ii) use this to re-examine existing relationships between consumer, retailer, and logistics service provider, and; (iii) assess the impact of more demanding consumers on the sustainability of the overall system.

Retail rings of influence: Rethinking retail catchment analysis in the light of purchasing power

Catchment areas are vital indicators of purchasing power that significantly influence the retail sales of shopping malls. However, conventional models, typically provided by mall owners, often assume a fixed isochrone, neglecting the sensitivity of the catchment size on mall's positioning strategies and sizes. This study introduces a novel, flexible approach, leveraging the population and household incomes of administrative units as a proxy for purchasing power, thereby enabling a sensitivity analysis on adjustable catchment sizes. We develop a Python programme to geofence these units based on an adjustable isochrone radius. This pioneering research also applies principles from the species-energy relationship and niche specialisation theory to build a theoretical model of catchment areas, empirically testing it using Australian data. Our findings confirm that while purchasing power within varying catchment sizes exerts a positive influence on retail sales, the impact is less pronounced for larger malls due to their more generalised niche in attracting customers far away from the malls. This study sheds new light on the dynamic interplay between catchment area characteristics and mall performance, offering valuable insights for future research and retail strategy planning.

Optimizing prices in trade-in strategies for vehicle retailers

In the vehicle industry, there are two trade-in services: TONF, that is trade-in for a new oil-fueled automobile (OFA), and TONE, that is trade-in for a new energy vehicle (NEV). So, when TONE and TONF coexist, how can companies make trade-offs among different trade-in strategies and formulate the corresponding optimal pricing. Therefore, considering the different of consumer’ mileage anxiety to NEVs, a supply chain trade-in game model composed of a manufacturer and a retailer was constructed. It not only discusses the threshold conditions for retailers to offer only TONE, TONF and both, but also gives the corresponding optimal pricing decision. We found the following: the retailer's trade-in strategy is not only affected by the production cost, but also related to the manufacturer’s recycling prices. Consumers’ mileage anxiety about NEVs will also have an important impact on the choices of retailers’ trade-in strategy, especially when the production cost is in the middle. Government subsidies for NEVs, durability and residual value gains of OFAs have a huge impact on retailers' choice of trade-in strategies when consumers have greater mileage anxiety, but have no effect when consumers have less mileage anxiety. When consumers have different mileage anxiety of NEVs, the retailer chooses the optimal trade-in strategy in the case of less mileage anxiety (Case Ⅱ) and may not be able to achieve ideal profits.

The Interaction Between Information Disclosure Strategy and Channel Structure in Platform Retailing: The Role of Product Returns

ABSTRACT Different information disclosure formats have been implemented to solve the severe product-return issue in platform retail. Considering the significant impact of channel structure choice on the information disclosure strategy, we explore their interaction by investigating the role of product returns. A multistage sequential game model is built in a supply chain comprising a platform and supplier. First, we derive the equilibrium pricing decisions in the short term and examine the role of product returns. Second, we study the optimal information disclosure strategy and channel structure choice in the long term. We also investigate the impact of the optimal strategy on the entire supply chain’s profits and consumer surplus. The following results were obtained: (1) Under the no information disclosure strategy, the presence of product returns weakens the impact of double marginalization in the wholesale model. Therefore, the information disclosure strategy improves product returns, but aggravates the double marginalization effect. (2) Information disclosure benefits the consumer and supply-chain members who disclose information, but may hurt the entire supply chain due to its negative spillover effect on other supply-chain members. (3) The optimal channel structure choice for the platform depends on the trade-off between these two effects of the information disclosure strategy on product returns. Therefore, platforms and suppliers should reexamine their attitudes toward product returns and be aware that more information is not always better, because of the impact of product returns.

Live streaming channel strategy of an online retailer in a supply chain

With the increasing development of live streaming selling, it is important for retailers to determine whether and how to introduce such channel. We develop a theoretical model to address these issues by considering three scenarios, i.e., without live streaming channel, with an influencer channel and a third-party channel. Our results show that the retailer will always benefit from adding a live streaming channel in the face of two channel choices, but not always do so only facing an influencer channel. Within a certain slotting fee, if the relative utility enhancement effect and the inconvenience cost are both small or both large, the retailer is better off choosing the third-party channel, but the influencer channel otherwise. Notably, adding a live streaming channel will not always benefit the upstream supplier. Furthermore, the presence of more loyal followers of the influencer may not always benefit the retailer if choosing the influencer channel.

Sales channel competition for supply chain with the blockchain technology

AbstractThe emerging blockchain‐supported platforms (BSPs) become prevalent with higher product quality and guaranteed authenticity, making the competition between BSP and traditional sales channels (TSC) gain attention. To explore the optimal operation strategies for retailers in TSC and BSP, we develop the vertically differentiated model to describe the channel competition and derive optimal decisions for two retailers. Then, the BSP's comparative advantage and the value of blockchain technology are analyzed. Next, we examine how blockchain quality disclosure and network externalities affect channel competition, as well as the impact of government policies. We find that (i) a higher quality improvement in BSP will simultaneously increase both retail prices and retailers’ profit under some circumstances. Meanwhile, the counterfeit sold in the TSC and channel switching hassle in the BSP make retailers’ products less competitive and reduce profits, respectively. (ii) Being a BSP retailer is not necessarily better, as blockchain's effect on product quality and consumer experience determines market share and profitability. Whether consumers can benefit from blockchain depends on the basic value of the BSP product and the aggregate level of consumer utility from the BSP. (iii) Blockchain‐based quality disclosures and network externalities might not always benefit BSPs, they could increase BSP retailers’ costs or increase competition in the market. (iv) The strict supervision policy reduces the TSC retailer's profit and product quality. Meanwhile, the technology subsidy policy contributes to the development of the BSP, but the BSP retailer needs to be wary of uncontrolled price increases due to policy spillover effects.

Robust pricing and inventory strategies for an omnichannel retailer under carbon tax and cap-and-offset regulations

While an increasing number of retailers use the buy-online-and-pick-up-in-store (BOPS) service to improve operational efficiency, it increases the uncertainty between the offline and online channels. Furthermore, the implementation of different carbon regulations creates certain challenges for an omnichannel retailing system because of the tradeoff between the economy and the environment. These factors motivate us to study the joint pricing and inventory decisions of an omnichannel retailer regrading the stochastic demand of BOPS customers with limited information under carbon tax and cap-and-offset regulations. A distributionally robust newsvendor model is developed for the omnichannel retailer under carbon tax regulation to derive the joint decisions on the sales price and inventory. An interesting result indicates that under carbon tax regulation, differential pricing strategy increases the profit of the omnichannel retailer. The distributionally robust newsvendor model under cap-and-offset regulation is solved by the Karush-Kuhn–Tucker (KKT) conditions. The comparison shows that adopting uniform pricing strategy under cap-and-offset regulation brings more profits than adopting it under carbon tax regulation. Finally, a numerical study is conducted to illustrate and complement the theoretical results. The value of addition demand information is also tested. Key findings show that the omnichannel retailer gains higher profit and emits more carbon emissions under cap-and-offset regulation than under carbon tax regulation. Under each type of regulation, the performance of robust solutions is close to that with normal distribution.

Spatial CRM and location strategy: E-commerce solutions in the furniture industry. Case of IKEA pick-up points in Poland

E-commerce in the furniture industry is specific as delivery of heavy and oversized parcels with traditional channels is not feasible. Alternative solutions, aside from stationary shops, include pick-up points which combine e-commerce purchasing with stationary collection. Convenient pick-up locations that support environmental sustainability and offer cost savings is a domain of Spatial Customer Relationship Management (CRM), which is not enough discussed in the literature. In this paper we develop Spatial CRM for the location strategy of pick-up points in the furniture industry, using IKEA Poland as a case study. We provide the methodology for analysing the spatial range of population potential for collection points and stationary shops based on radial catchment areas of 20 km and precise population data from a grid 1 km × 1 km. We compare this market coverage with customers' attraction to IKEA shops expressed through Google Trends searches to evaluate location strategies for furniture retailers. Our regional approach is responsive to local needs, improves CRM, and remains cost-effective for businesses. Given the similarity of European furniture markets in terms of consumer perspective and e-commerce development, our analysis methodology can be adapted for use in other countries and markets.

Managing omni-channel reverse logistics risk during supply chain disruption recovery in the South African fashion industry

Background: Omni-channel retailing is blurring the lines between online and physical stores for consumers as it provides consumers with more choices, convenience and a seamless shopping experience. An integral aspect of implementing an omni-channel retail strategy is having an efficient reverse logistics process. However, retailers seem reluctant to implement omni-channel reverse logistics because of the various risk types that affect the economic wellbeing of a firm, especially during supply chain disruption recovery (SCDR) when the firm is in distress. Prior research primarily examines the risks associated with reverse logistics in a single channel. While the existing findings are promising, there is a lack of understanding regarding the specific risks involved in omni-channel reverse logistics and how to mitigate these risks in the context of SCDR.Objectives: The purpose of this study was to explore omni-channel reverse logistics risks and mitigation strategies during SCDR in the South African fashion retail industry.Method: The study employed a generic qualitative design using purposive sampling methods. Fourteen semi-structured interviews were conducted to collect data. The data were analysed using a thematic analysis approach.Results: The study identified specific types of omni-channel reverse logistics risks. The findings indicate that omni-channel reverse logistics risk during SCDR is managed through proactive and reactive strategies such as technology implementation, collaborative relationships, quality insurance inspections, customised policy changes and disruption-specific reverse logistics teams. The findings show that mitigating omni-channel reverse logistics risk can help create a competitive advantage because of increasing customer loyalty, value recovery and profits.Conclusion: The findings provide valuable insight on how to manage omni-channel reverse logistics risk during SCDR and, if mitigated correctly, can contribute to a competitive advantage.Contribution: This study expands on the current literature by identifying multiple types of omni-channel reverse logistics risks and strategies used to manage omni-channel reverse logistics risk in a SCDR context.

The effect of consumption goals on review helpfulness: Behavioral and eye-tracking research

Through utilizing behavioral methodology and integrating eye-tracking technology, we investigate the effect of consumption goals on review helpfulness during online shopping. Behaviorally, consumption goals (hedonic vs. utilitarian) can influence relative review (attribute-based vs. experience-based) helpfulness and this effect is mediated by review-goal congruity. Compared with those with hedonic consumption goals, consumers with utilitarian consumption goals perceive attribute-based reviews (vs. experience-based reviews) as more consistent with expectations, which makes the former of reviews more helpful for shopping decisions. In the study of eye-tracking, we found the attention-based cognitive process underlying the behavioral effect of consumption goals. Consumers have longer fixation duration and more fixation counts for attribute-based reviews when they have utilitarian consumption goals rather than hedonic consumption goals. These results show that by different types of consumption goals, consumers evaluate the review helpfulness and meantime allocate attentional resources. This research extends our current understanding of the relationship between consumption goals and online review helpfulness, and provides guidelines on the utilization of online reviews to facilitate the development of the marketing strategy for online retailers.

Beyond skin-deep: Triple roles of salesperson attractiveness and consumer bargaining styles

ABSTRACT Salesperson attractiveness produces varied effects in consumer perceptions and behaviors particularly in the retail bargaining context. However, little research has been conducted. This study, employing semi-structured interviews with sixty participants, explains the roles of salesperson attractiveness (i.e. aesthetic preference, power, and marketing cues) that can influence different consumer perspectives, from favor to fear, and approaches in negotiations (i.e. cooperation or competition). Research findings enhance better understanding of the beauty premium versus beauty penalty and suggest more mindful implications of retail strategies in salesperson management and consumer interactions.

Is online-to-offline customer care support essential for consumer service?

Customer satisfaction is the main pillar for convenient and profitable retailing. The retail sector continuously tried to develop new strategies to improve consumer satisfaction. It is impossible to provide each service directly to the consumer by the retailer. In this direction, the retailer establishes customer care to provide the best service to consumers. Consumer care can provide promotional or prevention services, increasing the consumer's satisfaction level. This study is developed to show the impact of retailers' customer care service for an offline-to-online retailing strategy. The demand is consumer support, advertisement, and selling price dependent. For maintaining consumer service, some free home delivery policies are offered, when consumers ordered more than a certain percentage of the amount. Finally, the total profit of this O2O retailing system is calculated by the classical optimization technique. Some special cases are discussed in the numerical section to prove the impact of customer care services. Numerical results prove that customer care support enhances the profit by 48.20%, whereas investment in the advertisement and home delivery strategy helps the retail industry to earn 44.80% and 16.74% more profit, respectively. Finally, from this study, it is clear that customer care activities are essential to increase the profit of the retailing sector.

Re-examining the showrooming phenomenon: the moderating role of consumers' maximizing tendency

PurposeShowrooming presents a complex and evolving challenge to retail managers, as it signifies the emergence of new forms of exchange rules. The purpose of this research is to investigate how factors responsible for information search and evaluation affect showrooming and also consider the consumer mindset as a moderator.Design/methodology/approachThis research undertakes three experimental designs to investigate how the push (i.e. assortment size), pull (i.e. price discount), and mooring (i.e. sunk cost) factors influence consumers' showrooming intention. Specifically, consumers' maximizing tendency plays the role of moderator.FindingsThe results reveal that push, pull, and mooring factors are significantly related to consumers' showrooming intention. Furthermore, the findings show that maximizers have higher showrooming intention than satisficers in the context of the push, pull, and mooring factors.Originality/valueBy integrating the push-pull-mooring framework and the maximizing mindset theory, this research proposes a novel research model and the empirical testing results support six hypotheses. The findings add to the body of knowledge in showrooming behavior by taking consumer mindset into account. The results also provide implications for practitioners to develop their retail strategies.