Retail & Wholesale

68 Results

 

How Our Brain Determines if the Product is Worth the Price

Are consumers more likely to buy if they see the price before the product, or vice versa? Uma Karmarkar and colleagues scan the brains of shoppers to find out. Open for comment; 1 Comment posted.

Deconstructing the Price Tag

A new study by Bhavya Mohan, Ryan Buell, and Leslie John has an important conclusion for retailers: Explaining what it costs to produce a product can potentially increase its sales. Open for comment; 8 Comments posted.

Lifting the Veil: The Benefits of Cost Transparency

Most managers think about cost transparency in terms of a supplier-firm relationship: when there is a two-way sharing of cost information between a firm and its suppliers, with the goal of collaborating to reduce costs. What does cost transparency do, however, in customer-firm relationships, when firms voluntarily disclose their variable costs explicitly and directly to consumers? This is the question the authors examine in this paper. Results of several experiments indicate that one-way cost transparency enhances consumers' attraction to the brand, in turn increasing their willingness to buy. Overall, marketers can potentially improve both brand attraction and sales by revealing costs. Read More

Why Do Outlet Stores Exist?

Created in the 1930s, outlet stores allowed retailers to dispose of unpopular items at fire-sale prices. Today, outlets seem outmoded and unnecessary-stores have bargain racks, after all. Donald K. Ngwe explains why outlets still exist. Open for comment; 7 Comments posted.

Has Apple Reinvented the Watch?

Will the Apple Watch reinvent wearables the way the iPhone did smartphones? Ryan Raffaelli shares his insights. Closed for comment; 4 Comments posted.

Learning From Japan’s Remarkable Disaster Recovery

Harvard Business School students make an annual trek to businesses in the Japanese area wrecked by the 2011 earthquake and tsunami. Their objectives: learn all they can about human resilience and share their own management knowledge. Closed for comment; 0 Comments posted.

Eyes Shut: The Consequences of Not Noticing

In his new book The Power of Noticing: What the Best Leaders See, Max Bazerman explains how and why many executives fail to notice critical information in their midst. Open for comment; 6 Comments posted.

Banning Big-box Stores Can Hurt Local Retailers

Research by Raffaella Sadun shows how regulations meant to protect independent retailers from big-box stores may actually backfire. Open for comment; 1 Comment posted.

When Will the Next Dot.com Bubble Burst?

Summing Up: Is that the sound of a dot.com bubble bursting? Could be, but is that a bad thing?, ask Jim Heskett's readers. Closed for comment; 14 Comments posted.

How Grocery Bags Manipulate Your Mind

People who bring personal shopping bags to the grocery store to help the environment are more likely to buy organic items—but also to treat themselves to ice cream and cookies, according to new research by Uma R. Karmarkar and Bryan Bollinger. What's the Quinoa-Häagen-Dazs connection? Closed for comment; 13 Comments posted.

Is Walmart Defying Economic Gravity?

Summing Up Can Walmart sustain its half-a-trillion-dollar enterprise much longer? Jim Heskett's readers see a conflict between the company's immense size and its business model. Closed for comment; 17 Comments posted.

A Smarter Way to Reduce Customer Defections

Companies can't afford to lose hard-won customers, but in truth some are more important to keep than others. Recent research by Sunil Gupta and Aurélie Lemmens explains how to find them. Closed for comment; 4 Comments posted.

Managing Churn to Maximize Profits

Customer defection or "churn" is a widespread phenomenon across a variety of industries. As customer acquisition costs continue to rise, managing customer churn has become critically important for the profitability of companies. This paper provides a novel method for determining which customers to target in order to maximize the profit of a retention campaign. The authors developed a binary classification method that uses a gain/loss matrix, which incorporates the gain of targeting and retaining the most valuable churners and the cost of incentives to the targeted customers. Results show that this approach leads to far more profitable retention campaigns than the traditional churn modeling approaches. In addition, the additional profits come at no cost for companies. The implementation of the retention campaign is unchanged, only the composition and size of the target group changes compared to traditional approaches. Read More

What Went Wrong at J.C. Penney?

J.C. Penney CEO Ron Johnson went bold in his attempted rescue of the fading retailer, but his top-to-bottom makeover failed. Marketing expert Rajiv Lal explores what went wrong and why JCP has an even more difficult road ahead. Closed for comment; 27 Comments posted.

Everything Must Go: A Strategy for Store Liquidation

Closing stores requires a deliberate, systematic approach to price markdowns and inventory transfers. The result, say Ananth Raman and Nathan Craig, is significant value for the retailer and new opportunities for others. Closed for comment; 4 Comments posted.

Improving Store Liquidation

Store liquidation, defined as the time-constrained divestment of retail stores through an in-store sale of inventory, is a critical aspect of the retail industry for both defunct and going concerns. Store liquidation is important for firms and investors, affecting everything from retailer performance to how retailers are financed and how investors are compensated. Further, store liquidation is fundamental to innovation in the retail sector, since extracting value from defunct stores and firms is a key step in the process of creative destruction. In this paper, the authors introduce methods for increasing the efficiency of store liquidations operated by retail asset disposition firms, and they thus extend management science techniques to a consequential problem that has not yet been addressed by the literature. These methods were developed through a collaboration with GBG, a prominent liquidator, during the liquidation of over $3B of inventory. Read More

Marketplace or Reseller?

Intermediaries can often choose to operate as a marketplace, as a reseller, or as a hybrid having some products offered under each of the two different modes. For example, Alibaba.com, eBay.com, Premium Outlets, and Simon Malls act as marketplaces, in which suppliers sell directly to buyers via a platform. In contrast, retailers like 7-Eleven, Eastbay.com, Lowes, and Zappos.com resell the products they purchase from suppliers to buyers. A hybrid mode is also possible: For example, the largest electronics retailer in the United States, Best Buy, has taken a step towards the marketplace mode by allowing Apple, Samsung, and Microsoft to launch their own ministores within Best Buy stores. What economic tradeoffs drive an intermediary to adopt one mode over the other, or both? In this paper, the authors provide a new style of modeling intermediaries' strategic positioning decisions and a theory of which products an intermediary should offer in each mode. They also present a guide to how intermediaries should optimally position themselves between the two different modes. Managerial implications not only apply to an intermediary choosing between positioning itself as a pure reseller or a pure marketplace, but to hybrid modes in which the intermediary needs to determine how many products (and in the case of diverse products, which products) to offer in each mode. Read More

Pay Workers More So They Steal Less

New research by professor Tatiana Sandino confirms what many top companies have long believed: Good wages and benefits are linked to a company's low turnover and to happier, more honest workers. Closed for comment; 15 Comments posted.

Is JC Penney’s Makeover the Future of Retailing?

The stuffy department store chain has become emboldened under new CEO Ron Johnson, with plans for an innovative store upgrade, simplified prices, and a brand polish. Professor Rajiv Lal discusses whether Johnson can repeat his previous magic at Apple and Target. Closed for comment; 45 Comments posted.

Measuring the Efficacy of the World’s Managers

Over the past seven years, Harvard Business School's Raffaella Sadun and a team of researchers have interviewed managers at some 10,000 organizations in 20 countries. The goal: to determine how and why management practices differ vastly in style and quality not only across nations, but also across various organizations and industries. Closed for comment; 19 Comments posted.

HBS Cases: Clocky, the Runaway Alarm Clock

There had not been an innovative breakthrough in alarm clock design since the snooze button until entrepreneur Gauri Nanda created Clocky. Her runaway hit has been the inspiration for several cases written by Professor Elie Ofek. Closed for comment; 8 Comments posted.

Retailing Revolution: Category Killers on the Brink

Mass-market retailers, particularly big-box "category killers," are under critical pressure from online competitors. For retailers that can react quickly enough, this upheaval is survivable. But those slow to see the tsunami wave on the horizon stand to be swept away, according to professors Rajiv Lal and José B. Alvarez. Closed for comment; 18 Comments posted.

A New Model for Business: The Museum

Looking for a new model to think about business? Look no further than your local art museum, says Assistant Professor Ray Weaver. Some of the most profitable Web businesses and retailers such as Apple succeed by acting like museum curators: providing a very limited amount of choices at a time; offering a brief, engaging description of each choice; and classifying products honestly. Closed for comment; 47 Comments posted.

To Groupon or Not to Groupon: The Profitability of Deep Discounts

For consumers, online discount vouchers (like those offered by Groupon.com) have obvious appeal: discounts as large as 90 percent. But for retailers offering the deals through the site, does the publicity compensate for the deep hit to profit margins? This paper sets out to help small businesses decide whether it makes sense to offer discount vouchers. Research was conducted by Harvard Business School professor Ben Edelman, Business Economics PhD candidate Scott Duke Kominers, and by Sonia Jaffe of the Harvard University Department of Economics. Read More

Customer Loyalty Programs That Work

Thanks to ever-improving technology, customer loyalty programs are proving extremely popular among retailers—but merchants are not getting all they should out of them. The reason? Professor José Alvarez says retailers need to see customers as partners, not transactions. Closed for comment; 18 Comments posted.

Search Diversion, Rent Extraction and Competition

Retailers, search engines, shopping malls and other intermediaries often deliberately design their physical layouts or e-commerce sites in order to divert customers' attention away from the products they were initially looking for, with hopes that they'll buy a bunch of other products, too. This paper explores various incentives for so-called "search diversion" in a couple of scenarios—when stores internalize their affiliation decisions with intermediaries, and when competition is introduced among intermediaries. Research was conducted by Andrei Hagiu of Harvard Business School and Bruno Jullien of the Toulouse School of Economics. Read More

QuikTrip’s Investment in Retail Employees Pays Off

Instead of treating low-paid staffers as commodities, a new breed of retailers such as QuikTrip assigns them more responsibility and invests in their development, says professor Zeynep Ton. The result? Happy customers and even happier employees. Closed for comment; 9 Comments posted.

Empathy: The Brand Equity of Retail

Retailers can offer great product selection and value, but those who lack empathy for their customers are at risk of losing them, says professor Ananth Raman. Closed for comment; 15 Comments posted.

The ‘IKEA Effect’: When Labor Leads to Love

Companies increasingly involve customers in the design and assembly of products, from Converse allowing customers to design their own shoes to IKEA asking customers to assemble their own furniture. In this paper researchers Michael I. Norton (Harvard Business School), Daniel Mochon (University of California at San Diego), and Dan Ariely (Duke) use the "IKEA Effect" to explain the increase in valuation we place on products we build ourselves. The researchers discuss the implications of the IKEA Effect for marketing managers and organizations more generally. Read More

Clay Christensen’s Milkshake Marketing

About 95 percent of new products fail. The problem often is that their creators are using an ineffective market segmentation mechanism, according to HBS professor Clayton Christensen. It's time for companies to look at products the way customers do: as a way to get a job done. Closed for comment; 114 Comments posted.

Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis of Bonus-Based Compensation Plans

Companies generally pay their sales staff with some combination of salary, commissions, and bonuses for meeting quotas-with sales force costs averaging about 10 percent of sales revenue in the United States. This paper aims to gain insight into the most effective way to design a compensation plan, concentrating on whether bonuses boost sales productivity and whether they should be awarded quarterly or annually. Research, focusing on the sales force of a large office supply company, was conducted by Harvard Business School professor Thomas Steenburgh and Doug J. Chung and K. Sudhir of the Yale School of Management. Read More

Tesco’s Stumble into the US Market

UK retailer Tesco was very successful penetrating foreign markets—until it set its sights on the United States. Its series of mistakes and some bad luck are captured in a new case by Harvard Business School marketing professor John A. Quelch. Read More

How Mercadona Fixes Retail’s ’Last 10 Yards’ Problem

Spanish supermarket chain Mercadona offers aggressive pricing, yet high-touch customer service and above-average employee wages. What's its secret? The operations between loading dock and the customer's hands, says HBS professor Zeynep Ton. Read More

Rocket Science Retailing: A Practical Guide

How can retailers make the most of cutting-edge developments and emerging technologies? Book excerpt plus Q&A with HBS professor Ananth Raman, coauthor with Wharton professor Marshall Fisher of The New Science of Retailing: How Analytics Are Transforming the Supply Chain and Improving Performance. Read More

Ruthlessly Realistic: How CEOs Must Overcome Denial

Even the best leaders can be in denial—about trouble inside the organization, about onrushing competitors, about changing consumer behavior. Harvard Business School professor Richard S. Tedlow looks at history and discusses how executives can acknowledge and deal with reality. Plus: Book excerpt. Read More

The Return of the Salesman

Salesmen have received a bad rap over the years, but increasingly the profession is drawing scholarly interest. Business History Review coeditor Walter A. Friedman discusses the publication's recent themed issue on salesmanship. Read More

Crafting Integrated Multichannel Retailing Strategies

The past fifteen years has been a period of rapid growth in the practice of multichannel retailing, mirroring the rise of the Internet as a nearly ubiquitous tool that firms use to interact with customers. More than 80 percent of a broad cross-section of U.S. retailers now report that they sell merchandise through multiple channels. This practice seems to be on the cusp of a new era in which firms start demanding even more from their investments, with particular emphasis being given to financial performance in light of the current economic crisis. These circumstances present a great opportunity both to firms that are looking to gain a competitive advantage through multichannel retailing and to researchers who are interested in helping them make more informed decisions. This article provides a broad discussion of these issues, synthesizes current knowledge, and suggests directions for future research. Read More

Marketing After the Recession

This downturn has likely changed people's buying habits in fundamental ways. Professor John Quelch discusses why marketers must start planning today to reach consumers after the recession. Read More

‘Ted Levitt Changed My Life’

Many students say legendary Harvard Business School marketing professor Ted Levitt changed their lives inside his classroom and out. "Ted Levitt was the most influential and imaginative professor in marketing history," HBS professor and senior associate dean John Quelch eulogized on the occasion of Levitt's death in 2006. Colleagues and students remember a life and times. From HBS Alumni Bulletin. Read More

Thinking Twice About Supply-Chain Layoffs

Cutting the wrong employees can be counterproductive for retailers, new research from Harvard Business School professor Zeynep Ton concludes. One suggestion: Pay attention to staff who handle mundane tasks such as stocking and labeling. Your customers do. Read More

The Next Marketing Challenge: Selling to ’Simplifiers’

The mass consumption of the 1990s is fast fading in the rearview mirror. Now a growing number of people want to declutter their lives and invest in experiences rather than things. What's a marketer to do, asks professor John Quelch. Read More

Indulgence vs. Regret: Investing in Future Memories

Good news for makers of $20,000 watches and other luxury goods and services. Recent research from Harvard Business School professor Anat Keinan and a colleague suggest that we often regret not indulging ourselves earlier in life. Read More

Making the Decision to Franchise (or not)

Owners operating outlets across multiple markets have a variety of organizational models to choose from, including franchising. The decision is one of the most important they will make. A new Harvard Business School study looks at how 420 convenience store chains organized to serve diverse customers. Read More

Starbucks’ Lessons for Premium Brands

After building a great franchise offering a unique customer experience, Starbucks diluted its brand when it overexpanded and offered too many new products. Harvard Business School professor John Quelch thinks the trouble began when the company went public. Read More

Getting Down to the Business of Creativity

Business leaders must manage and support creativity just as they would any other asset. Harvard Business School professors Teresa Amabile, Mary Tripsas, and Mukti Khaire discuss where creativity comes from, how entrepreneurs use it, and why innovation is often a team sport. From the HBS Alumni Bulletin. Read More

Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry

Chain organizations operate units that are typically dispersed across different types of markets, and thus serve significantly different customer bases. Such "market-type dispersion" is likely to compromise the headquarters' ability to control its stores for two reasons: Relative differences in local conditions make it difficult to monitor a store manager's behavior, and a chain with wide-ranging customer bases will have a harder time serving its customers and will need to rely more heavily on store managers' ability to adapt to local needs. This study identifies market-type dispersion as a factor that is systematically related to firms' organizational design choices. The results may help managers and consultants who deal with control challenges related to a chain's geographic expansion into different markets. Read More

Negotiating with Wal-Mart

What happens when you encounter a company with a great deal of power, like Wal-Mart, that is also the ultimate non-negotiable partner? A series of Harvard Business School cases by James Sebenius and Ellen Knebel explore successful deal-making strategies. From the HBS Alumni Bulletin. Read More

The “Fees → Savings” Link, or Purchasing Fifty Pounds of Pasta

Discount membership clubs have a large and growing presence in retail—one recent survey reported that Costco sells to 1 in every 11 people in the United States and Canada, and warehouse clubs are estimated to be a $120 billion industry today in the United States alone. As a result, many people have had the experience of entering one of these popular clubs and leaving hours later with more goods than can fit in their car. One rational reason for such behavior is that membership clubs do offer lower prices than other retailers. However, Norton and Lee offer a counterintuitive explanation for such buying behavior. They propose that the presence of membership fees alone—independent of the actual savings on any given product—can lead consumers to infer a "fees → savings" link, leading them to spend more than they otherwise would to capitalize on these perceived "great deals." Norton and Lee explore this phenomenon by setting up their own "membership clubs" and comparing profits across stores with varying membership fees. Read More

How Magazine Luiza Courts the Poor

Brazilian retailer Magazine Luiza has developed an innovative strategy for selling to the poor, combining technology with great service that please both customers and employees. The question of how the company can grow without sacrificing the special qualities that have made it successful is at the heart of a case study developed by Harvard Business School professor Frances X. Frei. Read More

Incorporating Price and Inventory Endogeneity in Firm-Level Sales Forecasting

Benchmarking and forecasting firm level performance are key activities for both managers and investors. Retailer performance can be tracked using a number of metrics including sales, inventory, and gross margin. For operational reasons, the sales, inventory, and gross margin for a retailer are interrelated. Retailers often use inventory and margin to increase sales; and sales, conversely, provide input to the retailer's decisions on inventory and margins. Inventory and margin also influence each other. This research uses firm-level annual and quarterly data for a large cross-section of U.S. retailers listed on NYSE, AMEX, or NASDAQ to construct a model that examines the interrelationships among sales per store, inventory per store, and margin. Read More

Adding Bricks to Clicks: The Effects of Store Openings on Sales through Direct Channels

Consider a retailer who operates both brick-and-mortar stores and direct channels such as direct mail catalogs and an Internet Web site. What effect does the opening of a new retail store have on direct channel sales in the retail trading area surrounding the store? Does the existence of more opportunities for consumer contact with the brand increase the retailer's direct sales, or does intra-brand, inter-channel competition erode the retailer's direct sales? Does consumer response to the retailer's brand evolve over time, perhaps as consumers go through some process of trial-and-error learning about the relative merits of stores and direct channels, or is the impact of the new store relatively discrete? Does the answer depend on whether consumers in the retail trading area have had the opportunity for previous experience with the brand's stores? This research used a proprietary longitudinal dataset from a multichannel retailer to understand what happens and to probe the implications for channel management strategy. Read More

Fixing Price Tag Confusion

"Partitioned" price tags that include a main price plus additional charges (Lamp: $70, Bulb, $5, Shipping: $15) may be confusing your customers at best or even causing them to reject the product, warns HBS professor Luc Wathieu. When is an all-inclusive price the best bet? Read More

The Real Wal-Mart Effect

Critics are lining up to take shots at Wal-Mart's treatment of workers and a host of other alleged knocks against society. But the critics miss one big point, says Pankaj Ghemawat: Wal-Mart's overall impact benefits the economy and lower-income consumers. Read More

Whatever Happened to Caveat Emptor?

In many world nations, consumers enjoy vast protections that are relatively new on the scene. Why the rapid rise in consumer protectionism? Why do these efforts vary from country to country? A discussion with professor Gunnar Trumbull on his new book, Consumer Capitalism. Read More

Managing Alignment as a Process

"Most organizations attempt to create synergy, but in a fragmented, uncoordinated way," say HBS professor Robert S. Kaplan and colleague David P. Norton. Their new book excerpted here, Alignment, tells how to see alignment as a management process. Read More

Tips to Reinvent the Department Store

The world of multi-category retailing—much better known to customers of Filene's, Macy's, and Hecht's as simply "department stores"—has been under assault for what seems like ages. How can big retailers not just survive but also thrive? Read More

Prosper with Multi-Channel Retailing

Reps from Abercrombie & Fitch, the Gap, and Bath & Body Works traded pointers in a panel session at the HBS Retail and Luxury Goods Conference on April 3. The upshot: Keep your brand message consistent both in-store and online. Read More

Ground-Floor Opportunities for Retail in India

India is overcoming tradition and poverty to create opportunities for retailers ready to take a chance on a new playing field. Read More

Loyalty: Don’t Give Away the Store

Loyalty programs are profitable—if used correctly. HBS Marketing professor Rajiv Lal discusses how grocery stores get it wrong. But you can get it right. Read More

Unilever—A Case Study

As one of the oldest and largest foreign multinationals doing business in the U.S., the history of Unilever's investment in the United States offers a unique opportunity to understand the significant problems encountered by foreign firms. Harvard Business School professor Geoffrey Jones has done extensive research on Unilever, based on full access to restricted corporate records. This recent article from Business History Review is the first publication resulting from that research. Read More

In the Virtual Dressing Room Returns Are A Real Problem

That little red number looked smashing onscreen, but the puce caftan the delivery guy brought is just one more casualty of the online shopping battle. HBS professor Jan Hammond researches what the textile and apparel industries can do to curtail returns. Read More

Why E-commerce Didn’t Die With the Fall of Webvan

The Internet grocer Webvan died a nasty death along with many other online delivery services—or did it? HBS professor John A. Deighton describes how the forces that propelled it are here to stay. Read More

Sam Walton: Great From the Start

Sam Walton’s retailing career began September 1, 1945, in Newport, Arkansas. He paid a princely $25,000 to Butler Brothers to franchise a 5,000-square-foot Ben Franklin’s variety store. In this excerpt from Giants of Enterprise: Seven Business Innovators and the Empires They Built, author and HBS professor Richard S. Tedlow depicts the huge success Walton made of his first store—against all odds. The book is scheduled for publication later this year by HarperBusiness. Excerpted with permission of the author. Read More

The Manager’s Guide to Communicating with Customers Collection

The battle cry of business, "know thy customer," is heralded in The Manager's Guide to Communicating with Customers Collection. This excerpt by Richard Bierck examines research by HBS professor Gerald Zaltman and consultant Paco Underhill on the downfalls of focus groups. Read More

Building a Powerful Prestige Brand

Leveraging ambition, customer input, intuition, and a keen commercial imagination, a daughter of immigrant shopkeepers created a leader in the global prestige cosmetics market. HBS professor Nancy Koehn examines the genius of Estée Lauder. Read More

Rocket Science Retailing

Retailers and e-tailers have enormous amounts of data available to them today. But to take advantage of that data they need to move toward a new kind of retailing, one that blends the instinct and intuition of traditional systems with the prowess of information technology. Read More

Rapid Response: Inside the Retailing Revolution

A simple bar code scan at your local department store today launches a whirlwind of action: data is transmitted about the color, the size, and the style of the item to forecasters and production planners; distributors and suppliers are informed of the demand and the possible need to restock. All in the blink of an electronic eye. It wasn’t always this way, though. HBS Professor Janice Hammond has focused her recent research on the transformation of the apparel and textile industries from the classic, limited model to the new lean inventories and flexible manufacturing capabilities. Read More

Confronting the Challenges that Face Bricks-and-Mortar Stores

How dramatically have the Internet and other new technologies changed the retail landscape? Do the old fundamentals of the industry no longer apply? Harvard Business Review asked three retail executives and two distinguished academics for their perspectives on technology and retail trade. In this excerpt, Professor Raymond Burke of Indiana University tells how retail executives can prepare for the future while keeping the basics of their business in mind. Read More