Retail →
- 28 Apr 2008
- HBS Case
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. Closed for comment; 0 Comments.
- 19 Mar 2008
- Research & Ideas
Finding Success in the Middle of the Market
Let's face it—the middle market isn't sexy. Sears isn't Victoria's Secret. But it can be very profitable to know how to play "midfield" adroitly, says professor and soccer enthusiast John Quelch. Key concepts include: Midfield represents the middle of the market, to which one end of the market aspires to trade up while the other end may have to trade down. A company controls midfield by fielding a complete product line that includes backs and forwards. Cost and service tradeoffs are required of companies that continue to dominate the middle ground. Closed for comment; 0 Comments.
- 18 Mar 2008
- Working Paper Summaries
Modeling Expert Opinions on Food Healthiness: A Nutrition Metric
Despite an increased standard of living in the United States and other developed countries, health problems attributable to poor nutrition persist in part due to consumers' inability to translate the dietary advice of nutrition experts into anything actionable. Citing the improvement of public health as a primary objective, numerous studies have highlighted the need for a nutritional scoring system that is both comprehensive in its coverage of food products and easily understood by consumers. In this paper the researchers advance this objective by proposing a nutrition metric that is based on the current views of leading experts in the field. The metric can be used to score any food or beverage for which several component nutrient quantities are known. Key concepts include: This model encompasses the factors that matter most to the professional judgment of nutrition experts. Previous models focusing solely on either positive or negative nutrients have omitted critical information that experts take into account when assessing a food's healthiness. This model could be used to generate healthiness ratings that are displayed on or near food and beverage labels, allowing consumers to make more informed choices about which products to purchase and consume. Closed for comment; 0 Comments.
- 20 Nov 2007
- Working Paper Summaries
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. Key concepts include: Consumers behave irrationally in response to membership fees. When stores charge membership fees, consumers infer a "fees → savings" link due to their belief that stores that charge fees do so because they offer better prices. The presence of fees leads to increased spending. Consumers in the study were more likely to express a desire to shop at stores that charged fees than those that did not, even when products and savings were similar. With exceptions, there may be a curvilinear relationship between fees and savings: fees that are too low serve as a hook to make people pay more later; medium fees indicate good prices and decent quality and service; and high fees signal exclusivity and high prices. Closed for comment; 0 Comments.
- 16 Jul 2007
- Research & Ideas
Understanding the ‘Want’ vs. ’Should’ Decision
Pizza or salad? Consumers use different approaches to buying things they want (pizza) versus items they should buy (salad). In their research on online grocery-buying habits and DVD rentals, Harvard Business School's Katy Milkman and Todd Rogers, along with Professor Max Bazerman, provide insights on the want-should conflict and the implications for managers in areas such as demand forecasting, consumer spending habits, and effective store layout. Key concepts include: People often behave as if they possess multiple selves with different, competing interests—the "want-self" versus the "should-self." The want-self demands instant gratification while the should-self looks to longer-term interest. Online grocery shoppers order healthier groceries when ordering for delivery in the distant future (i.e., 5 days from now) than when ordering for delivery tomorrow. Grocery stores that locate the produce section ("should" buy) near the entrance have this figured out. Online and catalogue retailers should anticipate that the further in advance of delivery an order is placed, the less a customer is likely to spend. Closed for comment; 0 Comments.
- 18 Apr 2007
- HBS Case
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. Key concepts include: The case "Magazine Luiza: Building a Retail Model of 'Courting the Poor'" looks at the Brazilian retailer's innovative approach to selling to the poor. Magazine Luiza sells a mix of furniture, consumer electronics, and white goods. The retailer's flexible procedure for credit approval employs nontraditional metrics, which enables customers with lower, less easily established incomes to make purchases. Students who discuss the case in the HBS classroom must assess the viability of Magazine Luiza's acquisition of another Brazilian retailer and consider future growth initiatives. Can the company retain the qualities that have made it special to both customers and employees? Closed for comment; 0 Comments.
- 13 Apr 2007
- Working Paper Summaries
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. Key concepts include: This model can be used to benchmark retailers' performance in sales, inventory, and gross margin simultaneously. The model can also be used to generate sales forecasts even when sales were managed using inventory and gross margin. Closed for comment; 0 Comments.
- 12 Feb 2007
- Working Paper Summaries
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. Key concepts include: Adding a physical retail store to existing direct sales channels increases firm sales in the long run, as sales from the new store are incremental to sales from direct channels, which show little long term damage from channel competition. Adding channels produces both cannibalizing and complementary effects which operate in tandem and vary over time. Cannibalization occurs in the short term following the addition of a new channel, while complementarity takes time to manifest itself. Retail store openings cannibalize direct channel sales in the short term if physical stores do not already exist in the retail trading area, but produce complementary effects which overcome the losses from cannibalization in the long run. Our results suggest the underlying consumer shopping behavior driving this result. The opening of a retail store may induce some existing direct channel customers to switch their purchases to the retail store; simultaneously, new customers are attracted to the direct channels, perhaps due to a branding effect stemming from the publicity surrounding the new store which makes customers more aware of and more comfortable with the firm's direct channel operations. Use caution extrapolating these results to other retailers. This study involved only store openings by a single retailer with a well established and respected brand into markets where the retailer did not previously have stores. Direct retailers with less established brands may benefit even more than this retailer from branding effects by opening a new store. Closed for comment; 0 Comments.
- 11 Dec 2006
- Research & Ideas
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. When is an all-inclusive price the best bet? Open for comment; 0 Comments.
- 23 Aug 2006
- Op-Ed
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. Key concepts include: While Wal-Mart has many problems, the company's overall economic impact is positive both for the overall economy and for low-income consumers. The real Wal-Mart conflict isn't between capital and labor. It is a battle involving consumers and cost-efficient producers against traditional retailers, organized labor, and community activists. Closed for comment; 0 Comments.
- 07 Aug 2006
- Research & Ideas
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. Key concepts include: Until the 1960s, consumers enjoyed few regulatory protections from faulty products. The United States led the change. Consumer protections, which vary in scope and intent from country to country, influence product design. Germans favor quality; the French, innovation. Consumers benefit from these protections, but as part of a larger trend toward modernization, something in the social fabric is lost. Closed for comment; 0 Comments.
- 24 Apr 2006
- Research & Ideas
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. Closed for comment; 0 Comments.
- 18 Apr 2005
- Research & Ideas
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? Closed for comment; 0 Comments.
- 18 Apr 2005
- Research & Ideas
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. Closed for comment; 0 Comments.
- 19 Apr 2004
- Research & Ideas
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. Closed for comment; 0 Comments.
- 21 Mar 2004
- Research & Ideas
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. Closed for comment; 0 Comments.
- 16 Jun 2003
- Research & Ideas
Peeling Back the Global Brand
The global brand is a hard nut to crack. In a session devoted to these seemingly all-powerful brands, professors and practitioners exposed the fault lines. Closed for comment; 0 Comments.
- 09 Dec 2002
- Research & Ideas
UnileverA 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. Closed for comment; 0 Comments.
- 15 Apr 2002
- Research & Ideas
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. Closed for comment; 0 Comments.
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. Key concepts include: Chains experiencing higher levels of variation in customer demands across different locations are more likely to increase delegation and the provision of incentives through the organizational design choice of franchising. Stores are more likely to be franchised when their location characteristics are more divergent from the most prevalent location characteristics of the chain as a whole. Non-franchisor chains with higher levels of such market-type dispersion tend to decentralize operations to a greater extent. It is also possible that they provide higher variable pay. Closed for comment; 0 Comments.