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The evolving role of hit and niche products in brick-and-mortar retail category assortment planning: A large-scale empirical investigation of U.S. consumer packaged goods

ABSTRACT: Long tail theory, the notion that the future of retailing could involve shifting product assortments to offer more product variety to precisely serve the unique needs of individual customers, has largely been proven true in the context of online distribution. However, it has been implicitly assumed that this theory does not apply to brick-and-mortar selling situations due to higher supply side inventory costs and higher demand side consumer search costs. Academics and practitioners alike have thus advocated for the use of Pareto rules to make category assortment planning decisions about product inventory breadth and depth in the brick-and-mortar channel. This research directly challenges this received wisdom by noting that the widespread prevalence and use of mobile technology is causing information flows to speed up for consumers even while performing traditional shopping tasks. Such information flows should theoretically favor the strategic importance of niche products in the long tail of the sales distribution. A large-scale empirical analysis of consumer packaged goods brick-and-mortar retailing data indicates that this alternative prediction is indeed true. This research contributes to a larger body of research as well that has documented how major environmental forces are shifting the nature of retail strategy, particularly in the brick-and-mortar channel.

SUBMITTER: Hoskins J

PROVIDER: S-EPMC7387359 | biostudies-literature | 2020 Jul

REPOSITORIES: biostudies-literature

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Project description:BACKGROUND:Targeted coupons strongly influence purchasing behavior and may represent an innovative approach for improving dietary behaviors. METHODS:The retail analytics firm, Dunnhumby, provided secondary retail data containing grocery transactions, targeted coupon exposures, and coupon use for 2500 households over 2-years. The USDA Quarterly At-Home Food Purchasing Database was used to categorize individual foods into 52 categories and combined into 12 food groups. Mixed effects linear models estimated the difference-in-difference effects of coupon exposure on category-level purchase rate/wk. pre- and post-campaign; models also tested effect modification by food category. RESULTS:Category-level food purchases significantly increased post-campaign. Mean (SD) food purchases/wk. Among exposed households (17.34 (13.08) units/wk) vs. unexposed households (3.75 (4.59) units/wk) were higher (p?<?0.001). Difference-in-difference effects of coupon exposure showed a higher increase in purchase rate among exposed vs. unexposed households (5.73 vs. 0.67, p?<?0.001). Food category significantly modified the association between coupon exposure and coupon campaign. Category-level purchase rate among exposed vs. unexposed households was relatively higher in less healthful (e.g. convenience foods) vs. more healthful categories (e.g. nuts) with a 1.17 unit/wk. increase in convenience foods purchase (p?<?0.001) vs. a 0.03 unit/wk. increase in nuts (p?<?0.001). Exploratory analyses suggested that price elasticity of food categories for targeted coupons (1.02-2.81) was higher than previous estimates for untargeted coupons. CONCLUSION:Across food categories, coupon exposure increased category-level purchase rate, with a relatively larger effect size for less healthful than more healthful categories. Promising results from this preliminary study suggest that experimental research is warranted to determine whether targeting with the explicit purpose of improving dietary quality can more effectively influence diet, and whether it can do so more cost effectively.

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The evolving role of hit and niche products in brick-and-mortar retail category assortment planning: A large-scale empirical investigation of U.S. consumer packaged goods

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