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Retailing Research

Retailing Research

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Journal of Retailing 83 (4, 2007) 447–464
Retailing research: Past, present, and future
Dhruv Grewal
, Michael Levy
1
 Babson College, Wellesley, MA, United States
Abstract
The field of retailing has experienced significant changes in recent years. In this article, we review articles published in
Journal of Retailing
over the 2002–2007 time span, classified into ten broad topic categories: price, promotion, brand/product, service, loyalty, consumer behavior,channel, organizational, Internet, and other. Some areas have received a reasonable amount of attention; others would be worthy of additionalwork. We summarize a key insight from each article in the Appendix. Finally, we highlight some key insights for each area and some avenuesfor further research, in the hope that this review spurs additional research into these and other areas of importance to both academicians andretail practitioners.© 2007 New York University. Published by Elsevier Inc. All rights reserved.
Keywords:
Retailing; Price; Promotion; Brand; Product; Service; Loyalty; Consumer Behavior; Channels; Organizational; Internet; Supply Chain; Reviewarticle
The objective of this article is to highlight key areas of retailing that have been studied and published in
Journal of  Retailing
between 2002 and 2007. We have limited our focustoinsightsgeneratedbythesearticlesasopposedtobroaden-ingthescopeofourinquirytoalargersetofjournals.Duringthis timeframe,
JR
has published 130 regular articles, twentyspecialissuearticles,fiveinvitedarticles,andnineeditorials,for a grand total of 164 manuscripts (seeTable 1).
 Journal of Retailing
has had a long tradition of publishingarticles that make substantive and conceptual contributions.In theAppendix A,we include references to all the arti- cles published in the
Journal of Retailing
during the period2002–2007, highlighting one key contribution or finding foreach article. Although these articles may contain multiplecontributions, we have limited this discussion due to spaceconstraints. Because of their multiple contributions, manyarticles could be classified into multiple categories, but wehave chosen those categories that we believe most appropri-ate.Thus, the articles are grouped into the following cat-egories: pricing, promotion, product/branding, services,loyalty, consumer behavior, channels, organizations, Inter-
Corresponding author. Tel.: +1 781 239 3902; fax: +1 781 239 5020.
 E-mail addresses:
dgrewal@babson.edu(D. Grewal),mlevy@babson.edu(M. Levy).
1
Tel.: +1 781 239 5629.
net, and other. The “other” category covers a host of articlesincluding ethics, global retailing, and retail format.
Pricing and promotion research
Retail pricing is one of the most difficult issues facingretailers.Forexample,supercentersanddepartmentstoresarelikely to offer more than 100,000 stockeeping units (SKUs)and operate hundreds or even thousands of stores, as is thecasewith,say,Wal-Mart.EachSKUmustbeassignedaprice,and those prices can and often do vary in different locationsdue to variances in demand, competition, seasonality, costsof operations, and so forth.The pricing task differs for fashion and staple goods. Ide-ally, fashion merchandise hold zero inventory at the end of a fashion season. To accomplish this objective, retailers usemarkdowns and promotions to stimulate demand. But thesize and timing of markdowns is critical—too small a mark-down too late in the season, and the retailer has leftovermerchandise; too high a markdown too early in the season,and the retailer sacrifices gross margins. For retailers pric-ing staple goods, the challenge changes, because they do nothave to worry about a zero end-of-season inventory position.Instead, they must determine how to employ the frequentextra discounts and deals provided by vendors.
0022-4359/$ – see front matter © 2007 New York University. Published by Elsevier Inc. All rights reserved.doi:10.1016/j.jretai.2007.09.003
 
448
D. Grewal, M. Levy / Journal of Retailing 83 (4, 2007) 447–464
Table 1Types of articles published 2002–20072002 2003 2004 2005 2006 2007Regular articles 15 21 21 22 31 20Special issue articles 7 3 10Invited articles 2 3Editorials 1 2 1 1 4Total 23 21 28 26 32 34
Apricing-relatedstrategiccomplicationemergeswhenweconsider how the competition will react to prices. Becausecompetitors can meet price offers so easily, any price advan-tagecanquicklyevaporate,andmarginscandeteriorateintoapricewar. However, retailers likeWal-Mart, Costco, and oth-erssuccessfullyhavedevelopedlowpricestrategies.Retailersalso take a tactical perspective to pricing by using practicessuch as temporary price reductions and pricing guarantees.Faced with such a complicated set of pricing decisions,retailers can benefit from insights gained from both priceoptimization (Levy et al. 2004)and behavioral research. Duringthepastsixyears,paperspublishedin
 JR
havepro-vided many insights into a host of pricing issues, includingthe role of external and internal reference prices, the effec-tiveness of price promotions and price presentation cues, theroleoftemporarypricereductionsandthesizeofthediscount,theroleofpricematchingguarantees,andthedriversofpricedispersion. However, several research avenues identified byLevy et al. (2004)warrant additional research:
“In particular, researchers should conduct real-life fieldexperiments with respect to alternative pricing strategiesand show the superiority of price and promotion opti-mization methods. These experiments would necessarilyconsidersuchfactorsascategorymanagement,retailcom-petition, unit sales, retail prices, wholesale prices anddeals, complementary and substitute products, promotionactivity, and seasonality with the objective of maximizingcategory profitability.”
“Now that pricing optimization makes it possible to use adifferentialpricepolicyindifferentregions,itisimportantto examine how consumers react to such a policy. TheyalreadyoftenrunintotheissuewhenbuyingontheInternetversus stores.”
“Profit optimization software enables retailers to deter-mine the optimal price, and then round up to squeeze andextra profit on items that are less price sensitive. Do con-sumersrecognizethesesmalladditionalmarkups?Dotheycare?”
“Although one important goal for retailers is to maximizeprofits through optimal pricing, there are other, sometimesconflicting goals to consider. For instance, retailers maywish to peg their prices to competition, or set prices tomaintain a certain image. How do these conflicting goalsimpact their customers or profits?”In addition, we believe many other issues deserveresearchers’ attention:
Consumers’ perceptual and behavioral (i.e., purchase orbrand switching) responses to price changes according topanel data.
The role of price competition on retail profitability.
Insights into consumers’ cherry-picking behaviors acrossstores.
The role of bundled versus unbundled prices and theirimpacts on retail profitability.
Understanding how consumers process price informationcontained in circulars, flyers, and displays.
Therelationshipbetweenpricingstrategyandspecificpric-ing tactics.
Optimal dynamic pricing policies, particularly in a com-petitive setting.
How consumers process pricing tactics that appear to beatypical of a retailer’s overall strategy.
Consumer processing of retail price information.Retail price promotions, such as coupons, deal intensityrewards, bonus packs, and multipacks, involve a complexcombination of pricing, promotion, and packaging issues.Research that examines the factors that may moderate theeffectiveness of temporary price reductions likely can pro-vide insights to both retailers and consumer packaged goodmanufacturers.Althoughafewarticlesin
 JournalofRetailing
have tackled issues pertaining to ad frequency and the infor-mative value of advertising, additional research is warranted,especially if it considers the joint effects of advertising, interms of type and amount, and price.
Product/branding research
In the past six years, seventeen
JR
articles have focusedon product/branding topics—a relatively small number,considering that the topic spans products; branding; andmerchandise, assortment, and category management. Someresearch published includes investigations of national versusstorebrands,in-storesamplingofmerchandise,andpotentialdrivers of merchandise quality perceptions.A 2004 special issue on product/branding issues in retail-ing identified several research issues in this area (Grewal etal. 2004),including the growth of private-label and exclu-sive merchandise (e.g., Macy’s INC, Wal-Mart’s Old RoyDog Food) and the ongoing focus on developing strong retailbrands (e.g., The Gap, Abercrombie & Fitch). We reiteratethe need for additional work on topics like:
Understanding the process by which merchandise buy-ers make their decisions and the degree to which thosedecisions are optimal.
Private labels and in particular their
Impacts on retail sales and profitability,
 
 D. Grewal, M. Levy / Journal of Retailing 83 (4, 2007) 447–464
449
Impacts on the bargaining position of the retailer vis-`a-visnational brand manufacturers, and
Role in retail merchandising decisions.
Category management in terms of 
Combining store and national brands,
Category captains, and
Space allocation.
Merchandise management with regard to
Building strategic relationships with vendors,
Inventory management,
Global sourcing issues, and
Managing and allocating assortments.
Stock-outs, especially
Their impact on customers, profitability, and complemen-tary items and
The conditions (moderators) in which stock-outs are moreor less pronounced
Managing the global migration of the brand.
Retail brand positioning.
Retail brand personality and its impact on both other mer-chandise and overall store image across market segments.
Services research
To differentiate their retail offerings, build customer loy-alty,anddevelopsustainablecompetitiveadvantage,retailerscan provide excellent customer service. Sometimes the ser-vice is one-to-one, as is the case with higher-end specialtystoreslikeNordstrom.Otherretailersdefineexcellentserviceby providing innovative technologies in the store, such as theinteractive kiosks in Staples stores. In multichannel environ-ments,retailersdistinguishthemselveswithonlinechatswithservice representatives or virtual models that help customersdetermine how a garment will look on their bodies.With so many opportunities to study services within aretailing context, it is no surprise that many outstandingservices articles have found a home in
Journal of Retail-ing
. Recently,
JR
devoted a special issue to examining thechallenges of “Competing through Service.An editorialbyBolton et al. (2007)summarizes the varied key service strategies into six broad strategies: leveraging fundamentalsources of value that influence shareholder wealth, manag-ing customers’ perceptions of the service value proposition,customizing pricing for profitability, ensuring service excel-lence in implementation, planning for service recovery, andmanaging the holistic service experience (including the ser-vicescape).Between2002and2007,
 JR
coveredthesecriticalstrategiesandotherissues,suchastheroleofservicetechnol-ogy and service on the Internet, as well as scale developmentfor service quality.The continued growth of a stronger service orientation inmost markets means the need for research into these vitalissues likely will gain even more prominence. Some of themany issues that need to be addressed include:
The role of self-service technology and Web sites in shap-ing every aspect of the consumer decision process, fromneed recognition to post-purchase.
Managingtheserviceexperienceacrossthemultiplechan-nels, including the store, Internet, and catalog.
Understanding the components of service recovery andtheir main and interactive effects on patronage.
The role of service tactics, such as service guarantees, oncustomer satisfaction and loyalty.
Loyalty research
Customer relationship management (CRM) programsdesigned to identify and retain loyal customers have becomemoresophisticatedandprevalentamongretailersandserviceproviders. These programs can be elaborate, such as NeimanMarcus’s InCircle Program, in which consumers can redeempoints for prizes ranging from a limited-edition Emilio Puccisilk scarf to an eight-night excursion through India or a com-plete Sony home movie theater; or they can be simple, suchas a buy-ten-get-one-free card at a local pizzeria.In support of these programs, retailers have become muchmore sophisticated in their ability to use sophisticated datamining and market basket analysis techniques to target mer-chandise assortments and promotions directly to their idealcustomers. At the same time, even if customers prefer a par-ticularretailer,itremainsrelativelyeasytogetthemtoswitchby offering a variety of competitive products, services, andloyalty programs. In this sense, it is difficult to assess exactlyhow successful CRM and loyalty programs are.Research on customer loyalty has found a nice homein
Journal of Retailing
, which published 30 articles on thetopic during 2002–2007. In addition, part of a 2004 specialissue was devoted to loyalty issues in retailing (Grewal etal. 2004).Some of the topics covered in
JR
during the pastsix years include the impact of loyalty/reward programs onswitching, satisfaction, revenues, and profits; online loyaltyprogram enhancements; customer acquisition/retention pro-grams;theantecedentsofcustomerloyalty(e.g.,brandimage,multichannel strategies, technology); and customer lifetimevalue (CLV) measurement, as well as the impact of CLV onmarketing mix decisions.Research on customer loyalty initially focused onantecedents,suchasbrandimage,multiplechannels,technol-ogy, coproduction, and switching costs, or its consequences,such as switching, satisfaction, revenues, and profits. Someresearch also considers the role of potential moderators of these linkages. Recent research, however, concentrates moreon measuring CLV and understanding the impact of market-ing mix decisions on CLV.Compared with many of the other topics addressed in
JR
,CRM in general and loyalty programs in particular representrelatively new areas of academic pursuits. Current analyticaltechniques, such as dynamic structural models, data mining,andmarketbasketanalysis,offergreatcompatibilitywiththis

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