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Open access

Hans Haans and Els Gijsbrechts

Abstract

Retail chains often face tough competition and permanently seek to increase profitability. Closing outlets is a common strategy, even if knowledge about its implications is limited. Indeed, chain sales losses from store closure of a multi-outlet retailer operating multiple formats vary widely across outlets (ranging from less than 30 % to more than 80 % of the closed outlet’s revenue) and depend not only on the closed store’s format and distance to competitors, but also on the profile of its clientele and type of shopping trip. Analyzing these criteria helps to predict the magnitude of these losses for specific store closures using a new model. It offers guidance to retailers in deciding whether a particular store closure is beneficial to the chain or, if the objective is to prune an overly dense network, which of a set of local outlets is the best candidate for closure

Open access

Els Gijsbrechts, Katia Campo and Patricia Nisol

Abstract

Grocery-store switching has typically been viewed as evidence of cherry-picking behavior, with consumers switching stores to benefit from temporary promotional offers. However, research reveals that it may also result from a longer-term planning process based on stable store characteristics. Even in the absence of promotions, consumers have good reasons for shopping in multiple grocery stores. There is a link between consumer motives and the way shopping trips are organized. Some consumers visit different stores on separate shopping trips, while others visit multiple stores on combined trips depending on individual cost and benefit considerations. On the one hand, combined visits allow the consumer to save on transportation costs per trip and to purchase each product exclusively in the store where it is preferred. On the other hand, when the stores are visited on separate trips, the number of trips per store can differ and the trips to different stores can be spread over time. This allows the consumer to purchase high holding-cost categories on a more frequent basis, shifting some portion of these categories’ purchases to the less-preferred store. Depending on a store’s characteristics relative to local competitors, different competitive strategies are recommended for retailers.