Estimating The Importance Of Shelf Space Configuration On Retailer'S Profit
AbstractRetail shelf space allocation remains a central issue in grocery retailing. A literature review produced many studies on retail shelf space allocation, but none which evaluated shelf space allocation using three major factors at once: space, vertical height, and price. In this study, shelf space allocation was modeled from the perspective of a retailer maximizing profit using space, vertical height, and price. Using benchmarking, the results show how shelf configuration affects consumer demand and retailer profit. Parameters for the model were based on experience-based intuition. Although the initial results are not valuable at this point, the method and results create a rationale and motivation to gather primary data. Once primary data is collected, this methodology has important applications. First, it develops an understanding of which parameters are important in determining optimal shelf space configuration. Second, a properly specified model would determine retailer's profit for specific shelf level configurations.
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Bibliographic InfoPaper provided by Purdue University, College of Agriculture, Department of Agricultural Economics in its series Working Papers with number 07-06.
Length: 23 pages
Date of creation: 2007
Date of revision:
shelf space allocation; retail; optimization; grocery; elasticity; GAMS; ketchup.;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-26 (All new papers)
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