Managing Product Variety and Collocation in a Competitive Environment: An Empirical Investigation of Consumer Electronics Retailing
Product variety is an important strategic tool that firms can use to attract customers and respond to competition. This study focuses on the retail industry and investigates how stores manage their product variety, contingent on the presence of competition and their actual distance from rivals. Using a unique data set that contains all Best Buy and Circuit City stores in the United States, the authors find that a store's product variety (i.e., number of stock-keeping units) increases if a rival store exists in its market but, in the presence of such competition, decreases when the rival store is collocated (within one mile of the focal store). Moreover, collocated rival stores tend to differentiate themselves by overlapping less in product range than do noncollocated rivals. This smaller and more differentiated product variety may be because of coordinated interactions between collocated stores. In summary, this paper presents evidence of both coordination and competition in retailers' use of product variety. This paper was accepted by Bruno Cassiman, business strategy.
Volume (Year): 57 (2011)
Issue (Month): 6 (June)
|Contact details of provider:|| Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA|
Web page: http://www.informs.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stahl, Konrad, 1982. "Differentiated Products, Consumer Search, and Locational Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 31(1-2), pages 97-113, September.
- Severin Borenstein & Andrea Shepard, 1993.
"Dynamic Pricing in Retail Gasoline Markets,"
NBER Working Papers
4489, National Bureau of Economic Research, Inc.
- Stuart S. Rosenthal & William C. Strange, 2003.
"Geography, Industrial Organization, and Agglomeration,"
Center for Policy Research Working Papers
56, Center for Policy Research, Maxwell School, Syracuse University.
- Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 377-393, May.
- Stuart S. Rosenthal & William C. Strange, 1999. "Geography, Industrial Organization, and Agglomeration," Center for Policy Research Working Papers 14, Center for Policy Research, Maxwell School, Syracuse University.
- Sunder Kekre & Kannan Srinivasan, 1990. "Broader Product Line: A Necessity to Achieve Success?," Management Science, INFORMS, vol. 36(10), pages 1216-1232, October.
- Hirschman, Elizabeth C, 1980. " Innovativeness, Novelty Seeking, and Consumer Creativity," Journal of Consumer Research, Oxford University Press, vol. 7(3), pages 283-295, December.
- Taylor Randall & Karl Ulrich, 2001. "Product Variety, Supply Chain Structure, and Firm Performance: Analysis of the U.S. Bicycle Industry," Management Science, INFORMS, vol. 47(12), pages 1588-1604, December.
- Michael J. Mazzeo, 2002. "Competitive Outcomes in Product-Differentiated Oligopoly," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 716-728, November.
- Ellison, G. & Glaeser, E.L., 1994.
"Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach,"
94-27, Massachusetts Institute of Technology (MIT), Department of Economics.
- Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
- Glenn Ellison & Edward L. Glaeser, 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," NBER Working Papers 4840, National Bureau of Economic Research, Inc.
- A. M. McGahan & Pankaj Ghemawat, 1994. "Competition to Retain Customers," Marketing Science, INFORMS, vol. 13(2), pages 165-176.
- Steven M. Shugan, 1985. "Implicit Understandings in Channels of Distribution," Management Science, INFORMS, vol. 31(4), pages 435-460, April.
- Steven T. Berry & Joel Waldfogel, 2001. "Do Mergers Increase Product Variety? Evidence from Radio Broadcasting," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 1009-1025.
- McAlister, Leigh & Pessemier, Edgar, 1982. " Variety Seeking Behavior: An Interdisciplinary Review," Journal of Consumer Research, Oxford University Press, vol. 9(3), pages 311-322, December.
- Philip M. Parker & Lars-Hendrik Roller, 1997. "Collusive Conduct in Duopolies: Multimarket Contact and Cross-Ownership in the Mobile Telephone Industry," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 304-322, Summer.
- Gérard P. Cachon & Christian Terwiesch & Yi Xu, 2008. "On the Effects of Consumer Search and Firm Entry in a Multiproduct Competitive Market," Marketing Science, INFORMS, vol. 27(3), pages 461-473, 05-06.
- Zucker, Lynne G & Darby, Michael R & Brewer, Marilynn B, 1998. "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review, American Economic Association, vol. 88(1), pages 290-306, March.
- Ting Zhu & Vishal Singh, 2009. "Spatial competition with endogenous location choices: An application to discount retailing," Quantitative Marketing and Economics (QME), Springer, vol. 7(1), pages 1-35, March.
- Hitoshi Matsushima, 1998.
"Multimarket Contact, Imperfect Monitoring, and Implicit Collusion,"
CIRJE-F-24, CIRJE, Faculty of Economics, University of Tokyo.
- Matsushima, Hitoshi, 2001. "Multimarket Contact, Imperfect Monitoring, and Implicit Collusion," Journal of Economic Theory, Elsevier, vol. 98(1), pages 158-178, May.
- Barry L. Bayus & William P. Putsis, Jr., 1999. "Product Proliferation: An Empirical Analysis of Product Line Determinants and Market Outcomes," Marketing Science, INFORMS, vol. 18(2), pages 137-153.
- Raphael Thomadsen, 2007. "Product Positioning and Competition: The Role of Location in the Fast Food Industry," Marketing Science, INFORMS, vol. 26(6), pages 792-804, 11-12.
- Kelvin Lancaster, 1990. "The Economics of Product Variety: A Survey," Marketing Science, INFORMS, vol. 9(3), pages 189-206.
- de Palma, Andre & Lindsey, Robin & von Hohenbalken, Balder & West, Douglas S., 1994. "Spatial price and variety competition in an urban retail market : A nested logit analysis," International Journal of Industrial Organization, Elsevier, vol. 12(3), pages 331-357, September.
- Marcelo Olivares & Gérard P. Cachon, 2009. "Competing Retailers and Inventory: An Empirical Investigation of General Motors' Dealerships in Isolated U.S. Markets," Management Science, INFORMS, vol. 55(9), pages 1586-1604, September.
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:57:y:2011:i:6:p:1009-1024. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.