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The Effects of Sister-Store Presence and Market Competition on Product Assortment: Evidence from Book Retailing

Author

Listed:
  • Tao Chen

    (Carey Business School, Johns Hopkins University, Baltimore, Maryland 21202)

  • Yu Jeffrey Hu

    (Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308)

  • Mohammad Rahman

    (Krannert School of Management, Purdue University, West Lafayette, Indiana 47907)

  • Jiong Sun

    (Division of Consumer Science, Purdue University, West Lafayette, Indiana 47907)

Abstract

When consumers’ preferred products are not carried by the retail chain store they visit, they may switch to purchasing these products from nearby sister stores of the same chain or from nearby competing stores. Such within- and across-chain substitution effects are enhanced as store-level product assortment information becomes increasingly available to consumers. It is important for scholars and practitioners to understand the effect of sister-store presence and market competition on retail product assortment strategies. In this paper, we obtain store-level product assortment data from a nationwide bookstore chain and study how sister-store presence and market competition can have an impact on the retail chain’s product assortment. In addition, we explore how this impact differs for niche and popular products. Our results show that having at least one sister store nearby reduces product assortment and such effects are stronger for niche products although having a competing store nearby increases product assortment and such effects are stronger for popular products.

Suggested Citation

  • Tao Chen & Yu Jeffrey Hu & Mohammad Rahman & Jiong Sun, 2021. "The Effects of Sister-Store Presence and Market Competition on Product Assortment: Evidence from Book Retailing," Service Science, INFORMS, vol. 13(3), pages 155-171, September.
    • Handle: RePEc:inm:orserv:v:13:y:2021:i:3:p:155-171
    DOI: 10.1287/serv.2021.0275
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