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Estimating The Importance Of Shelf Space Configuration On Retailer'S Profit




  • Bobby MARTENS


  • Paul PRECKEL

    () (Department of Agricultural Economics, College of Agriculture, Purdue University)


Retail 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.

Suggested Citation

  • Maud ROUCAN-KANE & Bobby MARTENS & Paul PRECKEL, 2007. "Estimating The Importance Of Shelf Space Configuration On Retailer'S Profit," Working Papers 07-06, Purdue University, College of Agriculture, Department of Agricultural Economics.
  • Handle: RePEc:pae:wpaper:07-06

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    References listed on IDEAS

    1. John M. Connor, 1998. "ARCHER DANIELS MIDLAND:PRICE FIXER TO THE WORLD (Third Edition)," Working Papers 98-10, Purdue University, College of Agriculture, Department of Agricultural Economics.
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    More about this item


    shelf space allocation; retail; optimization; grocery; elasticity; GAMS; ketchup.;

    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

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