Retail-Price Drivers and Retailer Profits

Marketing Science, Vol. 26, No. 4, pp. 473-487, July-August 2007

15 Pages Posted: 25 May 2008


What are the drivers of retailer pricing tactics over time? Based on multivariate time-series analysis of two rich data sets, we quantify the relative importance of competitive retailer prices, pricing history, brand demand, wholesale prices, and retailer category-management considerations as drivers of retail prices. Interestingly, competitive retailer prices account for less than 10% of the over-time variation in retail prices. Instead, pricing history, wholesale price, and brand demand are the main drivers of retail-price variation over time. Moreover, the influence of these price drivers on retailer pricing tactics is linked to retailer category margin. We find that demand-based pricing and category-management considerations are associated with higher retailer margins. In contrast, dependence on pricing history and pricing based on store traffic considerations imply lower retailer margins.

Keywords: retail-price drivers, retailer profits, time-series models, generalized forecast error variance

Suggested Citation

Nijs, Vincent R. and Srinivasan, Shuba and Pauwels, Koen H., Retail-Price Drivers and Retailer Profits. Marketing Science, Vol. 26, No. 4, pp. 473-487, July-August 2007, Available at SSRN:

Vincent R. Nijs (Contact Author)

Northwestern University - Department of Marketing ( email )

Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208
United States

Shuba Srinivasan

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
6173535978 (Phone)
6173534098 (Fax)


Koen H. Pauwels

Ozyegin University ( email )

Kusbakisi Cd. No: 2
Altunizade, Uskudar
Istanbul, 34662


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