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

47 Pages Posted: 29 Apr 2018 Last revised: 29 May 2018

See all articles by Tao Chen

Tao Chen

University of Maryland

Yu Jeffrey Hu

Georgia Institute of Technology - Scheller College of Business

Mohammad Saifur Rahman

Purdue University - Krannert School of Management

Jiong Sun

Purdue University - Department of Consumer Sciences and Retailing

Date Written: April 10, 2018

Abstract

Product assortment is a critical competitive tool for retailers to increase sales, maximize profits, and attain customer satisfaction. Increasingly, more and more retailers provide in-store product assortment information online or via smartphone apps for consumers to check if their preferred items are carried by local stores. Such information systems make it easier for customers to switch between sister stores of the same chain, as well as between competing chain stores, which poses new challenges to retailers’ assortment strategies. Retailers must understand and evaluate the important role of sister-store presence and market competition in their product assortment strategies. In this paper, the authors obtain product assortment data from all stores of a nation-wide bookstore chain. The authors then study how competition and the presence of sister stores affect the retail chain’s product assortment. The authors also explore how product popularity affects this assortment and moderates the impact of competition and the presence of sister stores. The authors find that having a sister (competing) store nearby reduces (increases) product assortment and such effects are stronger for niche products.

Keywords: assortment, sister-store presence, competition, popularity

Suggested Citation

Chen, Tao and Hu, Yu Jeffrey and Rahman, Mohammad Saifur and Sun, Jiong, The Effects of Sister-Store Presence and Market Competition on Product Assortment: Evidence from Book Retailing (April 10, 2018). Georgia Tech Scheller College of Business Research Paper No. 18-12. Available at SSRN: https://ssrn.com/abstract=3160337 or http://dx.doi.org/10.2139/ssrn.3160337

Tao Chen

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Yu Jeffrey Hu

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Mohammad Saifur Rahman

Purdue University - Krannert School of Management ( email )

403 W. State St
West Lafayette, IN 47907
United States
765-494-4464 (Phone)

Jiong Sun (Contact Author)

Purdue University - Department of Consumer Sciences and Retailing ( email )

West Lafayette, IN 47907
United States

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