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

Service Science, 2021, 13(3):109-192

47 Pages Posted: 29 Apr 2018 Last revised: 7 Dec 2022

See all articles by Tao Chen

Tao Chen

University of Maryland

Yu Jeffrey Hu

Purdue University

Mohammad Saifur Rahman

Purdue University - Krannert School of Management

Jiong Sun

Purdue University - Department of Consumer Sciences and Retailing

Date Written: May 9, 2021

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-chain 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, while having a competing store nearby increases product assortment and such effects are stronger for popular 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 (May 9, 2021). Service Science, 2021, 13(3):109-192, 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

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47907
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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