Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Competing for Shelf Space

Competing for Shelf Space In recent years, the competition for shelf space has intensified, as more products now compete for a retail space that has remained roughly constant. In this paper, we analyze the dynamics of this competition in a multi‐supplier retail point. Assuming that sales are shelf space dependent, we consider a retailer that optimizes its shelf space allocation among different products based on their sales level and profit margins. In this context, product manufacturers set their wholesale prices so as to obtain larger shelf space allocations but at the same time keep margins as high as possible. We analyze the equilibrium situation in the supply chain, and find that generally the retailer's and the suppliers' incentives are misaligned, resulting in suboptimal retail prices and shelf space allocations. We however find that the inefficiencies induced by suboptimal shelf space allocation decisions are small relative to those induced by suboptimal pricing decisions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Production and Operations Management SAGE

Loading next page...
 
/lp/sage/competing-for-shelf-space-EGIwOueOVY

References (87)

Publisher
SAGE
Copyright
© 2011 The Authors
ISSN
1059-1478
eISSN
1937-5956
DOI
10.1111/j.1937-5956.2010.01126.x
Publisher site
See Article on Publisher Site

Abstract

In recent years, the competition for shelf space has intensified, as more products now compete for a retail space that has remained roughly constant. In this paper, we analyze the dynamics of this competition in a multi‐supplier retail point. Assuming that sales are shelf space dependent, we consider a retailer that optimizes its shelf space allocation among different products based on their sales level and profit margins. In this context, product manufacturers set their wholesale prices so as to obtain larger shelf space allocations but at the same time keep margins as high as possible. We analyze the equilibrium situation in the supply chain, and find that generally the retailer's and the suppliers' incentives are misaligned, resulting in suboptimal retail prices and shelf space allocations. We however find that the inefficiencies induced by suboptimal shelf space allocation decisions are small relative to those induced by suboptimal pricing decisions.

Journal

Production and Operations ManagementSAGE

Published: Jan 1, 2011

Keywords: game theory; supply chain competition; price of anarchy; pricing; supply contracts

There are no references for this article.