Author:

Keywords:

Social Sciences, Business, Business & Economics, organic food, organic retailer, specialist, store entry, competition, marketing mix, retailing, grocery shopping, NICHE WIDTH, PRICE, ASSORTMENT, PRODUCTS, BRAND, PERCEPTIONS, DYNAMICS, DRIVERS, QUALITY, MODEL, 1505 Marketing, 1506 Tourism, Marketing, 3506 Marketing, 3507 Strategy, management and organisational behaviour

Abstract:

Premium organic retailers are specialist retailers that exclusively offer organic products. Past literature has not studied their entry, focusing instead on the impact of generalist store entry, such as Wal-Mart. This study examines the impact of premium organic specialist store entry on category performance at incumbent generalist stores for 47 packaged food and beverages categories. The results indicate that incumbent stores lose sales after a local organic store entry, and that the impact of price on sales at generalist stores becomes stronger. The authors postulate that incumbent stores can reduce sales losses by reducing the relative distinctiveness of the entrant along three dimensions: variety, price-quality, and authenticity. Empirical results show that more variety in organic products as well as more organic feature and display advertising protect generalist stores from premium organic specialist store entry. Assortments composed of premium organic products are harmed less, whereas assortments where organic products are subject to more frequent and deeper price promotions are harmed more. Furthermore, including products from an organic specialist brand in generalist’s organic assortments, offers additional protection.