Creating value through wholesaler and retailer interface

Abstract

Purpose

In the premium price range, retailer collaboration and showroom decoration as well as information dissemination play an important role in the consumer sector, particularly in furniture sales. The purpose of this research is to report findings from Swedish wholesaler and its process to improve sales of order driven furniture business.

Design/methodology/approach

A large case study including 26 companies follows in longitudinal manner the retailers' contribution to value creation based on a value gaps model. Both qualitative and quantitative data are used. Approach was chosen as wholesaler needed to change its business strategy due to high competition.

Findings

Innovative products may lose consumer perceived value, if information of the product is distorted by the retailers. It is of course so that the number of display pieces in retailer outlets play important role, but actually the way these are presented is most critical. Only one retailer in this study followed wholesaler's guidance, but again this retailer was able to show best sales. In turn, some retailers performed much lower than expected, as they were not interested from new sales concept implemented due to strategy change at wholesaler.

Research limitations/implications

The service quality gaps model has been adjusted and is presented as a value gaps model that may be used to understand, how value creation is not limited to a single company in a supply chain. However, the authors would like to emphasize that the observations are not necessarily enough as only one wholesale company and its retailer network in Sweden was followed.

Practical implications

The common practice for wholesalers to focus on display pieces is not sufficient. The retailers' ability to contribute to value creation needs to be considered, and this starts from collaboration at showroom level. This particularly concerns items in other than low cost product groups.

Originality/value

The research introduces information distortion as a concept to understand, how consumer perceived value might be reduced by value gaps in a supply chain. Research is also unique in a way that it reports business strategy in other than low end segment (lowest costs), but still wholesaler procures products from Asia (China), and develops models in Sweden.

Citation

Eriksson, D., Hilletofth, P. and Hilmola, O. (2013), "Creating value through wholesaler and retailer interface", Industrial Management & Data Systems, Vol. 113 No. 8, pp. 1169-1188. https://doi.org/10.1108/IMDS-02-2013-0078