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Purpose – The purpose of this chapter is to examine the connection between actual variety (the number of stock-keeping units (SKUs)) and amount of useable variety that the consumer perceives. The optimal combination for a retailer is to offer an assortment that maximizes the perceived assortment variety while minimizing the perceived inter-item complexity. Both measures are a function of the actual variety offered in an assortment but other factors such as attribute structure of the individual items, assortment organization, and individual differences can alter the way the actual variety is perceived.Design/methodology/approach – The main methodology used in the chapter is a comprehensive, critical literature review of the empirical research on the topic.Findings – We find that while assortments with a large number of SKUs are desirable for attracting consumers to the category, too large assortments can result in consumer frustration and confusion. On the other hand, when assortments are small, the perceived variety or attention to the category may be limited.Value/originality – Our review shows ways a retailer can adapt to these challenges. First, we show that assortments are viewed in stages. In the first stage, high perceptions of variety are beneficial. When assortments are small, increasing perceived variety can be accomplished by increasing the number of subcategories within the assortment, adding in packaging cues, or using other emotional affective descriptors to further define options within the assortment. In the second or choice stage, too much variety can increase perceived complexity. Perceived complexity at this stage can be reduced by simplifying the complexity of the individual items within the assortment by increasing alignability of attributes, using a simplifying external organizational structure for the assortment, or helping consumers learn their preference.

Discrete choice models are widely used for estimating the effects of changes in attributes on a given product's likely market share. These models can be applied directly to situations in which the choice set is constant across the market of interest or in which the choice set varies systematically across the market. In both of these applications, the models are used to determine the effects of different attribute levels on market shares among the available alternatives, given predetermined choice sets, or of varying the choice set in a straightforward way.

Discrete choice models can also be used to identify the “optimal” configuration of a product or service in a given market. This can be computationally challenging when preferences vary with respect to the ordering of levels within an attribute as well the strengths of preferences across attributes. However, this type of optimization can be a relatively straightforward extension of the typical discrete choice model application.

In this paper, we describe two applications that use discrete choice methods to provide a more robust metric for use in Total Unduplicated Reach and Frequency (TURF) applications: apparel and food products. Both applications involve products for which there is a high degree of heterogeneity in preferences among consumers.

We further discuss a significant challenge in using TURF — that with multi-attributed products the method can become computationally intractable — and describe a heuristic approach to support food and apparel applications. We conclude with a summary of the challenges in these applications, which are yet to be addressed.

This chapter explores how customer's attributes, shopping behavior, and preferences affect the retail choice in fiercely competitive retail environments of megacities from developing countries. We study how small, family-owned retailers (i.e., nanostores) compete against organized chains from the modern channel (i.e., convenience stores and supermarkets) at different socioeconomic levels in 9 out of 16 boroughs from Mexico City. Primary data were collected using a combination of instruments (i.e., observation, interviews, and surveys) that were applied to relevant stakeholders of the retail footprint where nanostores develop their operations. We analyze the data via statistical tools such as descriptive statistics and independent nonparametric tests to understand the significant factors of the competitive landscape in which nanostores are immersed. We supplement our research methodology by using causal loop diagrams to identify opportunities in the way suppliers, shopkeepers, competitors, and customers interact with each other and new business models for the nanostore supply chains. By breaking down our result analysis into low-, middle-, and high-income areas, we provide insightful recommendations to increase nanostores' survival, improve their operations, and grow them in Mexico City by addressing issues from the supply, store management, and customer service.

This exploratory study identifies key pillars on which innovative business models rely in the Latin American retail landscape. First, using qualitative research methods, we delve into the minds of Latin America's emerging consumers to uncover their needs and paradigms. In a region where retail innovation has traditionally been targeted at high-income consumers, we find a new breed of retailers that cater to the large mass of emerging consumers. Second, we explore the avenues of innovation retailers have followed to serve this impoverished segment and find that retailers' efforts to innovate have resulted in at least three original retail formats: one centered on providing access to durable goods, another centered on offering a wide assortment of goods and a convenient location, and the last one centered on incorporating design and quality. Based on the wheel of retailing theory, we show how these new formats are changing the structure of the retail industry in the region.

Over the last decade, retailers have shown an increasing interest in providing evidence of the sustainability of their activities. This is mainly due to the demands of policy and consumers as well as competition. Indeed, several retailers are making efforts to design and implement sustainable practices from a Triple Bottom Line approach (i.e., economic, social, and environmental sustainability). This chapter discusses the sustainable practices of leading Spanish top grocery and apparel retailers, focusing on those that may be considered as setting benchmarks in their respective sectors. A content analysis of annual report sections related to sustainability, independent sustainability reports, and information published by these main Spanish retailers, enables us to identify three main types of practices providing evidence of retailers’ sustainability. These are cross-industry sustainable practices, industry-dependent practices, and firm innovations. These practices may become guidance and inspiration for other retailers in these sectors, as well as in other product assortment.

To cope with the complexity of modern retail stores and personal time constraints, shoppers must be selective in processing information. During a typical shopping trip, they visit only a fraction of a store’s departments and categories, examine a small subset of the available products, and often make selections in just a few seconds. New research techniques can help marketers understand how customers allocate their attention and assess the impact of in-store factors on shopper behavior. This chapter summarizes studies using observational research, virtual reality simulations, and eye tracking to identify the drivers of shopper attention, product engagement, and purchase conversion. These include shopper goals; product assortment, package appearance, price, and merchandising; shelf space allocation, organization, and adjacencies; and salesperson interaction. The research reveals that small changes in a product’s appearance and presentation can have a powerful impact on consideration and choice.

This chapter focuses on how retailers can do the right thing and be successful at the same time, particularly in the light of technological innovation. Service dominant logic (SDL), with the notion of operant and operand resources as a means to connect the retailer to the customer, provides a framework for the chapter. Normative decision making is presented as a necessary ethical and practical mindset to solve problems, and we illustrate the relationship between normative decision making and value. Value becomes the ultimate outcome to the customer that will allow for sustainable retailing into the future. Utilitarian value and hedonic value are presented and elaborated upon to show how companies and consumers come together to transform resources into value through service. Sections are included showing how value delivery will evolve into the future and what mix of value will be necessary so that retailing can see continued success.

In the context of a retailer with an international supply network, this paper develops theories of (a) how both stability and strong ties in an international supply network combine to yield a resource base that enables the development of flexible relationships with suppliers, (b) how stability and relationship flexibility in the international supply network of a retail reseller may in turn be driven both by the international diversity and by the density of the retailer’s supply network in a product category, and (c) how both the international diversity and the density of a retailer’s supply network may directly affect the likelihood of a retailer developing flexible relationships with its supplier. In doing so, this paper develops and presents six hypotheses and discusses some approaches to measurement of the underlying constructs and testing the hypothesized effects.