A Longitudinal Retail Price Analysis of Intra-Channel and Inter-Channel Competitors
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Date
2008-05-02
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Abstract
Retail pricing is a timely issue fueled by apparel price deflation, intense inter-channel retail competition, and increased presence of retail brands. Focused on the competitive dynamics of the apparel retail industry, this research investigated price as a key driver of competition for apparel retailers, and its role, or lack thereof, as a definitive construct of retail channel definition. Today, retail competition extends beyond the scope of a firm's intra-channel competition (within own channel) to increasingly inter-channel (between channel) competition. The central hypothesis of this research is that increased pressure from discounters has over time shifted the price distributions of other, non discount retailers (discounters inter-channel competitors), thus causing less price differentiation among retailers and forcing an industry wide convergence among a small range of price frequencies. For apparel retailers, this time period was significant due in part to the birth and growth of mass discounters, increased off shore sourcing of apparel, growth of private branding, and the birth of new retail formats including online shopping.
The overall purpose of the study was to understand the movement of price distributions of apparel for retailers in the mass discount, national chain, specialty and department channels from 1990 to 2005. This research first looked at price broadly, from a retail channel perspective, and then narrowed to present a case study of denim jean pricing at competing retailers. Two consumer purchase data sources, NPD Fashionworld American Shopper's Panel (1990-1999), and NPD Fashionworld AccuPanelSM (2001-2005), were provided to the author by Cotton Incorporated. Analysis of this data provided insight into the competitive environment of retailers from a unit sales and price perspective.
Within Research Objective I, there were two phases of analysis. The purpose of Phase I was to provide an overview of apparel retailers from 1990 to 2005 focusing on entry and exiting of firms, share of unit sales and aspects of intra-channel and inter-channel competition. In Phase II, the dynamics of retail competition were explored with a content analysis of 1990 to 2005 10-K SEC filings of select retailers. Insights were gained in terms of retailer's key competitors, competitive advantage and competitive risk factors. Each phase fed into the next and determined the scope of Research Objective II. Using the results of Research Objective I, Phases I and II, Research Objective II took the analysis a step further by applying statistical analysis tools to understand the differences in price at retailers from 2001 to 2005. Unique to this research was the creation of inventory maps. Inventory maps provided a visual depiction of the price distribution of a channel or retailer and were analyzed to understand the overall pricing strategy and longitudinal aspects of price competition. Additionally descriptive and inferential statistical techniques were used to evaluate differences in price between competing retailers.
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denim jeans, retail competition, retail pricing, apparel retailers
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Degree
PhD
Discipline
Textile Technology Management
