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Teaching Insight:
This research examines the impact of premium organic specialist store entry on category sales at incumbent generalist stores. The results indicate that incumbent stores lose about 3% in sales after a local organic store entry. The study also examines managerially relevant factors that can influence the magnitude of sales losses. The results show that incumbent generalist stores can reduce sales losses by reducing the relative distinctiveness of the entrant along three dimensions: variety, price-quality, and authenticity.
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Marketing Strategy, Retail Marketing
Full Citation:
Maesen, Stijn and Lien Lamey (2022), “The Impact of Organic Specialist Store Entry on Category Performance at Incumbent Stores,” Journal of Marketing, doi: 10.1177/00222429221090983
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.
Special thanks to Demi Oba, Ph.D. candidate at Duke University, for support in working with authors on submissions to this program.
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Stijn Maesen is Assistant Professor of Marketing, Imperial College Business School, UK.
Lien Lamey is Professor of Marketing, KU Leuven, Belgium.