Brand Store Entry in a Grocery Setting: The Impact on Supermarket, Online Direct and Overall Firm Performance.

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Abstract:

This article is the first to investigate the cross-channel impact of a manufacturer brand store on the sales performance of both the incumbent retail supermarkets and the manufacturer’s own online direct channel in a grocery setting.

It also incorporates brand store sales and costs to study the entry effects on the manufacturer’s total top- and bottom-line performance. Our framework based on shopping motivation and congruity theory, tested on the entry of ten brand stores of a national brand manufacturer, reveals significantly higher cannibalization of own online direct channel sales than supermarket sales in the vicinity of the store.

Further decompositions reveal that customer characteristics that define hedonic motivations help explain these losses in online direct channel sales. Despite its cannibalizing impact, the brand store generates an influx of own sales that compensates for lost incumbent sales.

Nevertheless, taking into account the operational costs of the brand store reveals that top-line growth not always suffices to preserve the bottom line.