Akshat is reading an article on ‘Walmart’ the second largest retailer in the world and uses customer interaction to understand their buying behaviour and drive its sales.Which of the following statement is true about Walmart
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Answer:
Abstract
This paper provides an empirical study of entry by a Wal-Mart supercenter into a local market. Using a unique frequent-shopper database that records transactions for over 10,000 customers, we study the impact of Wal-Mart's entry on consumer purchase behavior. We develop a joint model of interpurchase time and basket size to study the impact of competitor entry on two key household decisions: store visits and in-store expenditures. The model also allows for consumer heterogeneity due to observed and unobserved factors. Results show that the incumbent supermarket lost 17% volume--amounting to a quarter million dollars in monthly revenue--following Wal-Mart's entry. Decomposing the lost sales into components attributed to store visits and in-store expenditures, we find that the majority of these losses were due to fewer store visits with a much smaller impact attributed to basket size. We also find that Wal-Mart lures some of the incumbent's best customers, and that retention of a small number of households can significantly reduce losses at the focal store. Finally, certain observed household characteristics such as distance to store, shopping behavior, and product purchase behavior are found to be useful in profiling the defectors to Wal-Mart. Implications and strategies for supermarket managers to compete with Wal-Mart are discussed.
Journal Information
Discover the latest findings in the global marketplace with detailed results prepared through rigorous scientific methodology. Reviewed by prestigious scholars in the field of marketing science, articles often feature game theory, econometrics, multivariate analysis, econometric modeling, and choice models. Advertising Consumer choice modeling Interactions between manufacturers and retailers Market research Pricing decisions Purchase behavior Revenue forecasting
Publisher Information
With over 12,500 members from around the globe, INFORMS is the leading international association for professionals in operations research and analytics. INFORMS promotes best practices and advances in operations research, management science, and analytics to improve operational processes, decision-making, and outcomes through an array of highly-cited publications, conferences, competitions, networking communities, and professional development services.
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