Date of Award

2018

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Graduate Group

Marketing

First Advisor

Jagmohan S. Raju

Abstract

A couple of decades ago, modern retailers like Auchan, Costco and Walmart started expanding to several emerging markets like India. It was widely presumed that the entry of these large organized retailers would lead to the demise of traditional retailers (small independent / family owned stores) that accounted for the vast majority of retail sales in these markets. These assumptions, however, have proved wrong as traditional retailers have proved remarkably resilient, continuing to thrive in many emerging markets. In this dissertation, I investigate why this happened. I find that part of the answer to this puzzle lies in the different selling formats being employed by modern and traditional retailers. While modern retailers employ the "direct access" selling format which is prevalent in the developed world, traditional retailers in many emerging markets follow a "mediated access" selling format in which customers do not have direct access to the products in the store. Instead, these retail stores are manned by shopkeepers who offer products to customers one by one on demand. I find that the mediated access selling format affords traditional retailers certain advantages, both in their interactions with their customers as well as with manufacturers, which have allowed them to thrive in emerging markets. Methodologically, I use game-theoretic models to study different parts of the distribution channel. In the first essay, I model a retailer's interactions with its customers under the two selling formats. I find that under mediated access, the retailer can make higher profits and can also suffice with a smaller assortment size. This provides an explanation for why traditional retailers, despite being small in size, have been able to survive in many emerging markets. In the second essay, I focus on manufacturer strategies and profit sharing upstream in the channel. I find that mediated access can provide a certain bargaining power to retailers over manufacturers, further explaining their resilience in emerging markets. This dissertation work builds a theory of selling formats in retailing and has important implications for both modern and traditional retailers as well as policy makers.

Embargoed

Available to all on Sunday, June 06, 2021

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