ESTIMATING THE IMPORTANCE OF SHELF SPACE CONFIGURATION ON RETAILER'S PROFIT

Maud Roucan-Kane, Bobby J. Martens and Paul Preckel ()

No 7330, Working papers from Purdue University, Department of Agricultural Economics

Abstract: Retail shelf space allocation remains a central issue in grocery retailing. A literature review produced many studies on retail shelf space allocation, but none which evaluated shelf space allocation using three major factors at once: space, vertical height, and price. In this study, shelf space allocation was modeled from the perspective of a retailer maximizing profit using space, vertical height, and price. Using benchmarking, the results show how shelf configuration affects consumer demand and retailer profit. Parameters for the model were based on experience-based intuition. Although the initial results are not valuable at this point, the method and results create a rationale and motivation to gather primary data. Once primary data is collected, this methodology has important applications. First, it develops an understanding of which parameters are important in determining optimal shelf space configuration. Second, a properly specified model would determine retailer's profit for specific shelf level configurations.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 23
Date: 2007
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Working Paper: ESTIMATING THE IMPORTANCE OF SHELF SPACE CONFIGURATION ON RETAILER'S PROFIT (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:puaewp:7330

DOI: 10.22004/ag.econ.7330

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