Retain or Reduce? : Delisting Decisions in Relation to Manufacturer-Retailer Relationships in Grocery Store Retailing

Abstract

Retail assortment optimisation plays a significant role in the success and competitive advantage of retailing, contributing to companies' market differentiation, compatibility, and profitability. This study applies transaction cost theory, related opportunism, and bounded reliability as theoretical frameworks. The aim is to analyse assortment optimisation, especially selection-reduction decisions, in relation to the manufacturer-retailer relationship in grocery store retailing. Primary quantitative research in the form of a personal survey method about the delisting decisions of 215 grocery retail executives was implemented and analysed by applying partial least squares variance-based structural equation modelling (PLS-SEM). Results show that the reason for selection reduction is often the bounded reliability of manufacturers, as this may lead to excessively high supplier prices and logistical problems. These factors result in low retail margins, justifying assortment-reduction-related decisions. However, manufacturers believe that a lack of marketing support has no impact on low retail margins and, thus, also on assortment reduction decisions.