- The author(s): Karray, Salma and Sigué, Simon Pierre.
- The title of the source: Offline retailers expanding online to compete with manufacturers: Strategies and channel power.
- The title of the publication where the article appeared: Industrial Marketing Management.
- The year of publication: 2018.
The article focuses on analyzing the ongoing trend in retail companies to enter online markets to compete with manufacturers who sell the same products for a lower price. The authors explain that before the significant development of online commerce, manufacturers mainly relied on offline sales through retail companies. However, when manufacturers such as Procter & Gamble and IBM enter the online market, they generally set low prices, which negatively impacts offline sales of the manufacturer’s products in retail stores (Karray & Sigué, 2018). According to Karray and Sigué (2018), in order to avoid competition with retailers, some manufacturers like Levi Strauss & Co discontinued sales in the online market. Furthermore, the authors determined that dual channels for an offline retailer and expansion to the online market can result in the ‘cannibalization’ of offline sales. Therefore, the competition in the online market can negatively influence the prices and worsen the retailer’s position in the offline market.
In the article, the authors examine the multichannel retailing strategy utilized by the Canadian Tire company. Canadian Tire presents one of the traditional forms of companies that primarily focus on offline retail sales, such as Costco and Best Buy. However, the company successfully integrated online retailing into its work within the multichannel retailing framework. The article explains that in the case of Canadian Tire, the effective coordination of the company’s pricing policy in different sales channels had a synergetic effect in causing the sales growth. Thus, the article provides a valuable insight into the relevant topic of online sales and evaluates Canadian Tire company’s progress in maintaining the balance of online and offline sales through a well-organized pricing policy.
References
Karray, S., & Sigué, S. P. (2018). Offline retailers expanding online to compete with manufacturers: Strategies and channel power. Industrial Marketing Management, 71, 203-214.