Exclusive listings don’t help

Posted by Oliver Koll on Jul 21, 2015

ExclusivityA recent trend among manufacturers and retailers are exclusive deals limiting the brand’s availability to only one retailer. A study investigates an exclusive arrangement with a Dutch retailer for new sub-brands launched by 5 different brands of a European manufacturer. Results show that the retailer benefits most from the exclusivity deal, while the manufacturer’s sales suffer in 4 out of 5 cases.

Exclusivity losses for manufacturers result from (voluntarily) sacrificing part of the potential market. A win-win-situation would require compensatory arrangements between manufacturers and retailers like competitive de-listing, massive store support via flyers, or margin re-negotiations. Simulations show that only margin re-negotiation results in a beneficial outcome for each of the parties involved. In other words, the retailer has to sacrifice some margin to compensate the manufacturer for the lost opportunities in other retailers.

Source: Gielens, Gijsbrechts & Dekimpe (2014): Gains and losses of exclusivity in grocery retailing. International Journal of Research in Marketing, 31, 239-252.