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You own a digital-native brand and you want to set up a physical brand store? Read this first

Despite the cannibalizing impact on their own online channel, brand stores are an effective means to increase a brand’s top-line sales. Digital natives in startup or growth markets that aim to draw investors’ attention can try to improve their valuation through brand stores and the corresponding sales growth.

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Multichannel retailing has become crucial to the sales strategy of any brand, including digital-native brands that started retailing as online-only. Digital-native brands like Quip in the U.S. and Myprotein in Europe have partnered with independent retailers to offer consumers an in-person retail option. But some brands—especially those in the fast-moving consumer goods (FMCG) category—have opened their own brand stores to create a bigger physical footprint.

Researchers from Erasmus School of Economics at Erasmus University Rotterdam, KU Leuven, Universität zu Lübeck, Christian-Albrechts-Universität zu Kiel, and FoodLabs published a new Journal of Marketing article that investigates the multichannel impact of brand stores by digital-native FMCG brands.

The study, appearing in the Journal of Marketing, is titled “Assessing the Multichannel Impact of Brand Store Entry by a Digital-Native Grocery Brand” and is authored by Michiel Van Crombrugge, Els Breugelmans, Florian Breiner, and Christian W. Scheiner.

Brand stores are brick-and-mortar stores owned and operated by the manufacturer. They carry only the brand’s products and are designed to sell them profitably in a brand-centric environment.

Van Crombrugge explains that “these stores offer physical exposure, which digital-native brands might struggle to attain on supermarket shelves given the steep competition from mass-market brands.”

Brand stores increase brand awareness, which in turn can increase sales in the company-owned online channel and independent supermarkets.

“Brand stores can also spark distributor interest and prompt supermarkets to distribute more of the brand on their shelves. Since the number of brand stores that a digital-native FMCG brand can open is limited, increasing breadth and depth of supermarket distribution can further drive brand sales,” adds Breugelmans.

Yet brand stores also entail risks. Sales in this channel may cannibalize sales in the incumbent channels if consumers migrate to the newly opened brand store. If brand stores signal the manufacturer’s encroachment, supermarkets might reduce their distribution of the brand. Finally, opening and operating brand stores is expensive and these substantial operational costs put pressure on profits.

The Supermarket Effect

This research uncovers a substantially different impact of brand store entry on own-online channel sales than on sales in independent supermarkets. In areas in the vicinity of brand stores, the brand’s online channel sales decreased, yet its supermarket sales increased. This is because for customers seeking a more elevated consumption experience, brand stores offer an interesting alternative, which causes cannibalization of its own online channel.

In supermarkets, on the other hand, buyers are mainly concerned with price and convenience. For them, brand stores offer an opportunity to discover a digital-native brand that otherwise would have remained anonymous between bigger mass-market brands, which in turn causes supermarket sales to increase.

Brand Distribution

The research team also discovers that brand stores spark distributor interest and prompt supermarkets to start distributing the brand on their shelves. Indeed, part of the supermarket sales increase that brand stores bring about is driven by brand stores’ positive effect on the number of supermarkets that carry the brand. This increase in distribution breadth is an important component to drive sales since brands cannot open brand stores everywhere.

“We find that brand stores generate an influx of own brand store sales that more than make up for any online losses. This is not necessarily surprising because their strong local visibility, typically in locations with high foot traffic, and their appeal to customers who lack opportunities or motivations to visit the online channel or supermarket make brand stores an attractive sales channel on their own,” Scheiner says.

Despite the cannibalizing impact on their own online channel, brand stores are an effective means to increase a brand’s top-line sales. Digital natives in startup or growth markets that aim to draw investors’ attention can try to improve their valuation through brand stores and the corresponding sales growth.

However, opening and running brand stores is a capital-intensive operation due to factors such as store rental cost and sales staff wages. Breinder warns that “our analyses show that nearly half of the brand stores under study were not able to turn a profit. Brands therefore need to carefully weigh brand stores’ top-line gains against their high operational expenses to justify the investment financially.”

These findings offer important insights and caveats to digital-native brands that consider opening brand stores to increase their physical footprint beyond supermarkets. The upside is that brand stores can help digital natives reach potential consumers and gain additional physical exposure that FMCG brands especially require. Yet brand stores are not without risks: they may hurt the brand’s sales in the online channel where the digital native started and further impact brand profitability if the influx of new sales is not great enough to cover those online losses and the brand stores’ own substantial operating costs.

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Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

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Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

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Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

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A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

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Profit alone is a poor measure of success, study shows companies can look efficient while harming the planet

Firms that appear highly efficient at generating revenue can perform far worse when their environmental footprint are included in the calculation.  

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Companies celebrated for strong financial performance may actually be inefficient once their environmental impact is taken into account, according to new research from the University of Surrey. 

The study, published in the European Journal of Operational Research, shows that firms that appear highly efficient at generating revenue can perform far worse when their environmental footprint are included in the calculation.  

To tackle this problem, researchers developed a new way to measure “sustainable corporate efficiency”, combining traditional financial metrics with environmental data such as energy consumption, carbon emissions and revenues generated from environmentally friendly products and services.  

Dr Menelaos Tasiou, co-author of the study and Senior Lecturer in Finance at the University of Surrey, said: “Businesses have long been judged on how efficiently they turn resources into profit. But if those profits come with large environmental costs, the picture changes completely. What we show is that true efficiency means generating revenue while also reducing the environmental damage caused by production. In other words, profitability alone can mask how wasteful a business really is when environmental costs are considered.  

The research analysed more than 2,800 publicly listed companies across 61 countries between 2010 and 2022, creating one of the largest global datasets measuring how sustainable companies are, when both financial performance and environmental impact are assessed together.  

The team combined company financial records, in alignment with the green economy (defined as a low carbon, resource efficient and socially inclusive economy), with environmental disclosures such as energy use and greenhouse gas emissions. They then applied a machine learning technique known as Convexified Efficiency Analysis Trees (CEAT) to estimate how efficiently companies convert resources into revenue while minimising pollution.  

Unlike older approaches, the method models the reality that production creates both desirable outputs, such as revenue, and undesirable ones, such as emissions. This allows companies to be compared on how well they balance profit with environmental performance.  

The results found a moderate link between financial efficiency and environmental efficiency, meaning many firms that are strong financially are not necessarily good at managing their environmental impact.  

The study also found large differences across industries and countries. Firms operating in sectors with high emissions, such as manufacturing and energy, often lagged behind leaders that were better at reducing carbon intensity while maintaining revenue.  

Dr Tasiou continued: “Measuring efficiency in this broader way can help investors, regulators and policymakers identify companies that are genuinely prepared for a low carbon economy. Stronger management capability plays a key role. Firms with more capable management teams were more likely to balance profitability with environmental responsibility, suggesting that leadership decisions can strongly influence sustainable performance.  

“As governments push towards net zero and investors scrutinise environmental performance more closely, companies that fail to integrate sustainability into their operations risk falling behind.” 

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