Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

The King of Retail: New Study Shows Symbiotic Relationship Between Major Retailers and Suppliers

31.05.2012
Suppliers Wield Power and Benefit by Depending on Key Retail Accounts

A new study by supply-chain researchers at the University of Arkansas shows that the relationship between major retailers such as Walmart and Target and their suppliers is collaborative in nature, rather than adversarial, and that suppliers that actively participate in innovative supply-chain processes with these major customers actually wield considerable leverage and perform better financially.

As large retailers continue to experience increased revenues and greater market share, many researchers and industry analysts have asserted that this trend has caused a shift of power away from suppliers and manufacturers. The new study shows this isn’t necessarily the case.

“In this vision of the retail industry, large powerful retailers are eight-hundred-pound gorillas demanding concessions and squeezing every last drop of profit from suppliers,” said Matt Waller, professor of logistics and supply chain management in the Sam M. Walton College of Business. “The general assumption – and existing academic literature supports this – is that this concentration has allowed the powerful retailers to exploit their weaker suppliers, which in turn has caused the suppliers’ performance to suffer. But our study found that this isn’t necessarily the case. The dynamic between the two is a little more complex.”

Waller and his colleagues wanted to determine the impact of key retail accounts on supplier performance. To do this, they analyzed financial statements from Walmart, Target and more than 3,400 firms that sell their products to the two major retailers. Specifically, the researchers examined how market shares – both suppliers’ and retailers’ – influence suppliers’ financial performance.

They found that the shift in power from supplier to retailer and the consequent dependence of the former on the latter have not necessarily led to adversarial relationships between the two. The findings provided evidence of collaboration and cooperation between the two groups, due in large part to the rapid adoption of innovative supply-chain processes, such as retailers sharing point-of-sale data with suppliers. This collaboration has enhanced financial performance throughout the supply chain.

“It’s true that suppliers that depend on these key retail accounts for a significant share of their total revenues relinquish some of their leverage in the marketplace,” Waller said. “But we found that as these powerful retailers gain market share, their suppliers’ performance tends to increase. So suppliers may actually benefit from this dependence, and it could reflect successful strategic coordination rather than power struggles.”

The researchers’ findings were published in the Journal of Retailing.

U.S. News & World Report’s “2012 America’s Best Graduate Schools” guide ranked the university’s supply-chain management and logistics program in ninth place among all public graduate business schools and 14th place among all universities.

Waller holds the Garrison Endowed Chair in Supply Chain Management and is chair of the department of supply chain management at the University of Arkansas. He is also editor-in-chief of the Journal of Business Logistics, the leading academic journal in the discipline.

CONTACTS:
Matt Waller, professor, supply chain management
Sam M. Walton College of Business
479-575-8741, mwaller@walton.uark.edu
Matt McGowan, science and research communications officer
University Relations
479-575-4246, dmcgowa@uark.edu

Matt McGowan | Newswise Science News
Further information:
http://www.uark.edu

More articles from Business and Finance:

nachricht Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: A “cosmic snake” reveals the structure of remote galaxies

The formation of stars in distant galaxies is still largely unexplored. For the first time, astron-omers at the University of Geneva have now been able to closely observe a star system six billion light-years away. In doing so, they are confirming earlier simulations made by the University of Zurich. One special effect is made possible by the multiple reflections of images that run through the cosmos like a snake.

Today, astronomers have a pretty accurate idea of how stars were formed in the recent cosmic past. But do these laws also apply to older galaxies? For around a...

Im Focus: Visual intelligence is not the same as IQ

Just because someone is smart and well-motivated doesn't mean he or she can learn the visual skills needed to excel at tasks like matching fingerprints, interpreting medical X-rays, keeping track of aircraft on radar displays or forensic face matching.

That is the implication of a new study which shows for the first time that there is a broad range of differences in people's visual ability and that these...

Im Focus: Novel Nano-CT device creates high-resolution 3D-X-rays of tiny velvet worm legs

Computer Tomography (CT) is a standard procedure in hospitals, but so far, the technology has not been suitable for imaging extremely small objects. In PNAS, a team from the Technical University of Munich (TUM) describes a Nano-CT device that creates three-dimensional x-ray images at resolutions up to 100 nanometers. The first test application: Together with colleagues from the University of Kassel and Helmholtz-Zentrum Geesthacht the researchers analyzed the locomotory system of a velvet worm.

During a CT analysis, the object under investigation is x-rayed and a detector measures the respective amount of radiation absorbed from various angles....

Im Focus: Researchers Develop Data Bus for Quantum Computer

The quantum world is fragile; error correction codes are needed to protect the information stored in a quantum object from the deteriorating effects of noise. Quantum physicists in Innsbruck have developed a protocol to pass quantum information between differently encoded building blocks of a future quantum computer, such as processors and memories. Scientists may use this protocol in the future to build a data bus for quantum computers. The researchers have published their work in the journal Nature Communications.

Future quantum computers will be able to solve problems where conventional computers fail today. We are still far away from any large-scale implementation,...

Im Focus: Wrinkles give heat a jolt in pillared graphene

Rice University researchers test 3-D carbon nanostructures' thermal transport abilities

Pillared graphene would transfer heat better if the theoretical material had a few asymmetric junctions that caused wrinkles, according to Rice University...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Ecology Across Borders: International conference brings together 1,500 ecologists

15.11.2017 | Event News

Road into laboratory: Users discuss biaxial fatigue-testing for car and truck wheel

15.11.2017 | Event News

#Berlin5GWeek: The right network for Industry 4.0

30.10.2017 | Event News

 
Latest News

Water world

20.11.2017 | Life Sciences

Less is more to produce top-notch 2D materials

20.11.2017 | Materials Sciences

Carefully crafted light pulses control neuron activity

20.11.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>