/Euro Working Group
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Next online Meeting: EWG Retail Operaions
Friday, March-31st at 14.00 CET

Topic: Grocery retail to serve the base of the pyramid: nanoretailing

For the login to the Zoom meeting please CLICK HERE to get in touch with the coordinator

Grocery retail to serve the base of the pyramid: nanoretailing.
In the Spring online seminar of the EURO Retail Operations Working Group, we will leave European retail behind us for a while, and discuss retail in emerging markets and other developing countries. In these countries, 50 million mom-and-pop-operated nanostores serve about 4 billion consumers in Asia, Africa, and Latin America. In many cases, governments also assist the poorest of these consumers with their purchases.
We have secured two great speakers with each a really cool and impactful empirical study. After their presentations, we will have a brief discussion on what the learnings and relevance of nanoretailing can be for European retail.


Opening and Welcome

Jan Fransoo, Tilburg University


Enhancing Competitiveness of the Nanostore Retail Channel by Providing Value-Added Digital Services

Rafael Escamilla, Tilburg University


Food Subsidies at the Base-of-the-Pyramid: Take-up, Substitution Effects and Nutrition

Alp Sungu, London Business School


Implications for European retail: introduction and discussion



Abstracts and bios

Enhancing Competitiveness of the Nanostore Retail Channel by Providing Value-Added Digital Services

The nanostore channel, formed by millions of grocery retail microbusinesses that sell basic items to Bottom-of-the-Pyramid consumers, has been slow to digitize. Yet, this is the core channel where Consumer Packaged Goods manufacturers realize a higher margin and expect to achieve most of their growth in emerging markets in the upcoming decades. At the same time, the channel’s core competitors, convenience store chains, have introduced a variety of value-added digital services as part of their offering, leading to rapid growth over the past two decades. In this setting, manufacturers have started to strategically support the provision of value-added digital services by nanostore shopkeepers. We investigate whether this strategy helps manufacturers “grow the pie” of the nanostore channel through a quasi-experiment. We collaborate with a manufacturer in Latin America, that has facilitated value-added service offerings in the nanostore channel through a digital solution. We execute a series of econometric analyses capturing the spatial competition in nanostore communities, to uncover whether 1) the system generates an uplift in the sales of the manufacturer to adopting nanostores and 2) whether this uplift is due to cannibalization from other stores in the vicinity. We find that the manufacturer experiences an organic uplift in ordering volume from adopting nanostores, as we find no evidence of cannibalization from neighboring nanostores and convenience stores. Therefore, the digital solution effectively increases nanostores’ market share, to the advantage of adopting nanostores and of the manufacturer.

About the speaker:
Rafael Escamilla is a PhD candidate in Information & Supply Chain Management in the School of Economics and Management at Tilburg University and in Management at Kühne Logistics University. He investigates retail operations in emerging markets, through field experiments and econometric techniques. Rafael holds a Graduate Certificate in Logistics and Supply Chain Management (GCLOG) from the Massachusetts Institute of Technology (MIT), a Master of Science (Diplôme d'Ingénieur) from the Université de Technologie de Troyes and a Bachelor of Engineering from Tecnológico de Monterrey. He is a lecturer of causal inference at the GCLOG program at MIT.

Food Subsidies at the Base-of-the-Pyramid: Take-up, Substitution Effects and Nutrition

This paper studies food purchasing patterns among low-income individuals in India using objective scanner data with an aim to estimate the effects of food subsidies and improve their design. We digitally tracked the purchase histories of over 20,000 individuals by installing scanners in 39 food-selling vendors including groceries, butchers, and street food sellers, in an underserved urban settlement in India. We document heavy consumption of packaged junk foods. In groceries, the share of calories coming from the purchase of packaged snacks (e.g., chips or candy) exceeds that from the purchase of rice and wheat combined. To study how food subsidies impact shopping behavior and in turn nutrient purchases, we opened a store mimicking the Indian government’s food subsidy stores, and randomly assigned 1,258 individuals to a weekly rice and wheat subsidy treatment arm or to a no-subsidy control arm, for a 6-week period. Subsidy take up was 82%. We find that our in-kind subsidy induces both substitution and complementarity effects on beneficiaries’ grocery transactions. The purchase of packaged snacks decreases whereas that of complementary foods – such as spices and accompaniments – increases – with no detectable change in total grocery spending or spending at other tracked food vendors. These patterns indicate a substitution from snacking out towards home-cooked meals. These effects are most prominent for working parents. We find no evidence of a negative spillover on the purchase of calories, carbohydrates, protein, fat, and several micronutrients, suggesting that nutrients delivered through our in-kind subsidy program are likely to have increased beneficiaries’ nutrient intake. Finally, we explore the design of alternative, customized in-kind programs where we exogenously vary the subsidized foods. Based on estimates of the take-up rates, we uncover a tradeoff between the nutrient richness of different staples and their attractiveness to customers. We find that subsidizing lentils may increase the amount of proteins delivered through the program.

About the speaker:

Alp Sungu is a PhD candidate in Management Science and Operations at London Business School. Alp’s research uses field experiments and data-driven analytics methods to propose new ways of addressing policy questions in underserved societies. He is interested in studying and advancing technology-enabled interventions to alleviate global poverty. Alp holds an MRes from London Business School and a BSc in Industrial Engineering from Bilkent University.

Moderator and host: Jan Fransoo
Jan C. Fransoo is Professor of Operations and Logistics Management in the School of Economics and Management at Tilburg University. He further holds visiting appointments at Eindhoven University of Technology and Massachusetts Institute of Technology. Fransoo’s research studies operations and decision making in retail supply chains and transport operations. He is method-agnostic and conducts model-based, econometric, experimental, and qualitative work. He has published more than 130 papers across a wide variety of journals, including all OM journals on the FT50 list. He serves as associate editor of Operations Research and of Production and Operations Management, and currently guest-edits two special issues of the Journal of Operations Management. Fransoo frequently collaborates in research and in consulting with major corporations, tech startups, national and regional governments, and intergovernmental organizations. He has held senior leadership positions at Eindhoven University of Technology and Kuehne Logistics University.