Brand strategies: Enhancing manufacturers' bargaining power in grocery retail through cross‐category complementarities

Abstract

The article emphasizes the role of brand strategies, as placement in regional niche strategies for manufacturers, to impact retailer–manufacturer relations in the grocery retail sector. Due to joint purchases of initially unrelated products within a shopping cart, transaction cost‐induced complementarities between those products arise. Given unique retailer data, we infer complementarities arising from a specific product to a shopping cart of products. Using a Nash‐in‐Nash framework, we are able to show that the impact on the bargaining position for the manufacturer vis‐à‐vis a retailer is substantial and helps to increase the potential of gaining a larger slice of the profit pie.