Improvement of retail pricing strategies in food distribution networks in terms of global competition (St. Petersburg’s example)

Abstract

The global crisis that hit the world economy at the end of the first decade of the 21st century has significantly affected Russia. Since 2014 and up until now, due to internal and external reasons, there has been an almost continuous decline in real disposable income of Russian households. Many Russian families are forced to economize down to the essentials. As is generally known, food costs are at the very bottom of Maslow’s hierarchy of needs, and their reduction occurs in the last place. However, within this primary segment of consumption negative processes also occur; in determining the structure of costs the choice is cast over the quality of food and in favour of its affordability. Faced with the fall of its turnover, even large retail chains brands are forced to improve their pricing strategies in order to stabilize their falling revenues in the face of increasing competition. “How can they achieve this?” is the question the authors of two articles in this series attempt to answer. The first article examines problems associated with development of “customer loyalty programs”, and proposes a model for improving the existing system of trade margins. The article also looks at the advantages and limitations of the proposed model.

Keywords

• privatelabel
• economic recession
• households
• food chains