Title: Pricing and allocation of retail space with one radio frequency identification enabled supplier and one non-RFID enabled supplier

Authors: Joseph G. Szmerekovsky, Vera Tilson, Jiang Zhang

Addresses: Department of Management, Marketing and Finance, NDSU Dept 2420, P.O. Box 6050, Fargo, ND 58108-6050, USA. ' William E. Simon Graduate, School of Business Administration, University of Rochester, Rochester, NY 14627, USA. ' Department of Management, Marketing and Decision Sciences, School of Business, Adelphi University, Garden City, NY 11530, USA

Abstract: We consider a retailer with one radio frequency identification (RFID) enabled supplier and one non-RFID enabled supplier. Assuming vendor managed inventory, we address the problem of allocation and pricing of the retail shelf-space. Using a Stackelberg game where the retailer leads, we observe that the RFID technology provides a competitive advantage for the RFID enabled supplier. Further, high product substitutability, high demand uncertainty, low tag prices, and low restocking costs favour the RFID enabled supplier. As shelf-space is capacitated with large fixed costs and its demand varies over time, shelf-space management addresses many of the same challenges as revenue management.

Keywords: RFID; radio frequency identification; revenue management; shelf space pricing; shelf space allocation; technologically different suppliers; VMI; vendor managed inventory; retail space; shelf space management.

DOI: 10.1504/IJRM.2009.023137

International Journal of Revenue Management, 2009 Vol.3 No.1, pp.37 - 55

Available online: 11 Feb 2009 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article