An empirical study of Chinese SME grocery retailers’ distribution capabilities

This study aims to examine theoretical insights from market orientation and resource-based view for enhancing grocery retailers ' distribution capabilities. The distribution capability of a firm can influence both effective and efficient handling of external stocks and internal distribution of products in response to changing market demands. Although firms rely on distribution capability to manage their supply chain to ensure the right products are in the right place at the right time, few studies examine the underlying factors that support distribution capabilities for a firm’s upstream and downstream supply chain activities especially in uncertain environments.

In the context of retail firms, a review of the literature shows that distribution capability can be conceptualized as an interfirm phenomenon based on theoretical insights from the resource-based view, market orientation and network structure.

Data from a sample of 247 small- and medium-sized grocery retailers operating in three major Chinese cities highlight a salient and positive relationship between a retailer’s distribution capabilities and its performance in uncertain environments.

However, a retailer’s strong interfirm relations in a distribution network are negatively associated with retailer performance. Similarly, the influence of interfirm market orientation on retailer performance cannot be established in the supply chain. The study suggests that SME grocery retailers would benefit from understanding their numerous supply chain relationships and managing them (rather than relying on centrally ingrained relationships), and developing behavioral norms of interfirm market orientation among different supply chain partners.