‘Passivity’: A Model of Grocery Retail Price Decision-Making Practice

Purpose – This paper explores the applied context of grocery retail pricing practice to understand how pricing executives approach ‘regular price’ decision-making (as opposed to promotional pricing). The study seeks to inductively develop a model of regular price decision-making in grocery retailing. Methodology – The research employs an inductive methodology involving interviews with pricing executives working for grocery retailers that account for approximately 85% of UK, and 64% of US, grocery market retail sales. Our approach is appropriate given the underdeveloped research insights into regular pricing within food retailers. Findings – We find that regular pricing is undertaken with little sophistication; typically on the basis of simple, inflexible rules that result in conflicting goals. We identify a typology of three pricing roles, though all share an underdeveloped understanding of the effects of price changes on customer demand and the implications of competitor reactions. These contexts, causes and conditions lead to a range of consequences; notably a degree of pricing inertia, ‘customer-less’ pricing, and ‘enforced symbiosis’ – coping outcomes. Taken together we identify a theory of “passivity” pricing. Originality/value – The research presents a contribution to new knowledge in the field of retail marketing by developing theory in retail pricing. In contrast to much extant research on grocery pricing, this paper accesses the insights and opinions of the pricing executives themselves. It exposes the realities of regular price decision-making across two developed retail markets and offers managerial insights.