University of Zagreb - Faculty of Economics and Business Croatian Chamber of Economy Ekonomski fakultet Sveučilišta u Zagrebu Hrvatska gospodarska komora TRADE PERSPECTIVES 2015 Innovations in Food Retailing PERSPEKTIVE TRGOVINE 2015. Inovacije u maloprodaji hrane Proceedings of The International Scientific Conference Zagreb, Croatia, 18th and 19th November 2015 Zbornik međunarodne znanstvene konferencije Zagreb, 18. i 19. studeni 2015. godine Edited by / Uredili: Nikola Knego Sanda Renko Blaženka Knežević Zagreb, 2015. TRADE PERSPECTIVES 2015 Innovations in Food Retailing PERSPEKTIVE TRGOVINE 2015. Inovacije u maloprodaji hrane Editors / Urednici: Nikola Knego, Sanda Renko, Blaženka Knežević Faculty of Economics and Business Zagreb & Croatian Chamber of Economy, 2015 Ekonomski fakultet Zagreb i Hrvatska gospodarska komora, 2015. TRADE PERSPECTIVES 2015: Innovations in Food Retailing PERSPEKTIVE TRGOVINE 2015. : Inovacije u maloprodaji hrane EDITORS / UREDNICI: Prof. dr. sc. Nikola Knego Prof. dr. sc. Sanda Renko Izv.prof dr. sc. Blaženka Knežević EDITORIAL BOARD and REVIEWERS / UREĐIVAČKI ODBOR i RECENZENTI: Nikola Knego (Faculty of Economics and Business, University of Zagreb; Croatia) Sanda Renko (Faculty of Economics and Business, University of Zagreb; Croatia) Tonći Lazibat (Faculty of Economics and Business, University of Zagreb; Croatia) Blaženka Knežević (Faculty of Economics and Business, University of Zagreb; Croatia) Tomislav Baković (Faculty of Economics and Business, University of Zagreb; Croatia) Jadranka Bendeković (Faculty of Economics and Business, University of Zagreb; Croatia) Ines Dužević (Faculty of Economics and Business, University of Zagreb; Croatia) Ivan Kovač (Faculty of Economics and Business, University of Zagreb; Croatia) Dario Dunković (Faculty of Economics and Business, University of Zagreb; Croatia) Irena Kikerkova (Faculty of Economics Skopje, University St. Cyiril and Metod; Skopje; Macedonia) Eleonora Pantano (University of Clalabria, Department of Business Science; Arcavata di Rende; Italia) Edyta Rudawska (Faculty of Economics and Management, University of Szczecin; Szczecin; Poland) Almir Peštek (Faculty of Economics Sarajevo, University of Sarajevo; Bosnia and Herzegovina Marek Szarucki (Cracow University of Economics; Cracow; Poland) Jelena Stankeviciene (Vilnius Gediminas Technical University; Vilnius; Lithuania) Eduardo Tome (University of Lusiada; Vila Nova de Famalicao; Portugal) Cristina De Abreu (University of Lusiada; Vila Nova de Famalicao; Portugal) Joaquim Ramos Silva (Instituto Superior de Economia e Gestao; Lisabon; Portugal) Stipe Lovreta (Faculty of Economics, University of Belgrade, Serbia) Zdenko Segetlija (Faculty of Economics, University of Josip Juraj Strossmayer ; Osijek; Hrvatska) Zijad Džafić (Faculty of Economics; University of Tuzla; Bosnia and Herzegovina) Sreten Ćuzović (Faculty of Economics; University of Niš, Serbia) Cornelia Pop (Babes-Bolyai University; Cluj Napoca; Romania) All papers were peer reviewed by two independent reviewers. Svi radovi su recenzirani od strane dva neovisna recenzenta. PROOFREADING / LEKTURA: The papers are printed on the basis of manuscripts provided by the authors, who are responsible for the style and form of the English language. Radovi su tiskani na temelju rukopisa dobivenih od autora. Autori su odgovorni za jezični stil i jezičnu ispravnost tekstova. PUBLISHERS / IZDAVAČI: Ekonomski fakultet Zagreb Sveučilišta u Zagrebu; Trg J. F. Kennedya 6; 10000 ZAGREB Hrvatska gospodarska komora; Rooseveltov trg 2, 10000 ZAGREB GRAPHIC PREPARATION AND PRINT / GRAFIČKA PRIPREMA I TISAK: Sveučilišna tiskara Zagreb Trg maršala Tita 4 10000 ZAGREB YEAR OF PUBLISHING / GODINA IZDANJA: 2015. ISBN (Book of abstracts / Knjiga sažetaka): 978-953-346-015-4 CIP data are available in the computer catalogue of the National and University Library in Zagreb with number 000917261. CIP zapis dostupan u računalnome katalogu Nacionalne i sveučilišne knjižnice u Zagrebu pod brojem 000917261. ISBN (Proceedings - CD / Zbornik - CD): 978-953-346-016-1 CIP data are available in the computer catalogue of the National and University Library in Zagreb with number 000917262. CIP zapis dostupan u računalnome katalogu Nacionalne i sveučilišne knjižnice u Zagrebu pod brojem 000917262. Trade Perspectives 2015 FOREWORD The retail industry is the most sensitive to changes in consumer behavior. It is the industry that firstly responds to both positive and negative trends in the environment, and this is particularly true for food retailers. There are two major challenges in front of contemporary retailers, with the whole new set of market terms and conditions and which results in even greater need for innovation in order to survive in the market and in order to obtain the competitive advantage. These are: the recession and the rapid technological innovation. The recession as an economic fact puts retailers in front of consumers that are more sensitive to price, so retailers must innovate themselves in order to increase cost efficiency. While technological innovation, puts them in front of consumers which are fully informed, so retailers have to innovate even more in order to become better and differentiate in comparison to other retailers. Accordingly, nowadays retailers are faced with well-informed and cost-demanding consumers. So they search for ways to innovate, not only technologically but in all other ways, starting from the approach and communication with consumers, to ways of pricing and assortment planning, to ways to provide services and ways of performing business processes. As already mentioned, the dynamics of innovation is the most evident in the retail food sector, and this publication aims to address different aspects of innovation precisely in this area. This publication is the result of a scientific conference Trade Perspectives taking place since 2010, i.e. 90th anniversary of the Faculty of Economics, University of Zagreb. The conference has continuum ever since, year after year, putting into a focus some relevant topic in the field of trade. We can proudly say that the Conference is profiled as one of the most important in the field of trade in the region and numerous ways of cooperation on scientific research in the area of Central and Eastern Europe emerged out of it. Also, the publication that accompanies the Conference has become an inevitable source in the writing of scientific, technical, senior and graduate theses in Croatia and region. We are honored that the quality of the conference and the accompanying publication has been recognized not only by the Faculty of Economics, University of Zagreb, but also by the Croatian Ministry of Science, Education and Sports , and by the Croatian Chamber of Economy who, starting from this year, co-found conference activities and the accompanying publication. We thank them warmly for their efforts and financial contribution. And finally, to The Faculty of Economics, University of Zagreb, on the occasion of the 95th anniversary, we wish a tremendous success in its work, especially in its efforts to foster trade as an important discipline in the system of economic sciences. Zagreb, November 2015 Nikola Knego, PhD Sanda Renko, PhD Blaženka Knežević, PhD I Trade Perspectives 2015 PREDGOVOR Maloprodaja je gospodarska grana najosjetljivija na promjene ponašanja potrošača. Ona prva reagira i na pozitivne i na negativne trendove iz okruženja, a to osobito vrijedi za maloprodaju hrane. Dva su velika izazova koja pred maloprodaju danas postavljaju nove uvjete poslovanja i iz koje proizlazi još veća potreba za inoviranjem radi održavanja na tržištu i radi stjecanja konkurenske prednosti. To su: recesija i rapidne tehnološke inovacije. Recesija kao ekonomska činjenica pred maloprodavače dovodi potrošače koji su sve osjetljiviji na cijene, pa maloprodavači moraju uvoditi inovacije orijentirane na povećanje troškovne učinkovitosti. Dok tehnološke inovacije, potrošače stavljaju u poziciju potpune informiranosti što je za maloprodavače još jedan dodatni izazov pa se moraju inovirati kako bi bili bolji i izdvojiti se od drugih maloprodavača. Dakle, maloprodavači se danas susreću s vrlo informiranim i cjenovno vrlo zahtjevnim potrošačima. Zato oni traže načine kako se inovirati, ne samo tehnološki nego na sve druge načine, od pristupa i komunikacije s potrošačima, do načina formiranja cijena i asortimana, načina pružanja usluga te načina izvođenja poslovnih procesa. Kako smo već napomenuli, dinamika inovacija je najizraženija u maloprodaji hrane, te se ovom publikacijom žele sagledati različiti aspekti inovacija upravo u ovome području. Ova publikacija je nastala kao rezultat znanstvene konferencije Perspektive trgovine koja se od 2010. godine, tj. od 90-te obljetnice Ekonomskog fakulteta Sveučilišta u Zagrebu održava u kontinuitetu, godinu za godinom stavljajući u fokus neku relevantnu temu iz područja trgovine. S ponosom možemo reći kako se je ova konferencija do danas profilirala kao jedna od značajnijih iz područja trgovine u široj regiji te je iz nje proizišao i niz suradnji na znanstvenim istraživanjima na području Srednje i Istočne Europe. Također, publikacija koja ju prati postala je jedan od nezaobilaznih izvora u pisanju znanstvenih, stručnih, završnih i diplomskih radova u Hrvatskoj i šire. Izuzetna nam je čast što je kvaliteta konferencije i prateće publikacije prepoznata ne samo od Ekonomskog fakulteta Sveučilišta u Zagrebu, već i od Ministarstva znanosti, obrazovanja i športa Hrvatske, te od Hrvatske gospodarske komore koji od ove godine sufinanciraju konferencijske aktivnosti i prateću publikaciju. Na tome im se srdačno zahvaljujemo. Ujedno Ekonomskom fakultetu Sveučilišta u Zagrebu, povodom 95. obljetnice postojanja želimo puno uspjeha u daljnjem radu, a poseban uspjeh želimo mu u njegovanju trgovine kao važne discipline u sustavu ekonomskih znanosti. U Zagrebu, studeni 2015. Prof. dr. sc. Nikola Knego Prof. dr. sc. Sanda Renko Izv. prof. dr. sc. Blaženka Knežević II Trade Perspectives 2015 CONTENTS FOREWORD .......................................................................................................................................... I PREDGOVOR ...................................................................................................................................... II INSTITUTIONAL INNOVATION AS A FACTOR OF FOOD RETAIL DEVELOPMENT ...... 4 TECHNOLOGICAL INNOVATION IN RETAIL .......................................................................... 19 INNOVATIONS IN RETAIL FOOD FORMATS − THE CASE OF THE POLISH MARKET 32 INNOVATION AND FORMATS OF RETAIL BUSINESS UNITS .............................................. 46 IDENTIFYING FOOD RETAIL MIX ADJUSTMENTS TO ELDERLY CONSUMERS IN CROATIA ............................................................................................................................................ 69 IMPROVEMENT OF MANAGEMENT IN THE SUPPLY CHAIN OF FRUITS AND VEGETABLES IN BOSNIA AND HERZEGOVINA ..................................................................... 78 INNOVATIONS IN DEVELOPING COMPETITIVE ADVANTAGE IN FOOD RETAILING - THE CASE OF A POLISH NATIONAL CHAIN “PIOTR I PAWEŁ” ......................................... 93 CUSTOMER PERCEPTION AND ATTITUDE TOWARDS INNOVATIONS IN CROATIAN RETAIL MARKET ........................................................................................................................... 103 TRADE SECTOR IN THE REPUBLIC OF SERBIA IS WAITING FOR NEW STRATEGIC DOCUMENT ..................................................................................................................................... 119 SYSTEMATIC SHOPPER MARKETING FOR SUSTAINABLE COMPETITIVE ADVANTAGE ................................................................................................................................... 134 FOOD SAFETY AND FOOD QUALITY IN THE SUPPLY CHAIN ......................................... 151 SMARTPHONES AND MOBILE APPLICATIONS AS TOOLS FOR GROCERY SHOPPING ............................................................................................................................................................. 164 PROFILE OF SOCIALLY RESPONSIBLE FOOD RETAILING: THE CASE OF SERBIAN SUPERMARKETS ............................................................................................................................ 177 DELIGHTING CUSTOMERS AND BEATING THE COMPETITION: INSIGHTS INTO MAINSTREAMING FAIR TRADE ............................................................................................... 192 THE REVIEW OF CORPORATE RESPONSIBILITY POLICIES IN FOOD RETAILING . 202 POLICIES AND PRACTICES OF CONSUMER PROTECTION IN FOOD RETAILING IN THE REPUBLIC OF SERBIA ........................................................................................................ 212 CONSUMER POLICY IN FOOD RETAILING AND SUSTAINABLE CONSUMER CHOICES ............................................................................................................................................................. 225 SOCIAL SUPERMARKET RIJEKA AS A SOCIAL INNOVATION IN FOOD DISTRIBUTION ............................................................................................................................... 235 THE ROLE OF INTERNAL AUDIT IN FOOD RETAILING .................................................... 246 3 Trade Perspectives 2015 INSTITUTIONAL INNOVATION AS A FACTOR OF FOOD RETAIL DEVELOPMENT Sreten Ćuzović; Svetlana Sokolov Mladenović Faculty of Economics, University of Niš, Serbia Đorđe Ćuzović Business School in Novi Sad, Serbia Abstract Trade, especially retail and food retail, belongs to a group of innovation-intensive activities. The contemporary theory and progressive practice regard retail innovation as institutional, functional, and technological. The subject of this paper is institutional innovation. This refers to total innovation in retail, especially innovation in certain retail institutions, such as department stores, supermarkets, hypermarkets, discount stores, etc. In the long term, institutional innovation plays a leading role in trade and retail, allowing significant progress in the functioning of trade. At the same time, institutional innovation is accompanied by certain risks, and can have significant economic effects. For this reason, this paper views institutional innovation as a factor in the development of food retail. In accordance with the defined research subject, the aim of this paper is to analyze the diversity of institutional innovation in retail. The starting hypothesis in the paper is that institutional innovation affects the development of food retail. This hypothesis will be tested following the example of 250 largest retailers in the world, as seen by the volume of sales, with a special focus on food retailers. The statistical material will consist of available data on the ranking of the largest retail companies, viewed by the sales volume, in the period from 2009 to 2013, annually published by the consulting firm, Deloitte Touche. The analysis in this paper aims to show the participation of individual retail institutions in the observed sample of 250 companies, as well as their trend in the observed five-year period. At the same time, the position of the individual companies in the list of the most successful ones changes over time, and the aim of the paper is to show whether this is the result of institutional innovation. Key words: retail, innovation, retail institutions Acknowledgement: The paper is part of the research within the Project No. 179081, funded by the Ministry of Education, Science and Technological Development of the Republic of Serbia 4 Trade Perspectives 2015 1. INTRODUCTION Retail is a tertiary, labor-intensive and innovation-intensive industry, which is in many countries developing in line with the development of production and consumption. Its role in the development of the economy is constantly increasing, meaning that its share in the creation of gross domestic product, national income, and employment increases. Continuous strengthening of the role of retail in the overall economy is a result of the application of innovation, which can occur in the form of institutional, functional, and technological innovation. Food retail sector is an integral part of the overall retail, and shares its fate. Therefore, the application of innovation gets its form of expression in food retail. Based on these facts, the research subject in this paper is institutional innovation, and its application in the food retail sector. The research will be divided into three parts. The first part will refer to the evolutionary approach to innovation in trade, with particular reference to food retail sector and implementation of institutional innovation, through a variety of shapes and forms. The second part of the paper analyzes the different theories of institutional changes in food retail, with a focus on lifecycle of retail institutions or business formats in the European Union. Based on theoretical considerations, the third part of the paper will test the underlying hypothesis (H0): the number of business formats used by food retailers is a determinant of their position in the top 250 retailers in the world. Besides the underlying one, the additional hypothesis will be tested as well (H1): in addition to the number of used business formats, the number of countries where the food retailer operates is a statistically significant determinant of its ranking among the top 250 retailers. In order to test the established hypotheses, the paper will rely on the data on the ranking of food retailers in the list of 250 most successful retailers, published by the consulting firm, Deloitte Touche. 2. THE EVOLUTIONARY APPROACH TO INNOVATION IN TRADE AND FOOD RETAIL Innovation is one of the main characteristics of trade in developed market conditions. Virtually no sector of the economy is subject to such change intensity as trade. That is why the experience of the past development of trade is abundant. It offers the possibility for certain generalizations and for consideration of certain principles in the processes of innovation in trade (Ćuzović, Sokolov Mladenović, 2014). Innovation is the main lever of economic progress, regardless of the characteristics of the socio-political system. Product innovation contributes to the spread of the range offered on the market, but also to significant changes in marketing channels. In the wholesale and retail, innovation continuously has strengthened its position in the marketing system. Innovation in the organization of consumers and its impact on socio-economic trends has not been without impact on the activity of marketing channel members. The question is which principles have arisen from the past development of trade. They are primarily reflected in the innovation processes and application of modern techniques and technology in trade. In this regard, the following principles can be observed (Lovreta et al., 2013):  In the economically most developed countries, innovation in trade normally occurs;  In the trade of less developed countries, the process of accepting innovation is constantly intensifying;  The whole process of innovation in trade intensifies, which permanently reduces the lifecycle of trade institutions;  Large, multifilial organizations dominate in innovation; 5 Trade Perspectives 2015  Innovation appears in all aspects of the functioning of trade, i.e. technique and technology, management and overall content of marketing activities. There are basically two types of innovation in trade. The first relates to the so-called institutional innovation. It is a holistic innovation in trade, in particular the innovation of individual trade institutions, such as department stores, supermarkets, discount stores, etc. The second group refers to the so-called functional innovation. It appears in the performance of certain functions or segments of the business activities of a commercial enterprise. In the long term, the leading role in trade certainly belongs to institutional innovation. This innovation can make significant advances in the overall technology and the functioning of trade. It is accompanied by certain risks and can have significant economic effects. Therefore, institutional innovation has long-term significance in trade. Functional innovation can have a daily character, and can be manifested in the daily adjustment of activities within retail outlets, but also within the entire business of a commercial enterprise. Offerors, i.e. producers, are the most important in the so-called functional innovation of new products. Retailers are often perceived as adapters of institutional innovation, but also often as the original subjects of innovation on local markets. Along with this, retailers are commonly regarded as the original actors in innovation in the product range policy and other marketing activities on a competitive local market. For all types of institutional and functional innovation, consumers show their attitude through their reactions. Consumers are in a position to accept or reject a particular innovation. Therefore, it can be concluded that consumers have a very important and sensitive role in the overall process of innovation in trade (Dunne et al., 2014). The importance of this innovation for retail is illustrated through the concept of “the big middle segment”, which examines the relationship of the pricing strategy and product range strategy (Figure 1). Figure 1. The concept of the “big middle“ Source: Levy, M., Grewal, D., Peterson, R.A., Connolly, B. 2005, p. 84. 6