Academic journal article Asian Social Science

Intangible Assets and Competitive Advantage in Retail: Case Study from Russia

Academic journal article Asian Social Science

Intangible Assets and Competitive Advantage in Retail: Case Study from Russia

Article excerpt

Abstract

The article focuses on the ways effective intangible assets management helps the leading Russian food retailers derive ancillary competitive advantages. Analysis and assessment of intangible assets effectiveness (which is considered to be a source of retailer competitive advantages) include analysis of intangible assets as a part of company assets, analysis of intangible assets effectiveness using conventional indicators, valuation of intangible assets and business, analysis of private labels, and analysis of intangible assets franchising. As a result we have formulated characteristic features of formation of Russian retailers competitive advantages when using intangible assets in the process of operating activities (including the management of private labels), in franchising, as well as in the intangible assets accounting policy and management of the market value of the business. The findings of this research can be employed by retailers in actual practice of intangible assets management to achieve and maintain a high level of competitiveness.

Keywords: competitive advantage, efficiency, intangible assets, retail, Russia

1. Introduction

Russian retail trade at its modern stage of development is distinguished by a high level of competition (Bortnikova, 2012; Platonova, 2013; Seleznyova, 2011). Russia's admission into WTO, active growth of both domestic (Dixy, O'Key, Lenta, etc.) and foreign (Auchan, Spar, Douglas, IKEA, etc.) retail companies will facilitate more intensified competitive struggle. As things currently stand, creating of sustainable competitive advantages becomes a sine qua non condition for commercial success of any business engaged in retail trading.

Presently, Russian retailers compete primarily in location of stores, pricing, quality, assortment and service (Magnit, 2012), i.e. conventional factors that can be quite quickly replicated. Modern retail development trends require new instruments that are more effective. At the stage, intangible assets (IA) management seem to be the most promising source of ancillary competitive advantages for retailers. At the same time, studies show that at large Russian companies feature extremely low process of asset intellectualization (Seliverstov, 2013). Retail trade is not an exception, as IA share in total amount of companies' assets is less than 1% (First Independent Rating Agency [FIRA], 2013). IAs significance and simultaneously lack of their active use by retailers substantiate actual relevance of the issue in question.

In this article we will inquire into the ways effective use of IA helps retailing ancillary competitive advantages to emerge through the example of leading Russian food retailers Magnit and X5 Retail Group.

2. Literature Review

Some researchers in Russia have already noted IA importance as a source of retailer competitive advantages. For instance, Kafiatulova (2010) in the article dedicated to competitive advantages in retail trade distinguishes between tangible and intangible resources, referring branding, reputation, and skills to the latter. Selyukov, Schalygina and Savenkova (2011) qualify information, intellectual and technological potential as intangible factors of retail organization competitive advantages. Khalezov (2013) addresses the issues of competitive advantages for small retail enterprises in the context of innovation potential. Paramonova and Krasyuk (2010), Logunov (2006) reckon private label as the element of retailer competitiveness. Gorba (2012) calls creation of private label a complex competitive advantage of retail chains. Some authors take into account brand (Bogdanov, 2012) and business reputation (Nikolaeva & Yalunina, 2006) to assess retail enterprise competitiveness.

Therefore, the authors mark out relevance of IA to competitiveness of a company and make a detailed research into their specific types, while no study targeting the full aggregate of IAs as an instrument to obtain competitive advantages on Russian retail market has been undertaken so far. …

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