Pricing strategy of dual-channel supply chain with a risk-averse retailer considering consumers' channel preferences

With the booming of the e-channels, both the competition between the physical channel and the Internet channel and the consumers' preference for different channels increase the volatility of market demand. The partners may have different degrees of risk aversion in the dual-channel supply chain. Thus, the risk control is significant in exploring supply chain strategies. This article investigates the pricing strategy of a dual-channel supply chain in which the retailer is risk-averse and the consumers have channel preferences. The risk aversion of the retailer is measured by the mean-variance method and the consumers are classified into two types: grocery shoppers and Internet shoppers. Using a Stackelberg game, the optimal equilibrium solutions of the proposed model are derived. The results show that both partners and consumers can benefit from the retailer's risk control in the dual-channel supply chain. When the risk control factor is less than a critical point, with the increase of the Internet shoppers, the manufacturer's profit and the integral supply chain's profit increase and the retailer's profit doesn't vary.