Assessing the principles of spatial competition between stores within a retail network

Abstract

This study investigates the impact of driving time and retail agglomerations on consumer store choice within a retail network. A pairwise comparison of confluencing store trade areas is conducted based on loyalty card information and exit questionnaires for six retailers operating in different product categories in Belgium. Results show that there is a stronger emphasis in the preference hierarchy on driving time towards a store for the daily goods retailer. Moreover, there is varying intra-network spatial competition depending on the type of location strategy pursued by the different retailers. Results show that for some retailers retail agglomeration effects are more outspoken than for others. However, impact of driving time on consumer intra-network store choice was independent of retail agglomeration size. Finally, results indicate that opening stores outside the pursued location strategy should be approached with care as significant impacts on sales cannibalization can emerge within the store network. These findings are important for crafting an overall expansion strategy for expansion managers as well as for marketing managers occupied with network changes at operational level.