Levels of strategy and performance in UK small retail businesses

Abstract

PurposeThis study aims to investigate the way in which small retailer performance is influenced by strategy at different levels. It also aims to propose that business level strategy is more important to success than functional level strategy in small retail firms, as this is what enables them to distinguish their business from competitors and effectively set about competing in their markets.Design/methodology/approachData were collected from a mail survey of 305 independent retailers in the UK. Multivariate statistical methods were used to develop appropriate variables and explore the relationships between level of strategy and performance.FindingsThe results indicate that business level strategy variables have a significant influence on performance whereas functional levels do not when their combined effects are analysed using hierarchical regression modelling.Research limitations/implicationsThe caveats normally associated with survey methods apply, as do those related to the use of cross‐sectional, self‐report, and managerial perceptions data. Implications for retail strategy theory and small retailers' performance are addressed.Practical implicationsThe importance of business level strategy generally and its specific elements are considered with a view to providing guidance to management decision makers and policy advisors.Originality/valueReliable measures for retail strategy variables are developed in the paper. The research distinguishes the performance effects of retail business strategy from retail functional strategy and supports the view that business strategy decisions are superior in their market significance over operational retail mix decisions.