Modeling Retail Chain Expansion and Maturity through Wave Analysis

Abstract

This article examines retail store deployment through the analysis of waves. Based on concepts originally developed in coastal geomorphology and adapted to medical geography, a theory of retail chain expansion and maturity is presented whereby retailers expand in waves with alternating periods of faster and slower growth. Using a space-time matrix of new store openings, four stages are identified: prospective, deploying, saturation, and revisiting. By analyzing the net change from one period to the next at increasing distances from a retailer's original store, the stages can be represented as swash, backwash, and re-swash waves. Target and Walmart adopted dissimilar strategies, with Walmart diffusing gradually from Arkansas and Target growing from the coasts inward. They were similar, however, in that after expanding into an area they reached a point of saturation and opened fewer stores, then moved on to other areas, only to revisit the earlier areas for new store deployment.