Retail network spatial expansion: An application of the percolation theory to hard discounters

Abstract

This article concerns the spatial organization of a retail network. During the expansion of a retail network, the location decision process does not necessarily lead to a regular distribution of outlets throughout the territory. The case of 5 hard discount store networks in France in their development stage illustrates this situation. A hard discount network strategy to fight against incumbent stores relies on the postulate that its competitiveness stems from its perfect cost control, and consequently, its ability to impose its brands to the consumers. To explain hard discounter spatial strategies, the diffusion theory was primarily developed by retaining only the temporal dimension of the process. But this model is not well established for the disordered environment in which the networks are managed. The percolation theory facilitates a new approach of the diffusion in this disordered medium that represents the retail network.