Spatial competitive interaction of retail store formats: modeling proposal and empirical results

Abstract

This study builds on the spatial competitive interaction of store formats that are often considered generic retail positioning profiles. Specifically, a modeling proposal is developed that focuses on the role of the spatial coverage reached by particular store formats as a determining factor of intraurban market response. The proposal is assessed through an application to the Spanish retail context that tries to identify competitive frictions among the supermarket, the hypermarket, and the discount store. The results demonstrate the explanatory capabilities of the model and reveal interesting conclusions related to the impact of spatial growth by store formats on food shopping patterns. There is more intense competition between the discount store and the hypermarket, and the classic supermarket form maintains a balanced rivalry with both. The development of larger discount stores seems to affect the supermarket market share more severely, whereas the development of discount stores that offer parking subtracts more demand from the hypermarket.