Impacts of large discount stores on small US towns: reasons for shopping and retailer strategies

Abstract

Five small Minnesota towns are examined one year after the arrival of six large discount stores. Three hundred consumers were surveyed to determine reasons for store choice and how the new discounters affected shopping. Findings indicate that consumers shop at discounters for low prices and large variety and specialty stores for the unique items they cannot find elsewhere. They shop at the new discounters more and the existing stores less. Specialty stores need to differentiate themselves from discounters by increasing product assortments in the key categories carried, upgrading quality with branded merchandise not available to discounters, and maintaining good in‐stock positions.

Utilitarian and hedonic shopping value in the US discount sector

“…The saturation of these merchants into the US retail landscape creates greater choice for consumers and tougher competition for rival formats that sell similar or identical goods and services. As competitors in the discount sector expanded in terms of market coverage and supply chain power during the 1970s and 1980s, they were primarily recognized for selling low cost goods to consumers driven primarily by the desire to pay low prices and the convenience of a large assortment (Brennan and Lundsten, 2000). In contrast, general merchandise discounters that dominate the US market today use tactics on both the demand and supply sides of the business to enhance performance (Duff, 2005).…”

“…48).'' The discount shopper has traditionally been characterized as one who is task-oriented and driven by price and convenience (Brennan and Lundsten, 2000). However, research suggests that the shopping experience not only provides consumers with utilitarian value, but also provides hedonic value that is tied to emotional aspects of the experience (e.g., Babin et al, 1994;Babin and Darden, 1995).…”

A distribution services approach for developing effective competitive strategies against “big box” retailers

“…For example, both the Journal of Retailing and Consumer Services (volume 7, issue 4) and the International Journal of Retail & Distribution Management (volume 28, issue 4/5) published special issues devoted entirely to the impact of large-format retailers. Smaller retailers who compete against these large firms face tremendous challenges, and several studies provide prescriptive strategies for carving out a competitive niche (Arnold and Luthra, 2000;Brennan and Lundsten, 2000;Darrow et al, 2001;Stewart, 1998, 2000b, d;Peterson and McGee, 2000). One of the most frequently mentioned competitive advantage opportunities for smaller firms is their provision of personal, value-added services (Andersen, 1997).…”

When Does It Pay off to Link a Brand Name to a Country?

“…These retailers help drive retail sales, create jobs, pay higher salaries than would be available from small retailers to store employees, utilize advanced retail technology, and possess managerial know-how which enables them to improve the efficiency and effectiveness of their operations as well as facilitate the transfer of advanced retail technology and managerial know-how to less efficiently operated retailers (Paswan et al, 2010;Brennan & Lundsten, 2002;Brennan & Lundsten, 2000;Caves, 1974).…”