Full Citation

Title: Location Strategy of Chain Retailers: The Case of Supermarkets and Drug Stores in an Urban Market

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: This paper presents an empirical investigation of the location strategy pursued by chain retailers over a period of 55 years. We use a unique data set containing the sequential location decisions of supermarkets and drug stores in a medium size U.S. city between 1956 and 2010. The data indicate that chain retailers located new stores within reasonable proximity to their already existing network of stores through most of the sample period. We propose a strategy to empirically identify whether spatial monopolization intent, economies of density, or both of these factors were the reason for such clustering behavior by chain retailers. Using a discrete choice model for location in geographic space, we find that economies of density were partially responsible for the clustering behavior in the supermarket industry, but not in the drug store industry. Moreover, spatial monopolization intent was a pursued strategy by both supermarkets and drug stores all along. We also find that in some cases up to 33.2 percent of consumers living between two stores owned by the same retailer found themselves trapped in space by the retailer, with no closer shopping alternative.

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Authors: Vicentini, Gustavo

Publisher: Northeastern University, Boston, MA

Data Collections: IPUMS NHGIS

Topics: Housing and Segregation, Other

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