| Retail competition takes place within and between retail formats, and affects consumers, retailers and the society as a whole. Understanding the forces driving the cross-sectional variation of each retail format can enhance retailers' abilities to make strategic decisions and governmental officials' abilities to regulate the retail industry. Extending the theoretical frameworks of Ingene and Brown (1987) and Miller, Reardon, and McCorkle (1999), a refined model is proposed in this study to explain retail structure at a format level from both the demand and the supply sides.; To test the explanatory power of the model, an empirical study is conducted to simultaneously investigate the structure of competition among six retail formats engaged in on-premises and off-premises food sales across 331 Metropolitan Statistical Areas. Utilizing secondary data collected from two recent U.S. censuses, a two-stage OLS regression procedure is employed to examine the separate effects of the demand- and supply-side factors on retail structure. It is shown that seven market factors, extracted from a set of 51 demographic, socioeconomic, and environmental variables by a factor analysis procedure, account from the demand side, on average, for 25.2% of the cross-sectional variation of the three measures of retail structure across the six retail formats, and a set of intra- and inter-format store saturation and marketing mix variables of the retail formats investigated account from the supply side, on average, for 48.2% of the variation. In addition, the same set of market factors explain, on average, 32.4% of the variation for two marketing mix variables investigated.; The study contributes to the literature in three ways. First, it proposes a balanced approach that explains retail structure from both the demand and supply sides as a substitute for previous unbalanced approaches. Second, it is the first study to use merchandise line sales data instead of the traditional store sales data to purify the investigation on retail competition. Third, it is the first study to decompose a line of trade into a rather full range of retail formats and simultaneously investigate their competitive structure. |
