Retail store formats, competition and shopper behavior: A Systematic review
Graphical abstract
Introduction
Consumers face a diverse set of physical store formats when purchasing groceries (Gauri, Jindal, Ratchford, et al., 2021, Shankar, Kalyanam, Setia, et al., 2021). Store-based retailing formats have continued to evolve over the past few decades, along with the market shares they account for (Bronnenberg and Ellickson 2015). Newer formats such as discounters, supercenters and hypermarkets (e.g. Walmart, Aldi, Lidl, Carrefour) have broadened grocery consumption choices and disrupted traditional grocery formats across the globe, challenging traditional format retailers. Traditional average category shares have declined from 27% globally in 2005, to around 21% by 2020, giving up much of this share to modern store formats such as supermarkets, hypermarkets and discounters (EuroMonitor International 2021) and carrying substantial implications for society (Hausman and Leibtag 2007).
Store format decisions are often difficult to reverse due to the costs involved in changing store format attributes such as store size, location (or proximity to consumers), store layout, customer service levels, and price strategy. While the choice of a grocery retail store format is highly strategic and typically made only once by retailers, some formats have diversified by introducing sub-brands. For example, Walmart now operates multiple retail formats in Mexico including supermarkets, hypermarkets, Bodega Aurrera discount stores, and warehouse clubs. Its competitor Tesco also operates multiple formats based on different sub-brands, including forecourts (Tesco Fuel), convenience stores (Tesco Express), supermarkets (Tesco Superstores), hypermarkets (Tesco Extra), as well as one-stop convenience stores.
Store format decisions must be informed by a comprehensive body of evidence pertaining to consumer demand, competition and society. This systematic review involved an extensive examination of the literature, to derive generalizations of physical store retail formats that most impact consumer demand, market structure and competition. More specifically, how a physical store’s retail format influences shopper (customer) behavior and competitive conduct/market structure in the context of grocery shopping.
Section snippets
Motivation, scope and research questions
The store format is central to a retailer’s strategy, representing the operations used to serve target markets, as defined by Levy et al. (2018, page 121): “The retailer’s type of retail mix (nature of merchandise and services offered, pricing policy, advertising and promotion program, approach to store design and visual merchandising, and typical location).” The primary aim is to achieve significant variation within such a retail mix; to nominate a format that is substantially different from
Past review work and need for a systematic review
Initial review studies conducted by Ahlert, Blut, Evanschitzky, 2006, Ahlert, Blut, Evanschitzky, 2010 examined global retail store format trends focused on the evolution of formats and did not comprehensively review the academic literature on this topic. A review of the academic literature was conducted by Gonzalez-Benito et al. (2018) and covered a subset of the empirical work relevant to formats. A more recent literature review is by Gauri et al. (2021), which aims to provide guidance for
Findings from systematic review
The discussion of the literature in this section addresses the research questions posed in the previous section. In the interest of brevity, the overarching ideas are discussed with references made to selected contributors.
Discussion and conclusion
This study has examined the body of empirical evidence in relation to retail formats and corresponding market behavior, involving 178 articles. The thematic classification in this review is based on four primary themes with nine sub-themes. The topic modeling approach enables study of dominant ideas that may span themes, and interest in research topics over time. We now provide an overall discussion of the core findings, and suggest some future research directions.
Executive summary
Physical, or “bricks and mortar”, grocery store retailing formats play a large role in markets and society, with seven of the world’s top 10 retailers by revenues having a major focus with physical store formats on grocery products, and even online retailers (e.g., Amazon) seeking to enter and grow share in the grocery market with physical store formats (Deloitte 2021, Global Powers of Retailing). Physical grocery retail store formats represent how retailers are positioned, with key attributes
Acknowledgments
The authors express their gratitude for support, constructive feedback and numerous helpful suggestions to Raj Sethuraman, Russ Winer, Els Gijsbrecht, Praveen Kopalle, Kusum Ailawadi, Michael Levy, Katrijn Gielens, Dinesh Gauri, Paul Farris, Hayiel Hino, Dhruv Grewal, Marnik Dekimpe, Scott Neslin, and Aruna Divya, and to the review team for helping shape the paper through the revision process. The authors are also indebted to Nan Ge, Chuni Fann, and Girish Gupta for excellent research
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