Understanding the Key Determinants of Retail Success

Retailers are finding it increasingly difficult to survive and thrive in today’s cut-throat competitive environment. Singh et al. (2006, p. 457) summarize this phenomenon by stating the following: “Rapid growth of alternative retail formats, in the form of mass discounters, wholesale clubs, and supercenters, has transformed not only the competitive structure of the industry, but also the way in which consumers shop.” Despite this increased competitive intensity, few studies have identified the keys to retail success. My dissertation fills this gap by (1) explaining how retail advantage is built and (2) documenting the effects of competitive overlap between retail players. My first essay uses an inductive-based approach to identify the sources of retail advantage. I review pertinent literature, interview qualified retail managers, and use archival records to identify twelve capabilities vital to retail success. I find that durable retail advantage is driven by deploying systems of interdependent capabilities and appreciating capabilities’ differential importance. I synthesize this research into a framework to provide managers with additional insights as they develop company resources.\ud \ud My second essay is an empirical piece which studies the differential effectiveness of emulation and differentiation as competitive strategies. Strategic direction is seen as a continuum, a relationship I capture by introducing the notion of “strategic service orientation (SSO).” I examine how a firm’s SSO impacts its sales after new competitors arrive and the effects of pertinent SSO moderators. Results show that emulation-based services best protect incumbents from both new Wal-Marts and new upscale stores. However, as the number of competitors near the new entrant increases, differentiation-based services become more important. Importantly, the incumbent’s format impacts its ability to compete and how it should compete.\ud \ud Taken together, my dissertation provides unique and valuable insights into retail competition. It is hoped that my research not only has unparalleled pragmatic implications, but theoretical ones as well. These implications will come clearer in the following sections.\u