European retail market structures

Date of publication: June 15, 1995

Abstract:

This paper considers evidence that there are common structures, in terms of types of retail offer, that each European retail market will tend towards over time. It takes a detailed look at two contrasting markets, the UK and Russia, to understand some of the forces that are shaping retail structures. These two markets arc at the extreme ends of retail development but are shown to moving in similar directions. It is asserted here that these two markets arc or will be developing three distinct types of retail offer as follows: 1. "Price-led'' retailing aiming at low overheads; 2. "Value-Added" retailing based on unique products or services; 3. "Fusion" retailing based on range dominance and heavy promotional advertising. The polarisation of retail formats into these distinct strategics shows a growing sophistication in the management of retail businesses. We arc not suggesting that one particular strategy is the best recipe for success but rather that there arc three potential routes and that it is most important to pick one and stick to it. There is a fourth alternative which is to have no distinct position in terms of prices and value, stores of this type arc in decline.

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