The market structure of the U.S. retail industry: 1984–2003
Retail structure may be changing dramatically due to the diversified retail formats, increased size of retail stores, new technological developments, and the changes in consumer behaviors. It is important to understand these changes. If we can understand these changes better, we will know what is happening in retail and further we can predict what will happen in this business sector. The study of retail structure has a place in the historical research on retailing but has been generally the descriptive type. This study is designed to replicate prior research by Nowakhtar and Widdows (1987) to follow the changes in the US retailing from1984-2003 and also extend that research to look at the market structure in Internet retailing from 2002-2005. In doing so, this study is going to see first, if the changes of market concentration and competition outlined in the prior research remain today; second, what the structure within Internet retailing looks like. By examining two metrics, concentration and competition, this study outlines structural changes in overall retailing, department stores, specialty stores, and discount stores from 1984 to 2003. By comparing trends of retail structure, this study examines the predictive ability in the retail industry and further forecasts retail structural changes in the next five years from 2004-2008. This study uses the same methodology and econometric techniques as Nowakhtar and Widdows. The findings show that overall retailing has increased in concentration and competition. Discount stores have the highest concentration among other retailers; and there is much competition from diversified retail formats. The structural changes outlined from 1959-83 were not the same as found in the 20 years following. Findings in this study illustrate a dynamic retail market. A forecast based on five year increment is confirmed to be more accurate for the retail industry than a 20 year increment forecast. Finally, Internet retailing shows both increased concentration and competition from 2002-05. This is an empirical examination of the US retail market structure from 1984-2003 that follows previous research that tracked retailing from 1959 to 1983. The findings provide empirical evidence for the various structural models conceptualized in the texts. Two new issues investigated in this study are the predictive ability of retail structure and the structural changes in Internet retailing.
Feinberg, Purdue University.
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