STRUCTURE OF THE GENERAL MERCHANDISE RETAIL MARKET: AN EMPIRICAL ANALYSIS OF THE SELLER CONCENTRATION (1959-1983) (INDUSTRIAL ORGANIZATION, RETAILING, CONSUMER ECONOMICS)
Abstract
The world of retailing is undergoing a period of rapid institutional change. Retailing is going through the same kind of revolution that manufacturing did in the 19th century; this process is termed the industrialization of retailing. Theories of retail evolution have been advanced to analyze recent change in the retail market. The linkages between the emergence and evolution of retail institutions, and the ways they respond to changes in the economic, technological, and demographic environments have been explored. More recently, attention has focused on department stores, discount stores, and specialty stores and how they are working to establish distinct competitive positions within the changing retail market structure. The approach used in the present study is that of industrial organization theory. The central hypothesis of this approach is that there exists a systematic relationship between industrial structure and a firm's conduct, and therefore between industrial structure and economic performance. Seller concentration, one element of industrial structure, is the basis of the structure of the retail market in this study. The necessary data were compiled from two major sources, namely Fairchild's Financial Manual of Retail Stores, and Standard and Poor's Industry Surveys for the years 1959 through 1983. Other sources were employed where the need arose, such as the Census of Retail Trade. Four hypotheses were developed and tested. These hypotheses concern seller concentration within the general merchandise retail market, profitability, sales growth, and entropy. The hypotheses were tested using concentration ratios, Herfindahl Indexes, regression analysis, and entropy measures. The results of the study indicated that the general merchandise retail market became more concentrated over the 1959-83 period. The industries which contributed to this increased concentration were the discount and specialty stores, whereas the department store industry became less concentrated. Profit rates of the leading firms in the general merchandise retail market, including the department and discount store industries, declined over the years, whereas, profit rates of the leading firms in the specialty store industry increased. Results also indicated that entropy increased within and decreased between the different modes of retailing. With the exception of the between mode entropy findings, these results are supportive of the industrialization of retailing hypothesis.
Degree
Ph.D.
Subject Area
Business costs
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