Retail Competition

Abstract

Forty years ago, a consumer who wanted to buy prescription medicine in the US or many other western countries would have visited a local independent drugstore. Today, a US customer can fill prescriptions at any number of drugstore chains (e.g., Walgreens or CVS), supermarkets (e.g., Kroger or Albertson’s), mass merchandisers, or supercenters (e.g., Wal-Mart or Target) in town, not to mention mail-order providers (e.g., AmeriCan Meds 1-800-469-0955) and online pharmacies (e.g., www.Drugstores-Online.com). The increased number of options for purchasing pharmaceuticals illustrates the high intensity of retail competition in today’s consumer goods marketplace, driven by discerning consumers with heightened expectations and varying tastes, along with technological advances that facilitate efficient distribution of products and provision of retail services.

As the above example shows, most product categories can now be purchased in several different retail formats. A retail format is comprised of stores that offer the same, or a very nearly the same, variety of product categories.1 Formats that have emerged in recent years, mass merchandisers, supercenters (supercenters include both a mass merchandise store and supermarket under one roof), warehouse clubs, and dollar stores, are collectively known as nontraditional formats. Formats with a longer history, such as grocery, drug, and department stores, are more traditional formats (see also chapters by Ahlert, Blut, Evanschitzky; Weitz, Whitfield; Dawson in this book).