The Competitive Behaviors of Small Retailers: Examining the Strategies of Local Merchants in Rural America
Abstract
Mass merchandisers, discount chain stores, category killers, and e-commerce are changing the retail industry through innovations in marketing and service. Driven by increased competition and discriminating customers, small, local retailers are searching for ways to gain and sustain competitive advantage. This study examines the competitive behaviors and performances of 236 retailers located in rural Nebraska. The findings indicate that retailers which adopted competitive behaviors with a goal of low cost/low price leadership were most successful. However, retailers using a combination or value-oriented strategy were also successful. Retailers which adopted competitive behaviors that constitute solely a differentiation strategy and those which had no clearly defined strategy were the worst performers. These findings suggest that in order to achieve competitive advantage, rural retailers should follow a value-oriented strategy, being effective at both cost reduction and competitive pricing while offering unique products and services.
References
Armstrong, J. & Overton, T.S. ( 1977). Estimating nonresponse bias in mail surveys. Journal of Marketing Research, 16, 396-402.
Brennan, D.P. & Lundsten, L. (2000). Impacts of large discount stores on small US towns: Reasons for shopping and retailer strategies. International Journal of Retail & Distribution Management, 28 (4/5), 155-161.
Broom, H. N. & Longnecker, J.G. (1979). Small Business Management. Cincinnati, OH: Southwestern.
Buss, D. D. (1996). The little guys strike back. Nation's Business, 84 (7), 18.
Cappel, S.D., Wright, P., Wyld, D.C., & Miller, J.H., J r. (1994). Evaluating strategic effectiveness in the retail sector: A conceptual approach. Journal of Business Research, 31, 209-21 2.
Carter, N.M., Steams, T.M., Reynolds, P.O. & Miller, B.A. (1994). New venture strategies: Theory development with an empirical base. Strategic Management Journal, 15( I ), 21-41.
Chaganti, R., Chaganti, R., & Mahajan, V. ( 1989). Profitable small business strategies under different types of competition. Entrepreneurship Theory & Practice, Spring, 21-35.
Conant, J.S., Smart, D.T., & Solano-Mendez, R. (1993). Generic retailing types, distinctive marketing competencies, and competitive advantage. Journal of Retailing, 69, 254- 279.
Covin, J.G. & Slevin, D.P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, IO, 75-87.
D'Aveni, R.A. (1994). Hypercompetition. New York, NY: Free Press.
Dess, G.G. & Davis, P.S. (1984). Porter's (1980) generic strategies as determinants of strategic group mem bership and organizational performance. Academy of Management Journal, 27, 467-488.
Dess, G.G., Lumpkin, G. T., & Covin, J.G. ( 1997). Entrepreneurial strategy making and firm performance: Tests of contingency and configurational models. Strategic Management Journal, 18(9), 677-695.
Dess, G.G. & Robinson, R.B., Jr. (1984). Measuring organizational performance in the absence of objective measures: The case of the privately-held firms and conglomerate business unit. Strategic Management Journal, 5, 265-273.
Dillman, D. A. (1978). Mail and telephone surveys: The total design method. New York, NY: John Wiley and Sons.
Droge, C., Vickery, S., & Markland, R.E. (1994). Sources and outcomes of competitive advantage: An exploratory study in the furniture industry. Decision Sciences, 25(5/6), 669-689.
Gaskill, L.R., Van Auken, H.E., & Manning, R.A. (1993). A factor analytic study of the perceived causes of small business failure. Journal of Small Business Management, 11(4), 18.
Hair, J.F., Jr., Anderson, R.E., & Tatham, R.L. (I987). Multivariate data analysis with readings. New York, NY: Macm illan Publishing Company.
Hair, J. F., Anderson, R E., Tatham, R.L., & Black, W.C. (1995). Multivariate Data Analysis. Englewood Cliffs, NJ: Prentice Hall.
Hambrick, D. (1983). An empirical typology of mature industrial-product environments. Academy of Management Journal, 26, 213-230.
Helms, M.M., Hayne.s, P.J., & Cappel, S.D. (1992). Competitive strategies and business performance within the retail industry. International Journal ·of Retail & Distribution Management, 20(5), 3-14.
Hill, C.W.L. (1988). Differentiation versus low-cost or differentiation and low-cost: A contingency framework. Academy of Management Review, 13, 401-412.
Hodgens, Richard M. (1999). A conversation with Michael E. Porter: Significant extension toward operational improvement and positioning. Organizational Dynamics, 28(1), 24-33.
Hooley, G.J., Lynch, J.E., & Jobber, D. (1993). Generic marketing strategies. International Journal of Research in Marketing, 9(1), 75-89.
Hosmer, A. (1957). Small manufacturing enterprises. Harvard Business Review, 35, I I 1-122.
Kirchhoff, B.A. (1994). Entrepreneurship and dynamic capitalism: The economics of business firm formation and growth. Westport, CT: Praeger.
Kotha, S. & Vadlamani, B.L. (1995). Assessing generic strategies: An empirical investigation of two competing typologies in discrete manufacturing industries. Strategic Management Journal, 16(1), 75-83.
Lowry, J.R. (2000). The fight for survival by independent retailers. USA Today 129(2662):22-25.
Mauri, A.J. & Michaels, M.P. (1998). Firm and industry effects within strategic management: An empirical examination. Strategic Management Journal, 19, 211-219.
McDougall, P.P. & Robinson, R.B., Jr. (1990). New venture strategies: An empirical identification of eight "archetypes" of competitive strategies for entry. Strategic Management Journal, 11, 447-467.
McGee, J.E. (1996). When Wal-Mart comes to town: A look at how local merchants respond to the retailing giant's arrival. Journal of Business & Entrepreneurship 8(1):43-52.
McGee, J.E. & Rubach, M. J. (1997). Responding to increased environmental hostility: A study of the competitive behavior of small retailers. Journal of Applied Business Research, 13(1):83-94.
McGee, J.E. & Snook, C.L. (2000). Responding to industry consolidation in fragmented industries: The role of capabilities in small business survival. Journal of Small Business Strategy I 1(2),21-32.
Miles, M.P. & Arnold, D.R. (1991). The relationship between marketing orientation and entrepreneurial orientation. Entrepreneurship Theory and Practice, 15(4), 49-65.
Miller, A. & Dess, G.G. (1993). Assessing Porter's (1980) model in terms of its generalizability, accuracy and simplicity. Journal of Management Studies, 30(4), 553-585.
Miller, D. (1988). Relating Porter's business strategies to environment and structure: Analysis and performance implications. Academy of Management Journal, 31, 280-308.
Miller, D. ( 1992). The generic strategy trap. The Journal of Business Strategy, 13( I), 37-4 I.
Miller, D. & Friesen, P.H. (1986). Porter's (1980) generic strategies and performance: An empirical examination with American data. Organization Studies, 7(1), 37-55.
Miller, N. J. & Kim, S. (1999). The importance of older consumers to small business survival: Evidence from rural Iowa. Journal of Small Business Management 37 (4), 1-15.
Mintzberg, H. (1988). Generic strategies: Toward a comprehensive framework. Advances in Strategic Management. Greenwich, CT: JAi Press. 5, 1-67.
Murray, A.I. (1988). A contingency view of Porter's "generic strategies." Academy of Management Review, 13, 390-400.
Pitelis, C. & Taylor, S. (1996). From generic strategies to value for money in hypercompetitive environments. Journal of General Management, 21(4), 45-61.
Porter, M.E. ( 1 980). Com petitive strategy: Techniq ues for analyzing industries and com petitors. New York, NY: The Free Press.
Porter, M.E. (1985). Com_r.etitive advantage: Creating and sustaining su perior performance. New York, NY: The Free Press.
Porter, M.E. (1996). What is strategy? Harvard Business Review, 74(6), 61-78.
Robinson, R.B., Jr. & Pearce, J.A., II. (1988). Planned patterns of strategic behavior and their relationship to business-unit performance. Strategic Management Journal, 9(1), 43- 60.
Statistical Abstract of the United States. ( 1998). [national data book on line] (Washington, D.C.: U.S. Census Bureau, March 1998); available from http://www.census.gov/prod/3/98pubs/ 98statab/cc98stab.htm; Internet; accessed 19 October 1999.
Thom pson, A.A., Jr. & Strick land, A.J., 111 (2001). Crafting and Executing Strategy. 12'h Ed ition. Boston, MA: McGraw-Hill Irwin.
Trinh, H. Q. & O'Connor, S.J. (2000). The strategic behavior of U.S. rural hospitals: A longitudinal and path model examination Health Care Management Review 25(4): 48-64
Wagner, B. & Digman, L. (1997). The relationships between generic and time-based strategies and performance. Journal of Managerial Issues, 9(3), 334-354.
Woodruff, R.B. (1997). Customer value: The next source of com petitive advantage. Journal of the Academy of Marketing Science, 25(2), 139-153.
Wright, P. (1987). A refinement of Porter's strategies. Strategic Management Journal, 8, 93- 101.
Wright, P., Kroll, M., Tu, H., & Helms, M. (1991 ). Generic strategies and business performance: An em pirical study of the screw machine products industry. British Journal of Management, 2, 57-65.
