Thesis-2008-Yadav.pdf (21.36 MB)
A longitudinal study of competition and performance in the UK grocery retail industry
thesis
posted on 2011-02-22, 10:59 authored by Arvind YadavThe grocery retailing industry is a key sector of the UK economy, accounting for 16%
of consumer expenditure. As such developments in this sector will have an important
effect on UK economic and social welfare. Arguably, competition in the sector has
intensified in the last two decades. Yet significant consolidation in the sector has put
it under the spotlight of the UK competition authorities. Previous research analysing
factors affecting the performance and positioning of UK grocery retailers has tended
to be restricted to a limited time period and a small sample size. This study extends
this research by investigating industry evolution and factors affecting performance
and industry structure with longitudinal panel data, covering a two-decade time
period. The sample used covers a wide variety of grocery retailers with a range of
different attributes over a significant period in the development of the industry,
running from 1985 through to 2003.
Strategic group theory is employed to study industry evolution and examine the
effects of strategic positioning on performance. Specifically, fixed-effect panel
econometric models are estimated at different levels of aggregation to analyse firm,
industry and strategic group effects on the performance of retailers. Also, stochastic
frontier models, in the form of Cobb-Douglas and Transcendental Logarithmic
functions, are estimated at different levels of aggregation to analyse the efficiency of
retailers in the sector.
The results from cluster analysis on strategic groups suggest that industry structure
is likely to become more concentrated, and the size of retailers will be a significant
mobility barrier in the industry. The profitability analysis finds industry level factors
and strategic group composition to be crucial in explaining performance differences.
The efficiency analysis finds large retailers exhibiting economies of scale through
operating large store formats to be significantly better positioned from smaller-format
retailers with fewer outlets. Consistent and significant time dummies demonstrate the
favourable macro environment enjoyed by the retailers for much of the 1990s.
The analysis reveals potentially useful insights for retail managers, especially
concerning the importance of positioning in the industry and the choice of strategic
orientation. More generally, the study opens up further possibilities for future studies
of performance and efficiency measurement over an even longer time as the sector
continues to develop and shape the way consumers shop in the UK.
History
School
- Business and Economics
Department
- Business
Publisher
© Arvind YadavPublication date
2008Notes
A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University.EThOS Persistent ID
uk.bl.ethos.504058Language
- en