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Store Format Competition in Retail Markets

The purpose of this research project was to conduct a dynamic analysis of demand and market structure in retail food. A substantial share of investments in retail markets aims to increase the degree of differentiation between stores that differ in terms of size, geographic location, service, etc. Along with the trend toward larger but fewer stores there has been a recent emphasis on developing smaller store formats that are geographically close to the consumer.

Project manager
Matilda Orth

+46 (0)8 665 4531
+46 (0)736 42 38 24
matilda.orth@ifn.se

Project participants
Florin Maican, University of Gothenburg and IFN

The project combined newly developed theoretical models and statistical methods with a unique database covering all retail food stores in Sweden during the period 2001–2010. First, we investigated how consumers choose and value different store formats. Second, we analyzed firm strategies and estimated costs to enter and exit stores in local markets. A key contribution of the project was to simulate the development of the retail food market under a number of hypothetical changes. In particular, to evaluate the effects of changing the number of store formats in local markets and quantify how store profits are affected by higher costs for land and buildings.

The project was financed by the Swedish Retail and Wholesale Development Council.