Spatial Strategies in Retailing

265 Pages·1987·7.478 MB·English

by  Risto Laulajainen (auth.)

SPATIIAL STRATEGIES IN RETAILING
The GeoJournal Library
Series Editor: WOLF TIETZE
Editorial Board:
John E. Bardach, Honolulu W. Lauer, Bonn
Pierre Biays, Ulle Lee Shu-tan, Nanjing
Asit Biswas, Oxford Richard F. Logan, Los Angeles
Bruce Currey, Bedford Park Walther Manshard, Freiburg i. Br.
J. Demek, Brno German MOiler, Heidelberg
YehudaGradus, Bee~Sheva Paul MOiler, SaarbrOcken
Arild Holt-Jensen, Bergen Hiroshi Sasaki, Tsukuba
Huang Ping-wei, Beijing Akira Suwa, Tokyo
Johannes Karte, Bonn Jarn Thiede, Kiel
P. M. Kelly, Norwich H. Th. Verstappen, Enschede
C. Kergomard, Lille E. M. Yates, London
C. Gregory Knight, University Park M. M. Yoshino, Tsukuba
M. P. Lapping, Guelph Alexander Zaporozec, Madison
Spatial
Strategies
in Retailing
by
Risto Laulajainen
Department of Human and Economic Geography,
Gothenburg School of Economics and Business Administration,
Gothenburg University, Sweden
D. Reidel Publishing Company
A MEMBER OF THE KLUWER ACADEMIC PUBLISHERS GROUP
Dordrecht / Boston / Lancaster / Tokyo
Library of Congress Cataloging in Publication Data
Laulajainen, Risto.
Spatial strategies in retailing.
(GeoJournallibrary)
Bibliography: p.
1. Store Location. 2. Retail trade. I. Title. II. Series.
HF5429.275.L38 1987 658.8'7 87-20803
ISBN-13: 978-94-010-8267-9 e-ISBN-13: 978-94-009-3983-7
DOl: 10.1007/978-94-009-3983-7
Published by D. Reidel Publishing Company,
P.O. Box 17,3300 AA Dordrecht, Holland.
Sold and distributed in the U.S.A. and Canada
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All Rights Reserved
© 1987 by D. Reidel Publishing Company, Dordrecht, Holland
Softcover reprint of the hardcover 1st edition 1987
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechani.cal
including photocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner
to
TERESA and THOMAS
The Gothenburg Business School Foundation
has supported this. book financially.
CONTENTS
ABSTRACT ix
PREFACE xi
INTRODUCTION .................................................................... 1
The Scope ......................................................................... 1
The Retailing Scene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3
The Data .......................................................................... 7
What to Expect ..................................................................... 9
THE SWEDISH PRELUDE ........................................................... 12
Meeths ......................................................................... 12
IKEA .......................................................................... 14
Hennes & Mauritz ................................................................ 16
Kapp-Ahl ....................................................................... 18
Gulin's ......................................................................... 20
Ara-Jet .................................. , , ..................................... 22
The Swedish prelude .............................................................. 24
HISTORICAL EXAMPLES ............................... " ......................... 25
A&P .......................................................................... 25
Woolworth's ... , ............ , ......................... " ........................ 28
Kresge's ....................... , ....... , ..... , ............................. , .. , , 32
Penney's ..................................................... , . , , ......... , .... 35
Gimbel's ................................................... , ................... 38
May's ... , ............. ~ ....................... , ................................ 40
General lesson ...................................... , ............................ 42
ENVIRONMENT ......................................................... , .. , ...... 43
Federal Trade Commission ........................................................ 43
Competition ................. , .............................. , .............. ,.... 43
Purchasing power ........... , .............. , ........... , ............... , , ........ 44
COMPANIES BY STATE ................................. , ........................... 56
Oil Companies ., .................... " ............................................ 57
Shell ................... , ........................ ,.............................. 57
Standard Oil (New Jersey) ......................................................... 59
Standard Oil (Indiana) ......... , ............... , ................................. , 61
Common feature .......... , ............. , , ........... , ........... , ......... , .... , 62
Food Stores .............. , .... , ....... , ............. , ............................. 63
A& P ... , .. , ................................................................... 63
Safeway ........................................................................ 66
Kroger ......................................................................... 68
Lucky ....... , .............................. , ............................ , . . . . . . 72
Albertson's. , ................. , ............................ , .......... , ......... 74
Winn-Dixie .. , ............... , ................. , ................................ 75
Grand Union .... , .......................................... , ..... , .............. 76
Southland .................. , ................................................... 78
Spatial lesson ..................................... , .............................. 79
viii CONTENTS
Restaurants ....................................................................... 82
Burger King . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Wendy's ....................................................................... 85
Long John Silver ................................................................. 86
Church's ....................................................................... 87
Winchell's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Victoria Station .................................................................. 90
Fast food chains ................................................................. 93
SPECIAL TY STORES ............................................................... 94
Home Furnishing .................................................................. 94
Levitz .......................................................................... 94
Payless ............................ '.' ........................................... 99
Lowe's ........................................................................ 105
Toys and Books .................................................................. 110
Toys »R» Us ................................................................... 110
B. Dalton ...................................................................... 113
Promotional Apparel .............................................................. 118
Hit or Miss, T.J. Maxx .......................................................... 118
Mervyn's .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 121
Loehmann's ................................................................... 125
Fashion Apparel .................................................................. 128
Lord & Taylor .................................................................. 128
Saks Fifth Avenue .............................................................. 131
Neiman-Marcus ................................................................ 135
I. Magnin .......................................... _ ........................... 138
Fashion chains ...................................... __ . . . . . . . . . . . . . . . . . . . . . . . .. 138
Common Features ................................................................ 140
DISCOUNTERS ................................................................... 142
Korvette ....................................................................... 143
Almart ........................................................................ 145
Venture ....................................................................... 147
Gold Key etc .................................................................... 149
Target ......................................................................... 152
Caldor ........................................................................ 158
Wal-Mart ...................................................................... 162
Low-markup department stores ................................................... 168
DEPARTMENT STORES ........................................................... 169
Generalities ...................................................................... 169
Allied Stores .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 172
Associated Dry Goods ............................................................. 181
R.H. Macy & Co .................................................................. 189
Federated Department Stores ....................................................... 196
May Department Stores ............................................................ 209
Dayton Hudson .................................................................. 217
Carter Hawley Hale ............................................................... 225
Common Traits ................................................................... 234
CONCLUSION .................................................................... 238
ABBREVIATIONS ................................................................. 246
REFERENCES ..................................................................... 247
APPENDICES ..................................................................... 252
ABSTRACT
Risto Laulajainen: Spatial Strategies in Retailing.
Fifty-seven retailing organizations (companies or divisions) are studied for the purpose of finding
regularities in their spatial behavior at the regional and national level. Six of the cases are from Swe
den, the remainder from the V.S. Most discuss the period 1945-1983 although the earliest ones date
from the 1870s. Practically all usual retailing formats are represented.
In Sweden the behavior is easily categorized as either contagious or hierarchical diffusion. In the
V.S. some organizations also fit this dichotomy. Many others, however, show traces of diffusion
behavior only when a corporate space, smaller than the 48 contagious states, has been defined in
advance. Still others do not fit the diffusion scheme at all. The rapid pace of change with ensuing
random effects is one explanation. Another is the impact of competition which has hardly been
measured at all. The third one is the availability of acquisition-ripe companies, an essentially non
spatial exponent.
Two explanatory schemes are tried for the traces of orderly spatial behavior discovered: Copeland IS
classification of goods; and the sales margin juxtaposed with the bulkiness of the merchandise and its
need of backup service such as advertising. Copeland IS classification lacks explanatory value while
the sales margin approach holds a limited promise. Even so, the human factor and, in broader per
spective, corporate tradition are often more influential than theoretically attractive spatial concepts.
Key words: retailing, spatial, strategy, Sweden, V.S.A.
ix
PREFACE
Locational research has long been concerned with industrial plants and the site selection of retail
stores. The major determinants and decision processes now seem to be fairly well understood. Con
sequently, the research frontier in retailing has shifted to a higher spatial level, the location of stores
in the regional and national context. Certainly, stores tend to be found where the population is, but
beyond this obvious truth it is by no means outright clear how retailing companies with different
formats and home bases perceive space and how space affects their performance, if at all.
When the question is put this way, what appears trivial at first undergoes a change and seems now
complex enough to be worth a closer look. It need not be true, to cite the most obvious of examples,
that regions which are attractive as places of living for high-school and college students, the custom
ary data base, are also worthwhile from the business point of view. No attempt is made here to pen
etrate the topic at analytical depth. The ambition is simply to discover, with the help of numerous
descriptive examples, whether any order does exist in the high-level spatial behavior of retailing
companies.
If the answer is in the affirmative, it may also be possible to suggest behavioral patterns which are
either beneficial or harmful to the financial result of the company. As behavior necessarily involves a
time dimension, the approach has a heavy historical tilt. And because the financial result has many
other aspects than space alone, the cases to be discussed will contain a good deal of non-spatial
background also.
The insight that the frontier of spatial retailing research is no longer at the local level does not come
from thin air, of course. It originates from the Annual Report 1980 of the Dayton Hudson Corpora
tion, page 39 to be exact, which Dr. Kenard E. Smith, Manager, an old academic colleague from the
Virginia Tech, kindly sent over. In February 1985, the insight could be initially tested against the
Corporation's non-proprietary data base under the auspices of Mr. Stephen J. Morris, Director and
Mr. Douglas Schmidt, Administrator. Then and later on, Ken Smith and his Colleagues offered
unfailing support.
Invaluable as this first overview was, it opened more gaps than it closed. The subsequent fillup was
initiated at Kent State University where the Doyen of U.S. retailing geography, Professor Bart J.
Epstein took charge of the lost European. The voyage continued to Management Horizons, Inc.,
Columbus, OH where the President, Dr. William Davidson, granted entry to the superb data files on
a complimentary basis. The Director, Mr. Jon L. Leffler, then took care of the practical details in
Columbus, from Columbus, from the U.S ....
xi
xii PREFACE
The fillup was continued at the Department of Geography and Regional Planning, Indiana Univer
sity of Pennsylvania where the Chair, Professor Ruth 1. Shirey and Associate Professor John D. Ste
phens, also a one-time member of the Virginia Tech faculty, provided the indispensable logistical
backup and the University Library the equally indispensable journals and interlibrary loans. It was
primarily from this base that the retailing companies and various government agencies were con
tacted.
The overall response was good, even cheerful, and when it was reserved there were usually sound
business reasons for being tight-mouthed. Most of the information so received would also have been
available elsewhere -at a cost. Now, corporate responsiveness pressed costs and permitted the inclu
sion of more cases and consequently widened the scope for generalization. Some information, how
ever, such as that contained in Corporate Fact Books, might have been difficult to come by from
other sources, not to speak of interviews, when such were granted, and when the respondent had
been involved in the planning and execution of corporate strategy.
The final fillup, and particularly of older material, was effected with the help of some prominent
business libraries. Baker Library at Harvard University, Mr. Mark Blumberg; Lehman Library at
Columbia University, Ms. Susan Shiroma; Purdue University Libraries, Ms. Ruth G. Rothenberg,
Head; Powell Library at UCLA, Ms. Irene V. Roggia and the Library of the Stockholm School of
Economics and Business Administration, Ms. Kerstin af Sandeberg, Head; should be mentioned in
this context, together with Dr. Neil Smith, Assistant Professor, Columbia University who was help
ful in practical arrangements. This impressive listing must not conceal the basic fact, however, that
the start, before a single U.S. library had been contacted, was made at the Gothenburg Business
Library headed by Ms. Kerstin Wiman. Nor should it be forgotten that Mr. William M. Kernitz,
Manager, The May Department Stores Company supplied a complete set of Annual Reports
1945-1965, a most unusual favor. Mr. Donald D. Williams at Dayton Hudson Corporation, Mr.
William F. Sofsak at Kent State University and Ms. Roxana Sanjines at Indiana University of Penn
sylvania cooperated as Research Assistants and carried much of the thankless burden of routine
work.
The relevant pages of the manuscript were submitted for review in November 1986 to all the Com
panies and their divisions which had provided more than the most rudimentary data, one Annual
Report for example, and which were still in existence. It could be assumed that these organizations
might be interested in seeing in advance how their operations were perceived from the outside.
Another purpose, of course, was to have possibly erroneous facts corrected. Forty-two sets of the
text and figures were sent and comments were received from twenty-three organizations up to the end
of February 1987. Some errors were corrected and suggestions received about aspects which should
be emphasized. The suggestions were implemented when possible, i.e. without changing the general
approach of the report.
There is a feeling that whatever errors and inaccuracies may remain they hardly affect the rather
broad conclusions drawn. In any case, although reasonable care has been exercised when collecting
and preparing the data, the volume should not be used as a reference but the original sources con
sulted instead. For this purpose, they have been given in rather great detail when at all practicable.
As to the scientific control, I am indebted to Bart Epstein, who patiently waded through all the
details and, nevertheless, preserved a comprehensive view. His work and opinion are very much
appreciated. Associate Professor Lage Wahlstrom and Dr. Ragnar Olsson of my own department
kindly agreed to be consulted on cartographic matters.