The Marketing Book 5th Edition

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Retailing 779


Types of retail organization


The growth of retailer power and influence has
stemmed largely from the concentration of
trade into the hands of fewer, larger enterprises.
This section looks first at this process of
concentration, involving the shift of trade from
independent to multiple retailers. Considera-
tion is then given to symbol retailing, franchises
and co-operatives.


Independents and multiples


The term ‘multiple’ signifies more than one
outlet, but different data sources use different
definitions, e.g. at least two, five or 10 outlets.
In Great Britain, nearly 70 per cent of retail
trade is accounted for by multiples with 10 or
more outlets. The concentration of trade is
especially marked in the grocery sector, where
the multiples’ share grew from 20 to 84 per cent
between 1950 and 2000 (Nielsen, 2001). Table
30.1 estimates the shares held by the top three
multiples in six retail sectors, showing the
power of leading players in grocery, electricals
and DIY.
Retail concentration levels differ markedly
between countries, as Table 30.2 illustrates, and
the UK is by no means unique in experiencing
the growth of retail power. In Australia, Coles
Myer and Woolworth hold 19.0 and 15.5 per


cent respectively of retail trade. In New Zeal-
and, the Foodstuffs Group and Progressive
Enterprises hold respective shares of 19.1 and
10.7 per cent (Euromonitor, 2000). The Cana-
dian and US retail sectors have also seen rapid
growth of chain store shares (Management
Horizons, 2000). In Eastern Europe, concentra-
tion is increasing rapidly: in the Czech Repub-
lic, all of the top five retailers, which include
Tesco, are international.

Voluntary groups


One response of independent retailers and
wholesalers to the growth of the multiples has
been the formation of ‘voluntary’, ‘symbol’ or
‘affiliation’ groups. Within this form of con-
tractual chain, a group name is utilized and
the retailers are normally required to buy a
given proportion of their merchandise through
the group. The organization typically provides
buying and other marketing services, includ-
ing special promotions, advertising and fre-
quently own brands. The group is therefore
able to achieve some of the buying power and
economies of scale characteristic of major
multiples.
Table 30.3 gives examples of voluntary
groups in four sectors. The original Spar group
was founded in the Netherlands in the 1930s,
emulating voluntary group practices then
observed in the USA. It has grown to become a

Table 30.1 Share held by top three multiples


Sector Leading retailers Share %

Womenswear Marks & Spencer, Arcadia, Next 29.5
Menswear Marks & Spencer, Arcadia, Next 23.9
Grocery Tesco, Sainsbury, Asda 36.3
Furniture MFI, GUS/Argos, IKEA 16.6
Electricals Dixon Group, Comet, Argos 40.1
DIY B&Q, Focus, Homebase 73.7

Data are based on IGD and Verdict Research estimates.
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