The dynamics of UK grocery retailing at the local scale. (Retail Location: A Strategic Perspective on Planning and Management)

Introduction

There was something of a sea-change in UK grocery retailing in late 1993 and early 1994, with first Safeway, followed by Tesco and then J. Sainsbury all publicly reining back on their aggressive expansion plans. This "changing down of gear" is in contrast with the more rapid growth through new store programmes in the 1980s and early 1990s when the optimism of these same operators contrasted with the more conservative outlook of suppliers and industry analysts[1,2]. The phase of rapid growth and concentration in the grocery sector has been traced and commented on by Wrigley (see[3-5]). Expansion by the "top three" does, however, remain considerable: anticipated level of floorspace openings are still roughly equivalent to those reached in the mid-1980s. The comparatively confident outlook of the top three food operators is therefore still seemingly at odds with the picture painted by industry analysts of rapidly on-setting saturation. Why should this be the case?

Commentators who have attempted to explain saturation theoretically have examined the relationship between market share and outlet share[6], but no clear relationship appears to emerge. In the UK grocery sector specifically, it has been observed that new store expansion appears to be related in some way to the quality of floorspace in a given area and under-representation by individual operators[7]. This would seem to suggest that the competitive quality of retail floorspace in a particular catchment is important in defining the potential to expand or, perhaps more correctly, that the competition between stronger and weaker retail "brands" and competing formats can, over time, effectively serve to redefine local market potential. Indeed, this view -- that retailers can effectively "manage" saturation -- is one which is shared by some industry analysts (for example, see[8]) as well as, perhaps, by the retailers themselves.

An ongoing perspective of competing operators and formats blurring the boundaries of retail potential in a given local market has important strategic implications for location planning by retail organizations and local authorities alike, and is a standpoint examined in a tentative way in this article. To do this, some of the competing explanations of locational change which have been put forward are assessed briefly. The second section then illustrates the discussion with a study of the evolution of the food retailing sector in two cities, Cardiff and Manchester.

Retail Location Dynamics

A number of theoretical traditions have been applied to help explain locational change in retailing. These have been reviewed by Brown[9] who summarized them as environmental, cyclical and conflict theories. Environmental theory attempts to explain the structure of the retail system in terms of retailers emerging, developing, maturing and declining in response to changes in the socio-economic structure of the marketplace. The movement out-of-town in the grocery sector, for example, could be explained as the result of the changing distribution of population and the increased mobility of customers arising from increases in car ownership levels. Cyclical theory, on the other hand, envisages change occurring in an oscillating manner with different types of formats evolving over time in response to each other. These perspectives can be used to explain the arrival on the UK food retail scene of the new wave of limited line European discounters like Aldi and Netto who have been attracted by the high margins of the British operators which offer ample scope for being undercut. In the final perspective, conflict theory, retail change is held to be the result of "inter-institutional strife", established organizations having to respond to innovators of new formats in an ongoing fashion. For example, the growth of the limited-line discounters like Aldi, which emphasizes price as the main attraction, is viewed as a response to the superstores' emphasis on quality; the superstores then respond with their own price initiatives, and so on. Each of these perspectives could be criticized for being somewhat deterministic if used to explain locational changes in the UK grocery sector.

Wrigley's work on the sector is well known (see, for example[5]) and goes some way towards drawing these perspectives together, highlighting the "spatial switching of capital" at intra-urban, inter-regional and international levels as being central to the growth of the most successful organizations. Wrigley's work, clearly building on the ideas of Jones and Simmons[10], writes of geographical change in retail activity as the result of companies locating and relocating their stores in response to the changing "value platforms" of their principal customer segments and to the enhanced appeal of competing operators. Conflict theory underlines much of this way of thinking, and in many respects is the most persuasive in that it provides a rational motor for change. As noted more generally by Harvey[11], the context within which retailing operates is inherently "destructive" in that newly evolving retail formats act to undermine the existing geographical distribution of stores.

Explaining changes in the form and location of retailing through a perspective of conflict between organizations, influenced in turn by environmental changes, is intuitively appealing. Such a view emphasizes the inherent "life-cycle" of a particular type of store, a point raised a number of years ago[12], but it falls short of linking broad processes with local spatial outcomes. To achieve this it is necessary to adopt a more strategic perspective on how location is planned by retail organizations[13], in essence to take a closer look at the "supply-side actors" actions at the local level[14].

The need for a more balanced approach to retail change led Roth and Klein[15] to argue for an "open systems" view of retailing consisting of an examination of the environment, an evaluation of the influence of human behaviour, and the interaction of these two elements. They stress that these three points …