UNIVERSITY OF GREENWICH

“Small Retailers as Potential Entrants for Large Retailers: An Analysis of Business Strategies of Small Retailers Competing Against Large Retailers in the UK (EAST LONDON)”

Supervisor

DR. STEFFAINI PALADINI

Submitted by

SIMRIT MANIHANI

MASTERS IN BUSINESS ADMINISTRATION

(INTERNATIONAL BUSINESS)

SEPTEMBER 2009

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ACKNOWLEDGEMENT

In an attempt to do this research in efficient manner, I needed guidance from someone

who is well experienced in this field. The guidance and advice that came from my

supervisor Dr. Steffaini Paladini who is very experience and into the profession of

teaching from number of years, I am really grateful to her for her support and help.

Her supervision paved way to successful completion of my research. I would like to

thank Dr. Hanna Yakavenka as well for her guidance throughout the MBA course.

I would also like to thank my family for all their support and care without which I

would not have been able to complete my research. My warm thanks to all my friends

who helped me understand things better. Last but not the least I would like to thank

all the respondents of the questionnaire and interviews who helped me to get the most

needed primary data.

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TABLE OF CONTENTS

Page No.

Acknowledgement 2

Abstract 4

Chapter 1: INTRODUCTION .................................................... 1-4

1.1 Background Information................................................... 1

1.2 Aims and Objectives......................................................... 2

1.3 Research Questions.......................................................... 2

Chapter 2: LITERATURE REVIEW............................................. 5-25

2.1 Introduction...................................................................... 4

2.2 Survival and growth in Retail Industry.............................. 6

2.3 Competition and Retail Industry....................................... 6

2.4 Small versus Mega stores in Retail Industry 10

2.5 Summary …………………………………………………………..13

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Chapter 3: METHODOLOGY.................................................... 26-32

3.1 Introduction ..................................................................... 15

3.2 Design of Research........................................................... 15

3.3 Method of Research.......................................................... 17

3.4 Data Collection................................................................. 18

3.4.1 Primary Data........................................................... 18

3.4.2 Secondary Data...................................................... 18

3.5 Sampling Design............................................................... 19

3.6 Data Analysis.................................................................... 21

3.7 Ethical Issues…………………………………………………… 21

3.8 Reliability and Validity………………………………………... 21

3.9 Summary…………………………………………………………. 22

Chapter 4: DATA FINDINGS AND ANALYSIS............................. 33-51

4.1 Introduction...................................................................... 24

4.2 Main Body......................................................................... 24

4.2.1 Competition and Retail Industry…………………….. 24

4.2.2 Megastores and Retailers’ Competition……………... 25

4.2.3 Elements of competitive advantage………………….. 27

4.2.4 Challenges before small Retailers……………………. 28

4.2.5 Strategy for small Retailers…………………………… 29

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4.2.6 Private level branding strategy ……………………… 31

4.2.7 Suitable marketing strategies for small retailers… 32

4.2.8 Small stores versus large stores……………………… 33

4.2.9 Active learning model in marketing…………………. 35

4.3 Summary.......................................................................... 36

Chapter 5: CONCLUSION........................................................ 52-54

5.1 Introduction....................................................................... 38

5.2 Summary of Findings......................................................... 38

5.3 Limitation and Future Scope of Research.......................... 40

Bibliography ............................................................................... 40-

47

Appendix ............................................................................... 48-

49

Questionnaire................................................................... 48

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LIST OF TABLES

Table 4.1: Competition and Retail Industry....................................... 25

Table 4.2: Megastores and small retailers’ competition.................... 27

Table 4.3: Elements of competitive advantage................................. 28

Table 4.4: Challenge before small retailers....................................... 29

Table 4.5: Strategy for small retailers .............................................. 30

Table 4.6: Private level branding strategy......................................... 32

Table 4.7: Suitable marketing strategy............................................. 33

Table 4.8: Small stores versus large stores ...................................... 34

Table 4.9: Active learning model in marketing.................................. 35

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ABSTRACT

The aim of this research was to conduct a study on survival and strategy of small

retailers in UK (East London) in the current highly competitive environment leading

large retailers or megastores. The research has answered following research questions:

what are the factors which help sustain small retailers in competitive atmosphere due

to presence of big retailers; what are the strategies and methods adopted by small

retailers in order to compete with large retail firms; what are the changes that has

taken place due to the emergence and development of large retailers; how to

understand people perception for overall progress; are these small retail firms

successful despite of presence of big mega retailers; can there be mutual co-existence

between large and small retailers in present scenario; and how to manage operations

successfully in order to combat pressure coming from megastores domination. In

order to answer these research questions, 25 owners/managers of small retailers in UK

(East London) were surveyed through questionnaire. The major findings of the

research are presented below.

Big retailers in UK (East London) on greater level have challenged the very survival

of small retailers. Megastores have forced small retailers by their price pressures and

brand name and giving them tough competition in UK (East London). Pricing

discount and market information constitute the most effective element of competitive

advantage for megastores in relation to small retailers in UK (East London).

Increasing cost constitutes the major challenge before small retailers in UK (East

London) in the current competitive environment. Increasing and improving service as

strategy is comparatively more suitable (extension of working hours) for small

retailers in UK (East London) to survive and compete with big retailers in the current

environment. Adopting private level branding strategy is a key for small retailers in

UK (East London) to compete with megastores. Product /service quality and low

pricing as elements of marketing strategy would be most suitable for small retailers in

UK (East London) to successful compete with megastores. Small stores can have edge

over the larger stores in UK (East London) as far as the popularity is concerned in the

locality. An active learning model in internal and external marketing may help small

retailers in UK (East London) to compete with megastores.

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Chapter #1 INTRODUCTION

1.1 BACKGROUND INFORMATION

For conducting a research it is very crucial to know why the study is being done in

order to come to a result. However, the researcher tries to examine the factor which

helps the small retailers in finding solution of their rivalry with megastores.

Furthermore, the author needs to find out the reasons for current existence of

megastores.

At present, megastores have grabbed the big share of retail industry. Many people

believe that these small retailers are much experienced in satisfying the need of their

customers in those busy areas. But, currently these megastores have forced small

retailers by their price pressures and brand name and giving them tough competition.

However, small retailers generally come across such troubles in fighting against these

pressures that is finally creating hurdles in the way of their business. It is also seen

that lots of independent retail shops find themselves capable in minimizing this effect

and they being replaced by larger megastores.

This thesis explains the effect of these megastores over the small retailers. When the

researcher focus on the small retailers, then he doesn't mean the roadside or corner

shops or, but to such individual retailers who do their business on the bases of selling

everything which are bought from any megastore in those busy area. Despite getting

constant threat and pressure from the megastores, lots of small retailers are

successfully carrying out their business.

Retailers in the entire area have gained popularity by providing variety of services

and offers to meet the demands of the consumers.

However, lots of retailers have also become unique in this retailing business by

offering extraordinary services and products. Now firms are recognizing the outcome

of their limited resources, in tackling different problems of conducting their business

the segments in an effective manner.

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Despite the challenges and competitiveness of business raised by these megastores

over the retail industry, some small retailers who survive and haven’t vanished are

successfully conducting their business. This research study also explains the elements

which are necessary and that have made eased the working of retailers to survive in

their business development.

The researcher has always become fascinated towards the retail industry and

interested in knowing the results of owning his own retail shops across the country.

By this the author desired to find out the factor involved in the small retailers to close

their business and also to examine the reasons for the survival of retailers.

1.2 AIMS AND OBJECTIVES

To figure out the probabilities for small stores to rival with megastores.

To examine the responsibility of competitiveness of small retailers in rivalry

with Megastore.

To investigate the steps undertaken by small retailers doing differently so as to

rival.

To estimate the level of their success.

To figure out the techniques small retailers shall adopt for being successful

1.3 RESEARCH QUESTIONS

What are the factors which help sustain small retailers in competitive atmosphere

due to presence of big retailers?

What are the strategies and methods adopted by small retailers in order to compete

with large retail firms?

What are the changes that have taken place due to the emergence and

development of large retailers?

How to understand people perception for overall progress?

Are these small retail firms successful despite of presence of big mega retailers?

Can there be mutual co-existence between large and small retailers in present

scenario?

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How to manage operations successfully in order to combat pressure coming from

megastores domination?

To what extent, hyped entry of supermarkets is genuine and inevitable?

What do we mean by Sampling and how it helps in researches?

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Chapter #2 LITERATURE REVIEW

2.1 INTRODUCTION

Lots of new models have been proposed by researcher of different ages regarding the

dynamics of retail industry in order to analyze the potential of growth of market

behavior. The researcher believes that during the course of doing business and

interaction with customers, firms gather information so that they may manufacture

new products in the future. However, the larger firms are more capable to collects

information for better achievement results in the market. The research model tries to

find out where these retail firms are engaged in exploration and research active. They

also found that firms may invest to improve the system of distribution in order to earn

expected future profits. In relation to this number of scholars argues that lack of such

other variables within a firm are the main cause of insufficiency of the current

literature on dynamics of industry. For instance the chains are growing rapidly within

the retail groups of franchising and small-scale service sectors. Large- scale retailing

is treated as a big challenge for maintaining relationships among the retailers and

manufacturers. However, the existence of private brands store adds a new

importance in the trend of competition. In regard to the product, a category retailer

starts their own private labels brands. In this study the researcher has focused on these

Survival and growth in retail industry, Competition and retail industry, Small versus

mega stores in retail industry three points in order to know the exact scenario of the

retail industry which is working for the development of society and for earning profit

in their business.

2.2 SURVIVAL AND GROWTH IN RETAIL INDUSTRY

The literature has examined number of process and approach in order established facts

from the group of hypothesis made on the growth of young and small firms (Klepper

and Thompson, 2006). These concepts have encouraged the growth of theoretical

work by on firm in a dynamics industry.

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The early form of literature focused on the growth of firms who are engaged in

surviving their firms by focusing over the predictions of Gibrat’s law. Lots of new

models have been proposed by researcher of different ages regarding the dynamics of

industry in order to analyze the potential of growth market. Jovanovic (1982) have

recommended an approach based on self-selection, whereby firms are gifted with an

unknown competence stricture, by which they may survive and operate in perfectly

competitive environment .Studying the structure of this method of research, Dunne,

Samuelson and Roberts (1988, 1989) argued that the vanishing of firms prove to be

hazardous both on firm age and its size. However, the predictions of firm growth were

also found to be less clear.).But the net effect of size and age depend on the

importance of success and failure rate as compared with the decrease in the increase

rate of non-failing firms. Evans (1987) argued that the effect of firm depends largely

on the growth.

Although the Jovanovic (1982)’s model has been used and extended in many ways.

Jovanovic and Rob (1987) in particular believe that the effect of firm size over the

survival and growth of product is very essential for markets. The researcher believes

that during the course of doing business and interaction with customers, firms gather

information so that they may manufacture new products in the future. However, the

larger firms are more capable to collects information for better achievement results in

the market. Thus recent approach used by Bernard, Redding and Schott (2006), and

Nocke and Yeaple (2006) further focuses on allowing firms to encourage and

engaged in more than one activity.

Pakes and Ericson (1998) contradicts Jovanovic’s model of passive learning and its

implications However, Ericson and Pakes (1995) model tries to find out where these

retail firms are engaged in exploration and research active . They also found that

firms may invest to improve the system of distribution in order to earn expected future

profits. Applying the information over Wisconsin firms, the researcher focuses on the

passive learning and explains this as a active learning model which is especially

designed for retailing and manufacturing firms. The researcher comes to this result

because the size of the firm and the distribution changes gets closer to the cross-

sectional size of distribution system much faster, in the retail industrialized sector.

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However, at present there are no models of dynamics industry exist within the specific

chains of franchising. Foster, Haltiwanger and Krizan (2006) suggests that firm age

and size of manufacturing, ownership structure may not affect survival and growth

but both points are deeply connected with segments of the economy in retailing

business concern.. Furthermore, the growth may depend over time by the addition of

new outlets in different markets so that to increase the potential buyers through the

retail and service chains. This process also helps in generating variety of “learning”

process over time within the manufacturing firm. Specifically, adding more outlets

means making more new contracts with new or existing franchisees in a geographical

location by the help of chain age and size

While seeing the limitations of information researcher have followed the evaluation

method that how do the working of other firm including heterogeneity, potential may

be affected by the survival and growth and how a firm’s age and size are connected

with organizational growth and survival . In relation to this Geroski et al. (2003)

argues that lack of such other variables within a firm are the main cause of

insufficiency of the current literature on dynamics of industry. For instance the

chains are growing rapidly within the retail groups of franchising and small-scale

service sectors (Basker and Pham, 2007). Evans (1987), for example, suggested that

theories provides important guidelines for firm growth and expanded of age and

size. However, Klepper and Thompson (2006) express a similar view regarding the

effects of age and size on growth which is explained in the experimental literature

the literature also helps in coordinating with other factors like as variables which are

omitted from the list. Dunne, Roberts and Samuelson (1989)

2.3 COMPETITION AND RETAIL INDUSTRY

Large- scale retailing is treated as a big challenge for maintaining relationships among

the retailers and manufacturers. However, the existence of private brands store adds

a new importance in the trend of competition. In regard to the product, category

retailers starts their own private labels brands .The competitive environment is

described as the existence of vertical competition, among the retailers’ dealing with

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private and manufacturers’ brands. This competition plays a significant role in

increasing relevant service for the several industries, mainly within the food industries

and grocery. As a result the private brand has gained significant popularity among the

economics and marketing, literatures in recent retail management. The literature has

given lots of precautionary measure on private labels and over several issues.

However, lots of studies has focused on evaluating why retailers introduce private

labels and what are their impact of intensity over the retail price within the

competition (Cotterill and Putsis, 2000), their strategic positioning and market success

(Sayman et al. 2002), the cost of store brands on retailer profitability (Ailawadi and

Harlam 2002, Kadiyali et al. 2000).

The demands of literature is also a growing within bargaining power of retailers and

manufacturer in general to know how, the big store contribute in manufacturing of

brands image to increase buyer power (Chintagunta et al., 2002).

Furthermore the presence and development of growing literature, has improved the

competition within the big brands store however, some issues are still not explained

and they are under study in regards to the competitive effect of the interaction among

the national brands and private labels product innovation and their vertical and

horizontal level of product differentiation. But the results come up with various

conflicting views over both the theoretical and practical level of research. Some found

that the outcome seems to put positive impact on private labels and over the product

innovation quality. The brand manufacturer may help in producing variety of counter

strategies in regard to the growth of private labels. However, some of these policies

aims at short - term decisions making, while others are based on long- term as rightly

said by Mills (1999). Similarly, Bazoche, Giraud- Héraud and Soler (2005) argues

that manufacturing of advanced quality of private label brand is not necessarily

important for increasing upstream incentives to improve the quality.

This effect of positive upstream incentives has been noted by Steiner (2004) through

the possibility that vertical contest can affect the adoption of non- price strategies

however, this method was also confirmed by a similar method by Steiner (1987).

However , ever-increasing bargaining power of retailers in a higher competitive and

vertical pressures may put a negative effects over such incentives by reducing the

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profits of the manufacturer s’ and making the situation even more difficult for R&D

and finance advertising . There is, indeed, growing concern about the consequences

of buyer power Hence, the non- price strategies have some negative impact on the

expenditures contribute to finance, like as horizontal and vertical product

differentiation product innovation..

Store brands have gained immense attention in recent times. However, there are two

key phases that stylized the facts of increasingly recent patterns. Firstly the private

label products are growing steadily in their market share and a growing emphasis on

branding and marketing retailers are given by these private labels (Senauer and

Venturini, 2005). Furthermore these brands are believed as the market leaders within

the variety of food product categories in Europe and the United States. According to

the report from ACNielsen (The Power of Private Label, 2005), “private label hold

up to 17 %of total sales value for the full year till the ending the first quarter of 2005,

gain momentum up from the 15 percent level of the previous year . This was also

observed that the private label sales was increased up to 5 percent, more than the

double percent rate of growth of manufacturer brands (Tarnowski, 2005). Even

though private labels are still projected to develop within the countries like Germany

Great Britain, or Switzerland but is also difficult to say that these high- share markets

may reach to its desired goal or not.

The second authentic facts about the stylized is that the retailers are increasing the

capacity of their brands by giving focus over the initial traditional and by producing

low price and low quality products. Additionally the rise in the private label sales

share shows a growing trend towards the rising high quality private labels. This trend

also confirms that the private label positioning changes over time. Today, private

labels are increasing exclusively in order to produce their quality standards. However,

in present contest the retailers are also coming up with premium brands. As per

AcNielsen (2005), the development of premium private label products demands are

growing rapidly. Higher premium private label quality is growing among several

product categories.

It is also not hard to exemplify the factors of these stylized details. There are lots of

empirical and theoretical evidence is there at the private label which was offered by

retailers. The literature also suggests that these documents of store brands help in

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doing comparison with higher retailer margins with the manufacturers’ brands who

are contributing to enhance retailers’ profits (Ailawadi and Harlam, 2004;

Narasimhan and Wilcox 1998). Generally, the bargaining power of the retailer is

assumed to be a tool that helps in improving the results of adoption of store brands. A

store brand helps the retailer to bargain at lower wholesale prices over the national

brands with higher unit margins (Scott - Morton and Zettelmeyer 2001).

However, the private labels brands also help retailers in differentiating their stores,

with other market rivals by protecting retailers from price competition, developing

store loyalty for generating revenues. Retailers use a variety of factors for creating a

difference among their stores, like as increasing and improving service, extension of

working hours,etc Furthermore all these measures have certain drawback .. Store

brands are said to be an effective device by which store makes an effective change in

the value of ‘brands’ and develop store loyalty.

Although the private labels brands have not made a distinct identity but there

empirical results shows that they have huge potential to create effective store loyalty

(Brady, Brown and Hulit, 2003). Corstjens M. and R. Lal (2000), argues that theoretic

analysis, helps in proving that quality store brands acts as an instrument by which

retailers may generate a product based store differentiation and store loyalty, towards

customers. Recent experimental studies recommends that improvement in the brand

image of store , store loyalty helps in making a store differentiation and vice- à- versa

with other retailers. It was also suggested that the rise in the bargaining power of

retailers also have the tendency to put competitive pressures which may have negative

effects on upstream incentives in adopting non-price strategies like as product

innovation with vertical and horizontal product separation. The idea behind such

argument is that the buyer holds power in comparison to lower rate of suppliers’

profits due to decrease in R&D expenses (Dobson, 2005; Noll, 2005).

However, the development and adoptability of technological within the food industry

are comparatively very weak in the private labels for improving the brand quality of

new products, their incentives and innovation (Galizzi and Venturini, 2005). Berges-

Sennou et al. (2004) have focused over the growth of private labels share of profits

within vertical structures.

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A decrease in the profit margins of manufacturers’ may reduce the cost of innovation

related activities within the business. This mechanism is governed by the policy of

retailers who wants to improve their product strategy which is said as a basic need for

the improvement of new products. But the recent trend of buyer’s views has

transformed the entire scenario regarding the retail industry within the whole

community of the world market. Now there is very little bur strong theoretical

literature is growing which would help in the evaluating the impact of buyer power

over the incentives. Inderst and Wey (2002) argue that the incentive for a product

improvement helps in the development of buyers’ potential also.

Inderst and Shaffer (2004) have developed a model by which the retail mergers may

improve the capacity of of buyer by decreasing the variety of product and social

welfare. More recently, Inderst and Wey (2005), recommends bargaining theory by

which the want to explain the presences of buyer power within the retail industry for

innovation of products. .On the contrary this model does not accept the existence of

private labels retail sector structure within market. Weiss and Wittkopp (2003, 2005)

recommend in their research that buyer power decreases the upstream incentives at

the innovation of new products among the sample of German food manufacturer’s.

The theoretical literature doesn’t provide a clear picture over the competition and

innovation of price for product innovations. However, the competition has both the

positive and the negative effects on the innovation of incentives. Current study over

the structural growth of retail market has focused on some of the crucial factors that

are important for the development of firms (brands) heterogeneity. A clear prediction

regarding the theoretical is that and competitive pressure among these firm’s may

reduces the profit level of new product in an industry and within the similar firms.

For instance, Boone (2000) explains that a negative effect over the innovation of

models with asymmetric firm not only helps in the growth of firm’s positioning but

also provides space to the product. Boone (2001) also recommends that an

improvement in the intensity level of competition does not recommend the growth in

the lower profits for all firms within the forces of the market.

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Even though the current trend of theoretical developments provides important insights

about the impact of buyer power over the incentives.

2.4 SMALL VERSUS MEGA STORES IN RETAIL INDUSTRY

The features and attributes of retails store have been acknowledged as an important

factors within the determinants of US stores ( Baker et al., 2002; Burke, 2002;

Carpenter and Moore, 2006). Sherman et al. (1997) also stress over the factors such as

store environment, design Carpenter and Moore (2006) in order to find out attributes

such as atmosphere, price competitiveness, cleanliness, and product selection. Which

are believed to be the key factors among the market operation? Pan and Zinkhan

(2006) in their study of meta-analytic identifies that the price, product quality,

convenience, product service quality, friendliness of sales-personnel, are the main

determinants of patronage intention. (Broadbridge and Calderwood, 2002; Ganesh et

al., 2007).

This research also focuses over the functional benefit in the selection of theseretail

store. Others believes that the traditional utilitarian behavior may not be sufficient for

encouraging the consumers (Arnold and Reynolds, 2003). However, the Literature on

the international and rural retailing sectors are also important for making a store

choice (Brennan and Lundsten, 2000; Ganesh et al., 2007). These researches also

focus on various intangible dimensions for determining the selection and support of

retail store for local environment, for providing customer service, familiarity of

products and comfort to the shop owners. The literature on consumer assessment

also recommends other aspects of store loyalty (Carpenter and Moore, 2006; Jones et

al., 2006). The research also suggests a positive relation among the perception of

retail store consumers over various dimensions. Pan and Zinkhan (2006) carried of

same meta-analytic study process for determining the retail industry. These research

recommends that consumers choose a store type because they wants to fulfill their

need provided by the market and in order to fulfill their demands they come in

contact with these small retail stores .

However, it was also believed that local stores are advantageous over the larger stores

as for as the popularity of the firm is concerned. This scenario is very true for smaller

retail stores within a small community where the the consumers have to make a

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choice among the national and over international brands generally in the case of

emerging economies. Large stores also be seen as influential towards these low

income society and economy (Brennan and Lundsten, 2000; Broadbridge and

Calderwood, 2002; Goodno et al., 2004). However, lots of communities, within the

US, have opposed the starting of large stores like as Wal-Mart (Editorial, 2003).

However, these larger stores hire locally train people for running these mega stores

(Crosby et al., 1990). These large stores also enjoy the functional dimension like as

such as— selection, economies of scale, more extensive merchandise competitive

prices, and quality, and time utility (Brennan and Lundsten, 2000). Thus, shopping at

these local level stores also helps in supporting the growth of local environment and

economy for the benefit of local people in terms of salaries, living standards and other

functional benefits.

These findings are very true for doing recommendation of making purposed plan of

action for improvement in retail sector entirely. While these incursion of multinational

also helps in increasing the participation of retail industry with the emerging trend of

economies worldwide (D'Andrea et al., 2006; Maharajh and Heitmeyer, 2005).

However, this move was also supported by the shoppers, to reduce the negative

effects of such conflict within the small local businesses for influencing the social

structure among communities (Bianchi and Ostale, 2006; Hernandez and Fugate,

2004).

However, in spite of these negative sentiments,these large stores continue to grow

within the society with the emerging trends of economies (Kearney, 2006; Maharajh

and Heitmeyer, 2005). Furthermore, in a recent article published in the Business

Research, Journal of Babin et al. (2006) said that the interest of the business in the

retail sector depends on the behavior of the consumers. Experience from another in

the retailing field (Carpenter and Moore, 2006; Ganesh et al., 2007). However, little

attention has been given on the retail choice and the motivational approach of

emerging markets. Some exceptions of these rules are seen within the retail markets

of China (Uncles and Kwok, 2009).

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Within the past three decades the trend of retail market has changed dynamically

around the world. Larger store formats have grown rapidly with a variety of goods

and services, extensive marketing strategies and longer shopping hours have

transformed the mindset of the shoppers from the traditional retailing. This trend has

also raised the competitive pressure over the smaller stores who have their

“monopolistic” attitude within their neighborhoods society. However, supermarkets

are relatively more trendy in the developing countries and they are growing at a rapid

stores but as seeing these structural changes these small retailers and producers are

also following the same trend with little negative features and improved in the

political pressure over them (Reardon and Hopkins, 2006).

The key changes that occurred in Europe and the US demand side during the mid-

seventies and a couple of decades later within Latin America. States that demand are

connected to the economic factors and also to the demographical events, sociological

pressure. The retail business also helps in improving the per capita income of the

workforce for the expansion of supermarkets with giving additional focus on market

segments.

Retailers are said to be the intermediaries’ link among the consumers and producers

within a distribution chain. As argued by Spulber (1999). For instance, these retail

industry serves as a mitigate transaction costs to diversify the risk involved in the

fluctuating demand and supply. They also work to reduce the problems associated

within asymmetric information: about the retailer who have a good reputation within

the market and society.

2.5 SUMMARY

The demands of literature are also a growing within bargaining power of retailers and

manufacturer in general to know how, the big store contribute in manufacturing of

brands image to increase buyer power. Furthermore the presence and development of

growing literature, has improved the competition within the big brands store however,

some issues are still not explained and they are under study in regards to the

competitive effect of the interaction among the national brands and private labels

product innovation and their vertical and horizontal level of product differentiation.

But the results come up with various conflicting views over both the theoretical and

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practical level of research. Some found that the outcome seems to put positive impact

on private labels and over the product innovation quality. The theoretical literature

doesn’t provide a clear picture over the competition and innovation of price for

product innovations. However, the competitions have both the positive and the

negative effects on the innovation of incentives. Current study over the structural

growth of retail market has focused on some of the crucial factors that are important

for the development of firms (brands) heterogeneity. A clear prediction regarding the

theoretical is that a competitive pressure among these firm’s may reduces the profit

level of new product in an industry and within the similar firms. In this study the

researcher has focused on these Survival and growth in retail industry, Competition

and retail industry, Small versus mega stores in retail industry three points in order to

know the exact scenario of the retail industry which is working for the development of

society and for earning profit in their business. In this study the researcher has

focused on these Survival and growth in retail industry, Competition and retail

industry, Small versus mega stores in retail industry three points in order to know the

exact scenario of the retail industry which is working for the development of society

and for earning profit in their business.

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Chapter #3 RESEARCH METHODOLOGY

3.1 INTRODUCTION

Research methodology forms an important part of research study. This chapter

contents the important part of research methodology. Methodology is an integral part

of research as it includes some of the very important decisions that how the study

would progress. This chapter includes the following point in view of this research

study: research design, research method, data collection, sampling design, data

analysis, ethical issues, reliability and validity.

3.2 RESEARCH DESIGN

Research design includes plan and strategy of all the stages of research study. It

includes that what all activities will be required, how and when they will be carried

out, whom and where the tasks will be performed (Lincoln and Guba, 2000). A well

designed research study can be completed on time and with the reliable and valid

outcome to can be generalized. There are two research design approach to perform a

study: Positivism and Interpretivism (McQuarrie, 2006).

Positivism research approach believes that the universal laws are there in the society

which governs the social events. Studying these laws will enables the researchers to

explain, control and predict the social phenomena. Positivism accepts that truth and

knowledge that reality is correspondence with the external referent. In this way the

theory of truth lay down that truth is in reality a hypothesis which needs to be proved

with an independent reality accepted as true if agrees or false if it doesn’t (Schindler

and Cooper, 2006). On the other hands, interpretive research study the meanings,

beliefs, and values of social phenomena to get sympathetic and deep understanding

human experiences and activities of culture. These approaches take distinct

epistemological positions about purposes, assumptions, foundations of theories at the

time of producing inquiry modes of research (Webb, 2002).

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Inductive research approach starts with observation of general characteristics and

statistical analysis to develop hypothesis. In this research approach research first

observe the market, evaluate the trends and market patterns and then select a set of

characteristics for study (Webb, 2002). After forming the research hypothesis the

research observe or study the market pattern on the broader level to prove the

hypothesis. In this way, the inductive research approach goes from specific to

generalization (Ploeg and Moffit, 2002).

Deductive research approach goes opposite to inductive approach (Polit and Beck,

2003). This approached is used to establish and prove the existing theories. In this

research first of all the research studies the previous research that will judge the

applicability of the theory. Researcher first built hypothesis on the basis of theory and

then prove it by collecting the market data.

Some researchers view these two, inductive and deductive, reasoning forms as duals.

Out of these approaches the later is more developed and understood (Webb, 2002).

Though, deductive reasoning is a well researched and understood it suffers from

limitations. This approach is not able to explain the generalized properties. This

means the outcome has to be derivable from axioms. The selection of the research

design for a study depends on the type of the research in which the researcher wants

to complete his research (Polit and Beck, 2003).

This research was focused to look at survival and strategy of small retailers in

UK(East London) in the current highly competitive environment leading large

retailers or megastores. This required general surveillance of small retailers UK(East

London). For this, adopting inductive research design was prerequisite. As per

inductive design the research followed following processes: firstly literature was

reviewed regarding survival and strategy in retailing ( with reference to small

retailers) ; and further research issues were identified and based on those issues

questions were framed for first hand data collection; finally the data was analysed in

such a mode so that research questions are properly responded.

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3.3 RESEARCH METHOD

Generally, researchers confuse between research approach and research method, and

treat them as same. But, there is significant difference between them. Research

approach, where tells that what will be the research path, research methods tells that

how the research will be completed. Qualitative and quantitative are the two research

methods (Johnson and Turner, 2003).

Quantitative research methods use statistical and numerical process to answer the

research questions. In quantitative research statistics is used in different ways on

different research stages to support research studies. Descriptive statistics are the

numbers used to denote an item. This method has an advantage that the missing items

can be easily fulfilled as it uses numbers to specify responses (Wholey et al., 2004).

Researcher should start statistical analysis planning as the research starts. It is because

the decision of statistics to report and use of analysis techniques affects the variable

measurement, questions addressed and the level and type of information collected for

the study (Ploeg and Moffit, 2002).

Qualitative method was developed especially for social science to help researchers to

understand and study cultural and social phenomena. The research method is done

through textual analyses, ethnography, and case study (Denzin and Lincoln, 2000).

The data sources for qualitative research are observation, open-ended questionnaire,

interviews, texts and documents. The advantages of the research method are that the

researchers get ample, in-depth information through this method, which helps in

detailed analysis (Streubert Speziale and Carpenter, 2003).

There is a third ‘mixed’ method as well. In this method researchers combines or mix

research techniques, approaches, methods, languages or concepts in a single study

(Onwuegbuzie and Johnson, 2004). This is the third research method, which is

offering a practical and logical research alternative (de Waal, 2001). This method is

considered to have advantages of both qualitative and quantitative research.

A research being conducted with inductive design is expected to put into application

qualitative method. Hence, it was quite obvious to apply qualitative method for

conducting this research. More importantly, the research questions were found to be

easily responded using qualitative method. Following were the research questions in

this research: what are the factors which help sustain small retailers in competitive

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atmosphere due to presence of big retailers; what are the strategies and methods

adopted by small retailers in order to compete with large retail firms; what are the

changes that has taken place due to the emergence and development of large retailers;

how to understand people perception for overall progress; are these small retail firms

successful despite of presence of big mega retailers; can there be mutual co-existence

between large and small retailers in present scenario; and how to manage operations

successfully in order to combat pressure coming from megastores domination. In

order to answer these research questions, there was option to choose several tools for

conducting qualitative research(such as focus group, interview, observation and

questionnaire). But only questionnaire method was used for conducting this

qualitative research due to time constraints.

3.4 DATA COLLECTION

Selection of appropriate data collection method is equally important as important the

selection of data collection source. There are two types of data: primary and

secondary. Data types depend on the source of the data from where the data has been

collected. Sometimes, it is essential to use primary data, while sometimes secondary

data is easy and convenient to collect.

Secondary data is the data collected from the other existing sources, in which it was

collected for any other purpose. The source of the secondary data can be existing

research reports, government gazettes, company reports, magazines, newspapers, and

books (Webb, 2002). Though, it is easy to conduct research with secondary data. But,

it has limited use because the data is not specific for the research questions and the

reliability of these data can’t be judged. Still, most of the time secondary data is used

for marketing research studies, as it is easy to collect and economical to collected lots

of data in less time (Ploeg and Moffit, 2002).

Primary data is collected first time for answering specific queries. These data are also

called first hand data as collected by the research him/herself. There are several

sources of primary data that includes interviews, observation, focus group study,

experiment, test, and questionnaire survey. The advantages of primary data are that it

is collected by the researcher, so the reliability is high and it is more appropriate to

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answer the research queries as collected specifically for them. Time consuming and

expensive nature are the disadvantages of primary data (Onwuegbuzie and Leech,

2004).

In this research the primary data collection was decided, as our research design is

inductive. Primary data collection ensures that the data is collected especially for

answering specific research questions, so that the research outcome can be

generalized.

Questionnaire is the instrument used in most of the studies to collect primary data.

Generally, questionnaire is a semi-structured or structured format administered on

paper. Respondents usually fill the questionnaire by choosing a forced-choice or

responses (Webb, 2002). Questionnaire includes two types of questions, open-ended

and close-ended. Open-ended questions are used for interview purpose, while close-

ended is for survey. Close-ended questions have multiple options out of them

respondents choose or mark one option as his/her response (Schindler and Cooper,

2006). Most of the survey uses close-ended questions, which is easy for respondents

to understand and fill quickly. Questionnaire survey can be done in person or through

mail or telephone (Ploeg and Moffit, 2002).

At the time of preparing questionnaire, the selection of the questions should be done

carefully. The questions should be direct and easy to understand so that respondents

can fill them without any support or assistance. It should also kept in mind that the

questions in the questionnaire are not personal on which respondents may hesitate

while answering (Schindler and Cooper, 2006).

As an inductive research, this research required collection of both secondary and

primary data. Therefore, both secondary and primary data was collected to achieve the

aim and answer the research questions in this research. In fact, secondary and

primary data collection was balancing to each other in this research. In other words ,

secondary data collection paved the way for primary data collection in this research.

Secondary data was collected in this research in the form of external sources as books

and journals. Further, primary data was collected in this research through

questionnaire. The questionnaire consisted of 10 close-ended questions and was

directed either telephonic or in person.

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3.5 SAMPLING DESIGN

In case of most of the research studies, it is not feasible to study the whole targeted

population. To save time and to conduct research study from that research outcome

can be generalized sample is used for survey. Sampling allows the researchers to get

the nearly close results which he can get from the study of the whole population

(Ploeg and Moffit, 2002). There are two major group of sampling: probability and

non-probability.

Probability sampling techniques is also called random sampling. In probability

sampling each population element has equal known chance to be selected in the

sample (Webb, 2002). That’s why researchers place great confidence on this sampling

technique. It is also possible to estimate and remove sampling error if any. There are

generally four types of sampling: stratified random, simple random, systematic, and

cluster sampling (Schindler and Cooper, 2006).

Nonprobability sampling is not based on probability and the sample selection is done

non-randomly. As the probability is not calculated and known in the method, there are

fewer chances that the sampling represents the whole targeted population (Webb,

2002). Though, researchers also use this method because it is always not possible to

use probability sampling, like in case if the whole population size is not known. This

sampling technique can also give representative results if the sample selection is done

carefully (Schindler and Cooper, 2006). There are three major Nonprobability

sampling methods: purposive, quota and convenience.

For selecting the sample in this research for directing questionnaire, non-probability

sampling method was opted. This was for the reason that the researcher was not sure

as which particular person to be selected. For this reason, based on own judgment

sample was selected from owners/managers of small retailers in UK(East London).

The sample size was 25.

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3.6 DATA ANALYSIS

The data was analysed in this research in the framework of inductive-qualitative. First

of all the data was processed and structured in a systematic format. Then, the analysis

was done with the help of computer assistance by using MS Excel. Data analysis for

this research has been done in many sections based on the questions in the

questionnaire. In every data analysis section first the concept on which the question

was based has been explained in relation to literature part then the primary data

analysis has been given.

3.7 ETHICAL ISSUES

The increasing use of market research information for formulating business strategy

has increased the ethical concern for research studies. It has become very important to

safe keep privacy of research participants (Webb, 2002). In practice very little

attention has been given on this issue. This research has been done while following

the standard ethical practices. That’s why the questionnaire used for survey doesn’t

content any direct personal question and no personal information was collected

(Schindler and Cooper, 2006).

Carefully addressing the ethical issues was the prime focus in this research ,

considering the ethical requirement in a research . A variety of ethical issues that were

addressed in this research were many where prime focus was given on avoiding

plagiarism, appropriately referencing the matters taken from books and journals,

continuing uniformity in the whole research process, and uphold privacy of those

were involved directly in the research through questionnaire.

3.8 RELIABILITY AND VALIDITY

Reliability is the concept which is used to evaluate or test research outcome.

Reliability mean the closely same research results can be achieve on repeat study or

test. This is related to the quality of the research to evaluate research quality

(Stenbacka, 2001). This type of research outcome can be achieved through conducting

the research according to the research design and methods.

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Validity of a research means the tools and techniques used in the research is valid or

not. Wide range of validity terms is described in qualitative studies (Winter, 2000).

Creswell and Miller (2000) say the research validity can be affected by the perception

of the researchers through the choice of assumption of paradigm. Thus, researchers

may develop their own validity concepts and adopt which they find most appropriate

(Davies & Dodd, 2002; Stenbacka, 2001). The tools and techniques used in this

research study are established and proved that ensure the research validity.

For maximizing the reliability and validity of this research, pilot study was conducted

to pre-test the questionnaire. For this a few experts in the field were involved in a

group discussion, where they were asked to provide their view concerning the variety

of issues recognized. Finally based on the outcome of the discussion, questions were

decided for the questionnaire.

3.9 SUMMARY

Research methodology has the all essential part of research decisions which decides

the path of research process. In this research the research design was chosen

inductive, while looking to the research requirement. The research method was

selection qualitative, because the information should be detailed and huge to answer

the research questions. Primary data collection method was selection to gather new

and specific data, which is also necessary for inductive research. By looking to the

targeted population for the research, non-probability sampling technique was selected.

Overall the research has been completed with an appropriate and most suitable

research strategy. This research was focused to look at survival and strategy of small

retailers in UK(East London) in the current highly competitive environment leading

large retailers or megastores. This required general surveillance of small retailers

UK(East London). For this, adopting inductive research design was prerequisite. A

research being conducted with inductive design is expected to put into application

qualitative method. Hence, it was quite obvious to apply qualitative method for

conducting this research. More importantly, the research questions were found to be

easily responded using qualitative method. As an inductive research, this research

required collection of both secondary and primary data. Therefore, both secondary

and primary data was collected to achieve the aim and answer the research questions

Page | 22

in this research. For selecting the sample in this research for directing questionnaire,

non-probability sampling method was opted. The data was analysed in this research in

the framework of inductive-qualitative.

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Chapter #4 FINDINGS AND ANALYSIS

4.1 INTRODUCTION

This chapter is the most decisive part of the research in hand. The findings of the

research are analysed in accordance with the questions asked to the research

participants. The total 9 questions were asked to the research participants. The data

collected through questionnaire is presented in simple statistics and the findings are

analysed through triangulation. In accordance with triangulation method, for every (of

the 9) research issue firstly the related them of the literature is discussed (as research

proposition) and further the empirical data collected through questionnaire

(approaching 25 owners/managers of small retailers in UK East London) is

interpreted and analysed. The interpretation and analysis is carried out in such a way

so that research questions are answered.

4.2 MAIN BODY

Competition and Retail Industry

The research literature suggests that large- scale retailing is treated as a big challenge

for maintaining relationships among the retailers and manufacturers. However, the

existence of small store adds a new importance in the trend of competition. In regard

to the product, category retailers starts their own private labels brands .The

competitive environment is described as the existence of vertical competition, among

the retailers’ dealing with private and manufacturers’ brands. This competition plays a

significant role in increasing relevant service for the several industries, mainly within

the food industries and grocery. As a result the private brand has gained significant

popularity among the economics and marketing, literatures in recent retail

management. The literature has given lots of precautionary measure on private labels

and over several issues. However, lots of studies has focused on evaluating why

retailers introduce private labels and what are their impact of intensity over the retail

price within the competition (Cotterill and Putsis, 2000; Putsis and Cotterill, 1999),

their strategic positioning and market success (Sayman et al. 2002), the cost of store

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brands on small retailer profitability (Ailawadi and Harlam 2002, Kadiyali et al.

2000).  In the light of these propositions, it was examined in this research as to what

extent big retailers have challenged the very survival of small retailers in UK (East

London). The data collected in this regard divulges that big retailers in UK (East

London) on greater level have challenged the very survival of small retailers (see

table and figure 4.1).

Table 4.1: Competition and Retail Industry

To great extent To some extent Not at all0%

10%

20%

30%

40%

50%

60%

70%

80%76%

24%

0%

Figure 4.1: Competition and Retail Industry

As the data report in this table reveals for respondents in greater majority (76% out of

the total 25), they find that big retailers ‘to great extent’ have challenged the very

survival of small retailers in their city; whereas for the remaining respondents (24%),

they find that big retailers ‘to some extent’ have challenged the very survival of small

retailers in their city. By and large, these data conclude that big retailers in UK (East

London) on greater level have challenged the very survival of small retailers.

Megastores and small retailers’ competition

Page | 25

The research literature suggests that the early form of literature focused on the growth

of firms who are engaged in surviving their firms by focusing over the predictions of

Gibrat’s law . Lots of new models have been proposed by researcher of different ages

regarding the dynamics of industry in order to analyze the potential of growth market.

Jovanovic (1982) have recommended an approach based on self-selection, whereby

firms are gifted with an unknown competence stricture, by which they may survive

and operate in perfectly competitive environment .Studying the structure of this

method of research, Dunne, Samuelson and Roberts (1988, 1989) argued that the

vanishing of firms prove to be hazardous both on firm age and its size. However, the

predictions of firm growth were also found to be less clear.).But the net effect of size

and age depend on the importance of success and failure rate as compared with the

decrease in the increase rate of non-failing firms. Evans (1987) argued that the effect

of firm depends largely on the growth. At present, megastores have grabbed the big

share of retail industry. Many people believe that these small retailers are much

experienced in satisfying the need of their customers in those busy areas. But,

currently these megastores have forced small retailers by their price pressures and

brand name and giving them tough competition. However, small retailers generally

come across such troubles in fighting against these pressures that is finally creating

hurdles in the way of their business. It is also seen that lots of independent retail shops

find themselves capable in minimizing this effect and they being replaced by larger

megastores. In the light of these propositions, it was examined in this research as

whether megastores have forced small retailers by their price pressures and brand

name and giving them tough competition in UK (East London) . The data collected in

this regard divulges that undoubtedly megastores have forced small retailers by their

price pressures and brand name and giving them tough competition in UK East (East

London) (see table and figure 4.2).

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Table 4.2: Megastores and small retailers’ competition

Strongly agree

Agree

Disagree

Strongly disagree

0% 10% 20% 30% 40% 50% 60% 70%

68%

32%

0%

0%

Figure 4.2 : Megastores and small retailers’ competition

As the data report in this table reveals for respondents in majority (68% out of the

total 25), they ‘strongly agree’ to the fact that megastores have forced small retailers

by their price pressures and brand name and giving them tough competition in their

city; whereas for the remaining respondents (32%), they simply ‘agree’ to the fact that

megastores have forced small retailers by their price pressures and brand name and

giving them tough competition in their city. By and large, these data conclude that

undoubtedly megastores have forced small retailers by their price pressures and brand

name and giving them tough competition in UK (East London).

Elements of competitive advantage for megastores in relation to small retailers

The research literature suggests that while seeing the limitations of information

researcher have followed the evaluation method  that how do the working of other

Page | 27

firm including heterogeneity, potential may be affected by the survival and growth

and how a firm’s age and size are connected with organizational growth and survival .

In relation to this Geroski et al. (2003) argues that lack of such other variables within

a firm are the main cause of insufficiency of the current literature on dynamics of

industry.  For instance the chains are growing rapidly within the retail groups of

franchising and small-scale service sectors ( Basker and Pham, 2007). The researcher

believes that during the course of doing business and interaction with customers,

firms gather information so that they may manufacture new products in the future.

However, the larger firms are more capable to collects information for better

achievement results in the market. Thus recent approach used by Bernard, Redding

and Schott (2006), and Nocke and Yeaple (2006) further focuses on allowing firms to

encourage and engaged in more than one activity. In the light of these propositions, it

was examined in this research as what constitutes the most effective element of

competitive advantage for megastores in relation to small retailers in UK (East

London). The data collected in this regard divulges that generally pricing discount and

market information constitute the most effective element of competitive advantage for

megastores in relation to small retailers in UK (East London) (see table and figure

4.3).

Table 4.3: Elements of competitive advantage for megastores in relation to small retailers

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Product/service delivery; 24%

Pricing discount; 40%

Market informa-tion; 36%

Figure 4.3: Elements of competitive advantage for megastores in relation to small retailers

As per data account in this table reveals for respondents in greater majority (76% out

of the total 25), they find that ‘pricing discount’ (40%) and ‘market information’

(36%) constitute the most effective element of competitive advantage for megastores

in relation to small retailers in their city; whilst for the remaining respondents (24%),

they find that ‘product/service delivery’ constitutes the most effective element of

competitive advantage for megastores in relation to small retailers in their city. In

general, these data conclude that generally pricing discount and market information

constitute the most effective element of competitive advantage for megastores in

relation to small retailers in UK (East London).

Challenge before small retailers

The research literature suggests that the effect of positive upstream incentives has

been noted by Steiner (2004) through the possibility that vertical contest can affect the

adoption of non- price strategies however, this method was also confirmed by a

similar method by Steiner (1987). However, ever-increasing bargaining power of

retailers in a higher competitive and vertical pressures may put a negative effects over

such incentives by reducing the profits of the manufacturer s’ and making the

situation even more difficult for R&D and finance advertising. There is, indeed,

growing concern about the consequences of buyer power Hence, the non- price

strategies have some negative impact on the  expenditures contribute to finance, like

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as horizontal and vertical product differentiation product innovation. In the light of

these propositions, it was examined in this research as what constitutes the major

challenge before small retailers in UK (East London) in the current competitive

environment. The data collected in this regard divulges that generally increasing cost

constitutes the major challenge before small retailers in UK (East London) in the

current competitive environment (see table and figure 4.4).

Table 4.4: Challenge before small retailers

Decreasing profit; 40%

Increasing cost; 60%

Figure 4.4: Challenge before small retailers

As the data account in this table reveals for respondents in majority (60% out of the

total 25), they find that ‘increasing cost’ constitutes the major challenge before small

retailers in their city in the current competitive environment; whilst for the remaining

respondents (40%), they find that ‘decreasing profit’ constitutes the major challenge

before small retailers in their city in the current competitive environment. In general,

these data conclude that generally increasing cost constitutes the major challenge

before small retailers in UK (East London) in the current competitive environment.

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Strategy for small retailers to survive and compete

The research literature suggests that recent experimental studies recommends that

improvement in the brand image of store, store loyalty helps in making a store

differentiation and vice- à- versa with other retailers. It was also suggested that the

rise in the bargaining power of retailers also have the tendency to put competitive

pressures which may have negative effects on upstream incentives in adopting non-

price strategies like as product innovation with vertical and horizontal product

separation. The idea behind such argument is that the buyer holds power in

comparison to lower rate of suppliers’ profits due to decrease in R&D expenses

(Dobson, 2005; Noll, 2005). Here, strategy helps small retailers in differentiating their

stores, with other market rivals by protecting retailers from price competition,

developing store loyalty for generating revenues. Retailers use a variety of factors for

creating a difference among their stores, like as increasing and improving service,

extension of working hours, etc Furthermore  all these measures have certain

drawback .. Store brands are said to be an effective device by which store makes an

effective change in the value of ‘brands’ and develop store loyalty. In the light of

these propositions, it was examined in this research as which strategy is

comparatively more suitable for small retailers in UK (East London) to survive and

compete with big retailers in the current environment. The data collected in this

regard divulges that increasing and improving service as strategy is comparatively

more suitable(extension of working hours) for small retailers in UK (East London) to

survive and compete with big retailers in the current environment (see table and

figure 4.5).

Table 4.5: Strategy for small retailers to survive and compete

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Extension of working hoursIncreasing and improving

service

0%10%20%30%40%50%60%70%

36%64%

Figure 4.5: Strategy for small retailers to survive and compete

As the data account in this table reveals for respondents in majority (64% out of the

total 25), they find that ‘increasing and improving service’ as strategy is

comparatively more suitable for small retailers in their city to survive and compete

with big retailers in the current environment; whilst for the remaining respondents

(36%), they find that ‘extension of working hours’ as strategy is comparatively more

suitable for small retailers in their city to survive and compete with big retailers in the

current environment . In general, these data conclude that increasing and improving

service as strategy is comparatively more suitable(extension of working hours) for

small retailers in UK (East London) to survive and compete with big retailers in the

current environment.

Private level branding strategy and small retailers in

The research literature suggests that the presence and development of growing

literature, has improved the competition within the big brands store however, some

issues are still not explained and they are under study in regards to the competitive

effect of the interaction among the national brands and private labels product

innovation and their vertical and horizontal level of product differentiation. But the

results come up with various conflicting views over both the theoretical and practical

level of research. Some found that the outcome seems to put positive impact on

private labels and over the product innovation quality. As rightly said by Mills (1999),

the brand manufacturer may help in producing variety of counter strategies in regard

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to the growth of private labels. However, some of these policies aims at short - term

decisions making, while others are based on long- term.. Similarly, Bazoche, Giraud-

Héraud and Soler (2005) argues that manufacturing of advanced quality of private

label brand is not necessarily important for increasing upstream incentives to  improve

the quality. The second authentic facts about the stylized  is that the retailers are

increasing the capacity of their brands by giving focus over the initial traditional and

by producing low price and low quality products. Additionally the rise in the private

label sales share shows a growing trend towards the rising high quality private labels.

This trend also confirms that the private label positioning changes over time. Today,

private labels are increasing exclusively in order to produce their quality standards.

However, in present contest the retailers are also coming up with premium brands. As

per AcNielsen (2005), the development of premium private label products demands

are growing rapidly. Higher premium private label quality is growing among several

product categories. In the light of these propositions, it was examined in this research

as whether adopting private level branding strategy is a key for small retailers in UK

(East London) to compete with megastores. The data collected in this regard divulges

that undoubtedly adopting private level branding strategy is key for small retailers in

UK (East London) to compete with megastores (see table and figure 4.6).

Table 4.6: Private level branding strategy and small retailers in

Page | 33

YesNo

0%10%20%30%40%50%60%70%80%

76%

24%

Figure 4.6: Private level branding strategy and small retailers in

As the data report in this table reveals for respondents in greater majority (76% out of

the total 25), they find ‘yes’ that adopting private level branding strategy is key for

small retailers in their city to compete with megastores; whereas for the remaining

respondents (24%), they find ‘no’ that adopting private level branding strategy is not

key for small retailers in their city to compete with megastores. By and large, these

data conclude that undoubtedly adopting private level branding strategy is a key for

small retailers in UK (East London) to compete with megastores.

Suitable marketing strategy for small retailers

The research literature suggests that recent experimental studies recommends that

improvement in the brand image of store, store loyalty helps in making a store

differentiation and vice- à- versa with other retailers. It was also suggested that the

rise in the bargaining power of retailers also have the tendency to put competitive

pressures which may have negative effects on upstream incentives in adopting non-

price strategies like as product innovation with vertical and horizontal product

separation. The idea behind such argument is that the buyer holds power in

comparison to lower rate of suppliers’ profits due to decrease in R&D expenses

(Dobson, 2005; Noll, 2005). The features and attributes of retails store have been

acknowledged as an important factors within the determinants of US stores ( Baker et

al., 2002; Burke, 2002; Carpenter and Moore, 2006). Sherman et al. (1997) also stress

over the factors such as store environment, design Carpenter and Moore (2006) in

order to find out attributes such as atmosphere, price competitiveness, cleanliness, and

Page | 34

product selection. Which are believed to be the key factors among the market

operation? Pan and Zinkhan (2006) in their study of meta-analytic identifies that the

price, product quality, convenience, product service quality, friendliness of sales-

personnel, are the main determinants of patronage intention (Broadbridge and

Calderwood, 2002; Ganesh et al., 2007).  In the light of these propositions, it was

examined in this research as which element of marketing strategy would be most

suitable for small retailers in UK (East London) to successful compete with

megastores . The data collected in this regard divulges that product /service quality

and low pricing as elements of marketing strategy would be most suitable for small

retailers in UK (East London)to successful compete with megastores (see table and

figure 4.7).

Table 4.7: Suitable marketing strategy for small retailers

Product/service quality

Low pricing

Store convenience

Customer relationship

0% 5% 10% 15% 20% 25% 30% 35% 40%

40%

32%

16%

12%

Figure 4.7: Suitable marketing strategy for small retailers

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As the data report in this table reveals for respondents in greater majority (72% out of

the total 25), they find that ‘product /service quality’ (40%) and ‘low pricing’ (32%)

as elements of marketing strategy would be most suitable for small retailers in their

city to successful compete with megastores; whereas for the remaining respondents

(28%), they find that ‘store convenience’ (16%) and ‘customer relationship’ (12%) as

elements of marketing strategy would be most suitable for small retailers in their city

to successful compete with megastores. By and large, these data conclude that

product /service quality and low pricing as elements of marketing strategy would be

most suitable for small retailers in UK (East London)to successful compete with

megastores.

Small stores versus large stores and popularity in the locality

The research literature suggests that there is a positive relation among the perception

of retail store consumers over various dimensions. Pan and Zinkhan (2006) carried of

same meta-analytic study process for determining the retail industry. These research

recommends that consumers choose a store type because they wants to fulfill their

need  provided by the market and in order to fulfill their demands they come in

contact with these small retail stores . However, it was also believed that local stores

are advantageous over the larger stores as for as the popularity of the firm is

concerned. This scenario is very true for smaller retail stores within a small

community where the consumers have to make a choice among the national and over

international brands generally in the case of emerging economies. Large stores also be

seen as influential towards these low income society and economy (Brennan and

Lundsten, 2000; Broadbridge and Calderwood, 2002; Goodno et al., 2004). However,

lots of communities, within the US, have opposed the starting of large stores like as

Wal-Mart (Editorial, 2003). However, these larger stores hire locally train people for

running these mega stores (Crosby et al., 1990). These large stores also enjoy the

functional dimension like as such as— selection, economies of scale, more extensive

merchandise competitive prices, and quality, and time utility (Brennan and Lundsten,

2000). Thus, shopping at these local level stores also helps in supporting the growth

of local environment and economy for the benefit of local people in terms of salaries,

living standards and other functional benefits.  In the light of these propositions, it

was examined in this research as whether small stores can have edge over the large

Page | 36

stores in UK (East London) as far as the popularity is concerned in the locality. The

data collected in this regard divulges that certainly small stores can have edge over

the larger stores in UK (East London) as far as the popularity is concerned in the

locality (see table and figure 4.8).

Table 4.8: Small stores versus large stores and popularity in the locality

Yes No0%

10%

20%

30%

40%

50%

60%

70%

80%72%

28%

Figure 4.8: Small stores versus large stores and popu-larity in the locality

As the data report in this table reveals for respondents in greater majority (72% out of

the total 25), they find ‘yes’ that small stores can have edge over the larger stores in

their city as far as the popularity is concerned in the locality; whereas for the

remaining respondents (28%), they find ‘no’ that small stores can not have edge over

the larger stores in their city as far as the popularity is concerned in the locality. By

and large, these data conclude that certainly small stores can have edge over the larger

stores in UK (East London) as far as the popularity is concerned in the locality.

Page | 37

Active learning model in internal and external marketing for small retailers

The research literature suggests that Ericson and Pakes (1995) model tries to find out

where these retail firms are engaged in exploration and research active . They also

found that firms may invest to improve the system of distribution in order to earn

expected future profits. Applying the information over Wisconsin firms, the

researcher focuses on the passive learning and explains this as a active learning model

which is especially designed for retailing and manufacturing firms. Thereacher comes

to this result because the size of the firm and the distribution changes gets closer to

the cross-sectional size of distribution system much faster, in the retail industrialized

sector.  In the light of these propositions, it was examined in this research as whether

an active learning model in internal and external marketing may help small retailers in

UK (East London) to compete with megastores. The data collected in this regard

divulges that certainly an active learning model in internal and external marketing

may help small retailers in UK (East London) to compete with megastores (see

table and figure 4.9).

Table 4.9: Active learning model in internal and external marketing for small retailers

Page | 38

Strongly agree; 64%

Agree; 36%

Disagree; 0% Strongly disagree; 0%

Figure 4.9: Active learning model in internal and external marketing for small retailers

As the data report in this table reveals for respondents in majority (64% out of the

total 25), they ‘strongly agree’ to the fact that an active learning model in internal and

external marketing may help small retailers in their city to compete with megastores;

whereas for the remaining respondents (36%), they simply ‘agree’ to the fact that an

active learning model in internal and external marketing may help small retailers in

their city to compete with megastores. By and large, these data conclude that

certainly an active learning model in internal and external marketing may help small

retailers in UK (East London) to compete with megastores.

4.3 SUMMARY

Big retailers in UK (East London) on greater level have challenged the very survival

of small retailers. Megastores have forced small retailers by their price pressures and

brand name and giving them tough competition in UK (East London). Pricing

discount and market information constitute the most effective element of competitive

advantage for megastores in relation to small retailers in UK (East London).

Increasing cost constitutes the major challenge before small retailers in UK (East

London) in the current competitive environment. Increasing and improving service as

strategy is comparatively more suitable (extension of working hours) for small

retailers in UK East (East London) to survive and compete with big retailers in the

current environment. Adopting private level branding strategy is key for small

Page | 39

retailers in UK (East London) to compete with megastores. Product /service quality

and low pricing as elements of marketing strategy would be most suitable for small

retailers in UK (East London)to successful compete with megastores. Small stores can

have edge over the larger stores in UK (East London) as far as the popularity is

concerned in the locality. An active learning model in internal and external

marketing may help small retailers in UK (East London) to compete with megastores.

Page | 40

Chapter #5 CONCLUSION

5.1 INTRODUCTION

The aim of this research was to conduct a study on survival and strategy of small

retailers in UK (East London) in the current highly competitive environment leading

large retailers or megastores. The research has answered following research questions:

what are the factors which help sustain small retailers in competitive atmosphere due

to presence of big retailers; what are the strategies and methods adopted by small

retailers in order to compete with large retail firms; what are the changes that has

taken place due to the emergence and development of large retailers; how to

understand people perception for overall progress; are these small retail firms

successful despite of presence of big mega retailers; can there be mutual co-existence

between large and small retailers in present scenario; and how to manage operations

successfully in order to combat pressure coming from megastores domination.

5.2 SUMMARY OF FINDINGS

To begin with, it was examined in this research as to what extent big retailers have

challenged the very survival of small retailers in UK (East London). The data

collected in this regard divulges that big retailers in UK (East London) on greater

level have challenged the very survival of small retailers. Additionally, it was

examined in this research as whether megastores have forced small retailers by their

price pressures and brand name and giving them tough competition in UK (East

London) . The data collected in this regard divulges that undoubtedly megastores have

forced small retailers by their price pressures and brand name and giving them tough

competition in UK (East London).

Next, it was examined in this research as what constitutes the most effective element

of competitive advantage for megastores in relation to small retailers in UK (East

London). The data collected in this regard divulges that generally pricing discount and

Page | 41

market information constitute the most effective element of competitive advantage for

megastores in relation to small retailers in UK (East London). Additionally, it was

examined in this research as what constitutes the major challenge before small

retailers in UK (East London) in the current competitive environment. The data

collected in this regard divulges that generally increasing cost constitutes the major

challenge before small retailers in UK (East London) in the current competitive

environment.

As well, it was examined in this research as which strategy is comparatively more

suitable for small retailers in UK (East London) to survive and compete with big

retailers in the current environment. The data collected in this regard divulges that

increasing and improving service as strategy is comparatively more suitable(extension

of working hours) for small retailers in UK (East London) to survive and compete

with big retailers in the current environment. Additionally, it was examined in this

research as whether adopting private level branding strategy is key for small retailers

in UK (East London) to compete with megastores. The data collected in this regard

divulges that undoubtedly adopting private level branding strategy is key for small

retailers in UK (East London) to compete with megastores.

Besides, it was examined in this research as which element of marketing strategy

would be most suitable for small retailers in UK (East London) to successful compete

with megastores. The data collected in this regard divulges that product /service

quality and low pricing as elements of marketing strategy would be most suitable for

small retailers in UK (East London) to successful compete with megastores.

Additionally, it was examined in this research as whether small stores can have edge

over the large stores in UK (East London) as far as the popularity is concerned in the

locality. The data collected in this regard divulges that certainly small stores can have

edge over the larger stores in UK (East London) as far as the popularity is concerned

in the locality.

Page | 42

Lastly, it was examined in this research as whether an active learning model in

internal and external marketing may help small retailers in UK (East London) to

compete with megastores. The data collected in this regard divulges that certainly an

active learning model in internal and external marketing may help small retailers in

UK (East London) to compete with megastores.

5.3 LIMITATION AND FUTURE SCOPE

There are two limitations of this research. The first one is low sample size (25). As in

a questionnaire survey research sample size of 25 is too low. The second limitation

relates to the reliability of the research results as they are entirely based on personal

opinion. Therefore, a quantitative research should be conducted taking data from large

sample of small retailers in UK (East London). Moreover, interviews should also be

conducted from the senior managerial people of megastores or large retailers in UK

(East London).

Page | 43

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A P P E N D I X

Questionnaire

1. To what extent big retailers have challenged the very survival of small retailers in your city?

To great extentTo some extentNot at all

2. How do you agree to the fact that megastores have forced small retailers by their price pressures and brand name and giving them tough competition in your city?

Strongly agreeAgreeDisagreeStrongly disagree

3. What constitutes the most effective element of competitive advantage for megastores in relation to small retailers in your city?

Product/service deliveryPricing discountMarket information

4. What constitutes the major challenge before small retailers in your city in the current competitive environment?

Decreasing profitIncreasing cost

Page | 53

5. Which strategy is comparatively more suitable for small retailers in your city to survive and compete with big retailers in the current environment?

Extension of working hoursIncreasing and improving service

6. Do you find that adopting private level branding strategy is a key for small retailers in your city to compete with megastores?

YesNo

7. Which element of marketing strategy would be most suitable for small retailers in your city to successful compete with megastores?

Product/service qualityLow pricingStore convenienceCustomer relationship

8. Do you find that small stores can have edge over the large stores in your city as far as the popularity is concerned in the locality?

YesNo

9. How do you agree to that an active learning model in internal and external marketing may help small retailers in your city to compete with megastores?

Strongly agreeAgreeDisagreeStrongly disagree

Thank you for your participation

Page | 54