Emerging Retail Strategies in Urban Canada

Emerging Retail Strategies in Urban Canada

Tony Hernandez, Magnus Svindal
DOI: 10.4018/978-1-4666-0258-8.ch010
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In this article, the authors examine the spatial distribution of major retail chains across Canada. Using store location data for 2001 and 2006, the geospatial approach adopted in this study allows for the analysis of retail chains’ store portfolios by the size of the resident population of the ‘markets’ within which they operate. The analysis presented highlights the dominance of chain locations within and proximal to Canada’s major urban markets and provides further evidence of increasing interest amongst a number of major chains in ‘small town’ (or ‘C’) markets. It points to a future in which these smaller markets will become more competitive with an increased presence of major retail chains. The findings reported can be seen as the locational imprint of the processes of corporate concentration taking place across Canada, fuelled by the interplay of increased competition, concerns over market saturation and the need to sustain growth.
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Defining Markets

For retailers, decisions relating to which markets to enter (or exit), the type of formats to operate, and the optimal mix of formats for a particular market are amongst the most far-reaching and investment intensive decisions they face (Ghosh & McLafferty, 1987). These ‘location-based’ decisions have long-term strategic implications for retail organisations (Jones & Simmons, 1990). They typically represent a major capital expenditure in the short-run and operating expense in the long-run, during which resources are grounded in the bricks and mortar of the retailer’s store portfolio (Guy, 1994). Once made, location decisions are costly to reverse, making them critical to the overall health of the firm. Therefore, the long-term success of a retailer is directly correlated to sound strategic locational decision making (Thrall, 2002).

The viability of a given market can be formalized as a function of the existing and projected supply and demand relationship. This relationship can be thought of as the amount of demand for a given set of goods and services against the level and type of supply (Berry & Parr, 1988). Demand is typically determined by a combination of measures, including demographics (e.g., population size, age and family structure, employment, education, etc.), and wealth (e.g., income, assets, etc.). These factors are often translated into some form of consumer spend potential, which is ideally subdivided for specific types of goods and services. Supply is generally measured by the size, number, and competitive mix of retailers within the marketplace, along with the retailers own stores and competing chains (e.g., formats, type of location, square footage, etc.).

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