Small retailer strategies for battling the big boxes: a “Goliath” victory?

Abstract

PurposeThe past 25 years have witnessed a dramatic rise in the dominance of big‐box retailers in the global retail sector and the decline of small retailers. The purpose of this paper is to explore how the intensity of competition with big box retailers moderates the relationship of strategy choice to expected growth.Design/methodology/approachThis study uses cross‐sectional survey data from a group of 199 small retailers in the USA. Hypotheses are tested using linear regression of expected growth on the use of three growth‐oriented strategies. These relationships are subjected to tests of the moderating effect of direct competition with big box retailers.FindingsThis study shows that small retailers pursue strategies of offering previously unavailable goods or services, high quality, and better service to pursue future growth. The interaction effect of strategy with directness of competition with big box retailers, however, has a negative and significant effect on expected growth.Research limitations/implicationsThe data set is from 2003 and is cross‐sectional. Future research on small retailers' strategic preferences should reflect a more recent competitive landscape and employ longitudinal data sets to establish cause‐and‐effect relationships.Practical implicationsSmall retailers need to understand that the strategies they use to pursue growth essentially become strategies for mere survival when competing directly against big box retailers. One small retailer's growth strategy is another small retailer's survival strategy, depending on direct competition with a big box retailer.Originality/valueThis study provides support for the argument that small retailers should pursue growth‐oriented strategies that create value and differentiate them from big box retailers. Under direct competition from big box retailers, however, these growth‐oriented strategies seemingly become mere means for survival. Small retailers need to be aware of blind spots that prevent them from understanding strategy‐performance relationships.