Dissertation - University of Greenwich Small Retailers As Potential Entrants For Large Retailers

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
Chapter 3: METHODOLOGY...................................................................................... 26-32
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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
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
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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?
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 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?
 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
Page | 17
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
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
Page | 24
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
No. of Response in Cumulative

Variables
respondents percentage Percentage
To great extrent 19 76% 76%
To some extent 6 24% 100%

Not at all 0 0% 100%
Figure 4.1: Competition and Retail Industry
76%
80%
70%
60%
50%
40%
24%
30%
20%
10% 0%
0%
To great extent To some extent Not at all
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).
Page | 26
Table 4.2: Megastores and small retailers’ competition

Variables
Strongly agree 17 68% 68%
Agree 8 32% 100%
Disagree 0 0% 100%
Strongly disagree 0 0% 100%
Figure 4.2 : Megastores and small retailers’ competition
Strongly disagree 0%
Disagree 0%
Agree 32%
Strongly agree 68%
0% 10% 20% 30% 40% 50% 60% 70%
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

Variables
Product/service
6 24% 24%
delivery
Pricing discount 10 40% 64%
Market information 9 36% 100%
Page | 28
Figure 4.3: Elements of competitive advantage for
megastores in relation to small retailers
Product/servi
Market ce delivery
information 24%
36%
Pricing
discount
40%
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
Page | 29
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

Variables
Decreasing profit 10 40% 40%
Increasing cost 15 60% 100%
Figure 4.4: Challenge before small retailers
Decreasing profit
40%
Increasing cost
60%
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

Variables
Extension of working
9 36% 36%
hours
Increasing and
16 64% 100%
improving service
Page | 31
Figure 4.5: Strategy for small retailers to survive and compete
70%
60%
50%
40%
30% 64%
20% 36%
10%
0%
Extension of working hours
Increasing and improving
service
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
Page | 32
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

Variables
Yes 19 76% 76%
No 6 24% 100%
Page | 33
Figure 4.6: Private level branding strategy and small retailers in
80%
70%
60%
50%
40% 76%
30% 24%
20%
10%
0%
Yes
No
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

Variables
Product/service
10 40% 40%
quality
Low pricing 8 32% 72%
Store convenience 4 16% 88%
Customer
relationship 3 12% 100%
Figure 4.7: Suitable marketing strategy for small retailers
Customer relationship 12%
Store convenience 16%
Low pricing 32%
Product/service quality 40%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Page | 35
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

Variables
Yes 18 72% 72%
No 7 28% 100%
Figure 4.8: Small stores versus large stores and popularity in the
locality
72%
80%
70%
60%
50%
40% 28%
30%
20%
10%
0%
Yes No
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

Variables
Strongly agree 16 64% 64%
Agree 9 36% 100%
Disagree 0 0% 100%
Strongly disagree 0 0% 100%
Page | 38
Figure 4.9: Active learning model in internal and external
marketing for small retailers
Disagree Strongly
0% disagree
0%
Agree
36%
Strongly agree
64%
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
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
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
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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APPENDIX
Questionnaire
1. To what extent big retailers have challenged the very survival of small
retailers in your city?
To great extent
To some extent
Not 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 agree
Agree
Disagree
Strongly disagree
3. What constitutes the most effective element of competitive advantage

for megastores in relation to small retailers in your city?
Product/service delivery
Pricing discount
Market information
4. What constitutes the major challenge before small retailers in your city
in the current competitive environment?
Decreasing profit
Increasing 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 hours

Increasing 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?
Yes
No
7. Which element of marketing strategy would be most suitable for small

retailers in your city to successful compete with megastores?
Product/service quality
Low pricing
Store convenience
Customer 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?
Yes
No
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 agree
Agree
Disagree
Strongly disagree
Thank you for your participation
Page | 54

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UNIVERSITY OF GREENWICH

“Small Retailers as Potential Entrants for Large Retailers:

MASTERS IN BUSINESS ADMINISTRATION

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

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

2.2 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

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

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

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

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

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

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

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

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

Bibliography ................................................................................................... 40-47

Appendix ................................................................................................... 48-49

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

1.1 BACKGROUND INFORMATION

1.2 AIMS AND OBJECTIVES

 To examine the responsibility of competitiveness of small retailers in rivalry

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

 To estimate the level of their success.

1.3 RESEARCH QUESTIONS

2.2 SURVIVAL AND GROWTH IN RETAIL INDUSTRY

2.3 COMPETITION AND RETAIL INDUSTRY

2.4 SMALL VERSUS MEGA STORES IN RETAIL INDUSTRY

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

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

3.2 RESEARCH DESIGN

3.4 DATA COLLECTION

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

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