Wal Mart

SOURCES OF COMPETITIVE ADVANTAGE FOR SMALL INDEPENDENT RETAILERS: LESSONS FROM THE NEIGHBORHOOD DRUGSTORE

Jeffrey E. McGee, The University of Texas at Arlington Leonard G. Love, The University of Texas Arlington Michael J. Rubach, The University of Central Arkansas ABSTRACT Driven by discriminating customers and increasing competition, small independent retailers are searching for new ways to gain and sustain competitive advantage. This paper reports the results of a study designed to complement the research literature by developing a typology of distinctive competencies used by small local retailers to address increased environmental turbulence and to compete with new, larger competitors. Results suggest that small retailers who develop a cohesive group of distinctive competencies have higher levels of performance than neighborhood retailers who develop no distinctive competencies. The most important finding, however, may be that independent retailers who focus on developing a broad range of distinctive competencies across many areas significantly outperform those firms that develop only one or a few competencies. INTRODUCTION There is no getting around it -- times are quite tough for many small independent retailers. The dynamics of changing demographics and consumer purchasing patterns, coupled with ever stronger competition, are putting increased pressure on the local merchant. Appearing everywhere are large merchandisers and discount chain stores. Moreover, so-called category killers like Home Depot, Barnes & Noble and Blockbuster Video have threatened many traditional bastions of independent retailing. In these increasing hostile and turbulent environments, retailers of all sizes are searching for new formulas to achieve competitive advantage. Although the challenges facing small independent retailers are well documented, many local merchants are managing to survive and actually thrive. It is somewhat surprising, therefore, that little empirical research...