A model of retail format competition for non-durable goods

In the academic literature pertaining to store choice, studies have traditionally limited the choice to stores within a certain format. The role played by different retail formats has not been studied extensively. This paper, therefore, develops a general model of retail format choice for non-durable goods. Using one common model, we are able to isolate the states under which patronizing supermarkets, convenience stores, and food warehouses would be optimal. The optimality of the different formats is shown to depend on membership fees, travel costs, consumption rates, perishability of products, inventory holding costs of consumers, and cost structures of retailers. We develop several hypotheses regarding format choice by consumers. We test the hypotheses on self-reports of shopping behavior in hypothetical situations. (C) 2004 Elsevier B.V. All rights reserved.