Store Wars

Although the title suggests this book concerns itself solely with the battle between competing retailers, the actual, and more interesting dichotomy actually explored is that between retailers and manufacturers.
 
In just 21 pages the first chapter provides a powerful potted history of the power struggle between those who make and those who sell over the last 2,000 years, and the decisions that have led to the tension between price-based commoditisation and brand-led innovation today. It’s an excellent example of brevity in academic business writing.
 
The authors explain how the growth in the UK of large multiple hyperstores, with huge fixed and ongoing costs, has forced retailers to push volume in order to maintain their slim margins. The book explains how manufacturers, who still enjoy much more attractive margins, are in turn obliged to give away margin (in the form of trade marketing) equivalent to four times their advertising budget to satisfy retailers demand for lower prices. Yet the book reveals that half of all trade marketing spend is never evaluated for effectiveness!
 
Manufacturers, the authors posit, are now forced to compete for shelfspace based on their share of consumer mindspace (essentially consumer awareness and preference). It’s no wonder then, according to the book, that manufacturers believe retailers hold twice the power of manufacturers in negotiation. This, as the authors explain in some detail, is one reason why some manufacturers have embraced private label to placate retailers whilst filling spare capacity.
 
Where the fight for custom between retailers is discussed, the authors uncover some fascinating and often counter-intuitive case studies. For example, one study showed that price matching between two rival US supermarkets actually helped both chains increase rates without fear of being undercut. Price matching it seems can build profits, whereas price beating often leads to a race to the bottom.  

You may previously have read books that track the rise and fall of specific retailers, or that focus solely on the detail of competition between multiples. The authors of ‘Store Wars’ have instead examined the peculiarities of the relationship between makers and sellers, and the commercial levers at their disposal. In doing so they have created a study that rises above individual brands and personalities and instead gives real insight into the forces that shape FMCG markets worldwide.

Store Wars: The Worldwide Battle for Mindspace and Shelfspace, Online and In-store, 2^nd Edition,, by Greg Thain and John Bradley, Published by Wiley, £29.99, Hardback and e-book, ISBN: 9781118374061

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