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Big box retailers aren't killing the small retailer, reveals new study

The days of the mom-and-pop retailer won’t be ending anytime soon.

March 29, 2016

The days of the mom-and-pop store won't be ending anytime soon as a new report reveals organized retailing due to big-box store growth is actually strengthening the small business industry.

The research, from the Chazen Institute of International Business at Columbia Business School, illustrates fears that big-box retailers would kill the small local enterprise are likely unfounded.

"Because organized retailing has done so well in some emerging markets, there was a feeling that it would be the death knell for unorganized retail," Kinshuk Jerath, an associate professor in the marketing division at Columbia Business School, said in an announcement. "But the impact of organized retailing is not uniform across different countries and economies. In some economies, such as Chile, independent small retailers are feeling the heat. However, in other economies such as India, what is actually happening is that the market share of unorganized retailing is growing after the advent of organized retailers."

Local merchants are able to charge higher prices and attain higher profit margins due to increased competition in the retail space and market efficiencies due to big retail chain activity. Smaller businesses operate on an extremely small scale, and can maintain a tight control over inventory while also providing a highly personalized consumer experience, explains the report.

"Policymakers can use the insights gleaned from this research to help balance the growth of unorganized and organized retailing in emerging markets," states the announcement.

One "dismal" aspect to the current retail environment is the impact on the consumer, explains the report as shoppers buying from unorganized retailers are likely paying a higher price and those buying from organized retailers risk the cost of waste.