Question

Home Depot, Toys “R” Us, Staples, Best Boy and many other giant retailers (often referred to as “category killers” or “big box” retailers because of their dominance in particular merchandise categories and the sheer physical size of the stores) are fierce competitors and are frequently accused of driving small retailers out of business. Observers who have witnessed this competitive struggle take place over the past decade say the reason that small retailers go out of business is that they “can’t compete” with these giants. The verdict in most cases has been “no contest” between the retail giants and the little guys because the little guy so seldom wins or even gets to stay in business.

From a competitive standpoint, is such an outcome inevitable? Please explain. Is it really the “big guys” driving the “little guys” out of business or is there something more fundamental at work here?

Answer 1

From competitive standpoint its completely possible, because small retailers lack physical size, lack ability to spend massively and innovate constantly, lack expertise and cannot afford price wars if any which can be brutal and bloodbath

Thus small retailers lack competitive advantage and resources to fight with big retailers and thus due to their dominant presence, these small retailers are forced out of business.

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