The retail trade industry is the 2nd largest industry in the US and generated more than three trillion dollars in sales in 2002 (Vargas, 2003). Surprisingly enough, this resulted in a 0.4% decrease from 2001 (TDCTrade, 2003). It is more difficult to obtain information on direct competition because a wider variety of products are offered by many sellers in the retail sector (Antonini, 1994). Although various other areas of retail showed a decline in sales, by contrast, many mass marketers in the discount retail industry prospered. A 3.4% increase was recorded in 2002, dropping only slightly from 3.8% in 2001 (TDCTrade, 2003).
Top competitors in the discount retail industry are Wal-Mart, Target, and Kmart, which currently occupy the top three positions in the industry. Wal-Mart occupies a commanding 56.2% of the discount market while Target and Kmart hold onto their 10.6 and 10.3% respective shares (Stock Selector, 2002).
Other firms, such as ShopKo, CostCo, Sears, and JCPenney play a minor role in the industry, but individually possess less market share or specialize in very different target areas of the market. Each of these companies alone poses little threat when compared to the three leading retailers based on those characteristics.
The retail industry is at the mature stage in the industry life cycle, identified by low opportunities for growth within the US market. Different strategies, ranging from low-cost leadership to differentiation, contribute to the success of various player and are used by retailers to react to the changing consumer. These features are characteristic of a very competitive industry.
The most dominating driving forces in the industry are technological innovation and increased globalization. These opportunities faced by players in the industry are essential to the establishment of a competitive advantage and aid in development of a large customer...