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What Is Big Box Retail?

Big box retail refers to very large retail stores, which are often box-like in appearance. A big box retailer typically offers a wide range of goods. Some may offer products across many categories, such as stores which offer a one-stop shop for everything from groceries to clothing to electronics. Others may be more focused, with their range concentrated to one area such as homewares.

Big box retailers are typically chains, rather than stand-alone stores. Because of their size, big box retailers are usually located away from the main town or city high street, on a stand-alone site or as part of an out-of-town retail centre or park.

To sustain a store of this size, with high rents and operating costs, requires a high sales volume. These retailers may offer attractive discounts on higher-priced items, such as home appliances or electronics, to entice shoppers into the store and to spend on other products. This tactic of reducing margin on certain items to encourage more footfall and higher overall sales is also known as offering ‘lost leaders’.

Stores of this size with more space for stock may also be able special deals for purchasing in bulk. Some retailers do this by offering paid membership in exchange for members-only pricing.

Another reason that big box retailers can be so competitive on price is the volume of business that they place with their suppliers. This position of strength allows them to negotiate more aggressively. Suppliers may have little leverage, as losing a customer of such a size would be extremely detrimental to their business.

Big box retailers moving into an area may be seen as a threat by smaller, more specialised stores who cannot compete with the breadth of their offer, or the aggressive discounting. Smaller retailers may need to rely on the loyalty of their customer base to prioritise a higher level of customer service above the most competitive pricing. The out of town location of big box retailers is also seen as a reason for a reduction in footfall on the high street, another challenge for smaller town centre stores.

Next Up: What Is Retail Price?



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