Why are similar stores often near each other?

Post Reply New Topic

I noticed a trend with stores where similar types of stores are close to each other & 1ce one opens up another similar type opens up in the same area. For example WalMart & Target, Lowes & Home Depot, Pet Smart & Pet Co, different trendy clothing stores, different office type places, & different fast-food places tend to be near each other. It seems like horrible common sense for a major known place too open a new thing next to a competing one instead of opening it on the other end of town where there's no competition. Could anyone explain this trend

I think it is all about the competition.

I'm no expert though.

Wouldn't it be better to have less compeition

I wrote a longer reply than this but the program crashed. So I just say maybe good shops being close together attracts even more customers altogether.

Decisions about retail store locations are often based on rather intensive studies of area demographics. If a given area is so identified as having a promising concentration of people in their target market (e.g. those who shop at discount stores) then one might expect a certain concentration of discount retailers in that area.

A much-told story (presumably true) is that in the 1970's McDonald's was acknowledged as a leader in conducting comprehensive demographic studies in deciding where to place their stores. (Arguably with success; one seldom sees a closed McDonald's). So much so that one of their main competitors (Burger King) made the business decision that, rather than spend tons of money on their own demographic studies, simply decided to open a store wherever McDonald's opened one.

I don't know to what extent that story is true, but I have always thought it is fun commentary on placement of retail stores.

I think you're right, it must be to do with the catchment area.

Maybe they are owned by the same person, but just give their stores different names and different logos.
Each having there own bargains to entice customers in, and once they are in they are likely to buy other stuff.
Targetting various groups in society, getting them to think that that store is "for people like them".

If I had loads of money to spend on opening up stores that's the way I'd do it if I didn't have morals (which I do, so I wouldn't do it).

Last edited by StarCity on 13 Jan 2014, 4:43 pm, edited 1 time in total.

There are two Home Depots 2/3 mile away from each other somewhere in the Boston suburbs. I was puzzled why. Every Home Depot is far away from the other ones.

On one hand: I NEVER see a Giant, and a Safeway, in the same shopping center.

But on the other hand you are starting to see things like: a Modell's right next door to a Sports Authority.

Youd think that they would steal business from each other. But maybe theyve done studies and found that competing chains having outlets next door to each other attracts their common market (in this case the sports gear consumer) to that shopping center in greater droves than otherwise, and thus benifits both outlets more than it hurts either one. Maybe.

Not too far from my house, on one block, there is a McDonald's. Across the street from it is a Burger King and a KFC. I have noticed this trend, too. In some area of this city a gas station would sit diagonally across the street from another one. The Ballard Market (supermarket) is one block over from Safeway.

There are two Wal Marts on the same road here but they are spread apart, crazy. I am not sure how many miles apart they are but they are not far from each other.

There is a Petco and a Petsmart that is so close to each other. Best Buy is in between the two pet stores.

The companies want their piece of a healthy competition.

That's pretty common in the part of Louisiana I'm from. What's stupider is that when one station raises the price, the other one does so they can be 1cent more than the 1st but when one station lowers the price, the other one doesn't bother. It's like they compete to charge more.
In the city close to the town I lived in Louisiana; most of the major stores were on the same major highway very close to each other but there was very little on the rest of the city. You could drive through a couple parking lots to get to WalMart from Target

I almost always find a CVS and a Walgreens next to each other.

There's 2 BP's less than 100 meters from each other here with no other brand nearby in Bradenton Florida.
https://maps.google.com/maps?ll=27.4764 ... ient=apiv3
I can't think of any other instance of such happening (except maybe Starbucks).

To make you check out their similar crap and wind up spending more than you bargained for. There's your answer...