Wal-Mart Versus Meijer: a Spatial and Economic Analysis of Supercenter Competition in Michigan
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Western Michigan University ScholarWorks at WMU Master's Theses Graduate College 12-2007 Wal-Mart Versus Meijer: A Spatial and Economic Analysis of Supercenter Competition in Michigan Christopher J. Washebek Follow this and additional works at: https://scholarworks.wmich.edu/masters_theses Part of the Spatial Science Commons Recommended Citation Washebek, Christopher J., "Wal-Mart Versus Meijer: A Spatial and Economic Analysis of Supercenter Competition in Michigan" (2007). Master's Theses. 4049. https://scholarworks.wmich.edu/masters_theses/4049 This Masters Thesis-Open Access is brought to you for free and open access by the Graduate College at ScholarWorks at WMU. It has been accepted for inclusion in Master's Theses by an authorized administrator of ScholarWorks at WMU. For more information, please contact [email protected]. WAL-MART VERSUS MEIJER: A SPATIAL AND ECONOMIC ANALYSIS OF SUPERCENTER COMPETITION IN MICHIGAN by Christopher J. Washebek A Thesis Submitted to the Faculty of The Graduate College in partial fulfillment of the requirements for the Degree of Master of Arts Department of Geography Western Michigan University Kalamazoo, Michigan December 2007 Copyright by Christopher J. Washebek. 2007 ACKNOWLEDGEMENTS I would like to thank several people fr their guidance and friendship throughout my graduate career. First, I would like to thank my committee: Ors. Jordan Yin, David Lemberg, and Benjamin Ofori-Amoah. Dr. Yin served as the advisor for the thesis committee, not only providing great advice for the project, but also giving some great career-oriented tips along the way. I had the pleasure of taking two courses with Dr. Lem berg, and learned a great deal about Transportation Planning and "Wicked Problems" from him. Dr. Ofori Amoah had a very large role in my career preparation in the field of site location research, as he ofered to teach a comprehensive course in Retail and Service Location Analysis. This thesis would also not be possible without a research grant from the WMU Graduate College. Additionally, I would like to thank Dr. Elen Cutrim and Dr. Greg Veeck. Dr. Cutrim was a great professor to TA for and I will most certainly miss our weekly lunch outings. A week would not be complete without stopping by Dr. Veeck's ofice to talk about my thesis, sports, or whatever else was on my mind. He also assisted with some of the statistical analyses for this thesis. I also had a creative outlet while studying for my master's degree, serving as a graduate assistant for the WMU Bronco Marching Band. I'd like to thank Professor David Montgomery for that opportunity, as it gave me a necessary diversion from the daily grind and allowed me to work with a very talented and ii Acknowledgements-Continued inspiring group of people. I would also like to thank my family, friends, colleagues, and the Delta Iota chapter of Phi Mu Alpha Sinfonia fraternity for all of their support. Finally, I would also like to take this time to thank Ors. Howard Botts, Thomas Jeffery, John Patterson, and Carol Rosen from the University of Wisconsir Whitewater Geography Department, who all played a large role in helping me discover my true calling as a geographer. To everyone mentioned and those not directly mentioned here, thanks for everything! Christopher J. Washebekr • iii WAL-MART VERSUS MEIJER: A SPATIAL AND ECONOMIC ANALYSIS OF SUPERCENTER COMPETITION IN MICHIGAN Christopher J. Washebek, M.A. Western Michigan University, 2007 My research will examine the spatial and demographic strategies of supercenter firms in the State of Michigan, namely those operated by Meijer, Inc. and Wal-Mart, Inc. The competitve nature of retailing in Michigan shifted heavily in 2000 when Wa�Mart brought its Supercenter format to Michigan, making it a direct competitor to Meijer, who has operated. in Michigan since 1962. Within seven years, Wa�Mart expanded its Michigan Supercenter operations from one in 2000 to fortyfve in 2007. In many cases, small towns throughout the state are supporting both Meijer and a Wal-Mart Supercenter. Heavy competition of this nature between two supercenter chains is unequaled anywhere else in the United States, making this an interesting and necessary study. This research examines the location strategies of Wa�Mart and Meijer in Michigan, and determines which chain, if either, has a distinct spatial and demographic advantage in the state. A thorough study of available business, spatial, economic, and demographic data supports this conclusion. The result of this research is the first comprehensive analysis of supercenter competition in the State of Michigan, and illustrates the very unique retail challenges existing there. TABLEOFCONTENTS ACKNOWLEDGMENTS ..................................................................................... ii LISTOFTABLES ................................................................................................ vii LISTOFFIGURES ............................................................................................. ix CHAPTER I. INTRODUCTION..................................................................................... 1 1.1IntroductiontotheResearchProblem.................................. 1 1.2ThesisStructure ....................................................................... 2 II. LITERATUREREVIEW.......................................................................... 4 2.1IntroductiontoRetailing .......................................................... 4 2.2RetailLocationTheories ......................................................... 4 2.3LocationStrategiesinaNewRetailEra.............................. 10 2.4SupercentersandtheirEffects .............................................. 13 Ill. METHODSANDPROCEDURES......................................................... 20 3.1StudyArea ................................................................................ 20 3.2ResearchDesign/DataCollection......................................... 22 3.3Formatting,Processing,andAnalysisofData.................... 24 IV. HISTORYOFSUPERCENTEROPERATORSINMICHIGAN ....... 28 4.11962:GroundZeroofDiscountRetailing• ............................ 28 4.2TaretCorporation.................................................................. 29 4.3KmartCorporation ................................................................... 32 iv Table of Contents-Continued CHAPTER 4.4 Wal-Mart Corporation .............................................................. 35 4.5 Meijer Corporation ................................................................... 39 4.6 Company Financials .............................................................. 44 4.7 Grocery Industry Market Share Infrmation ........................ 52 V. LOCATION STRATEGIES OF WAL-MART AND MEIJER............... 58 5.1 Location Strategies of Wa�Mart and Meijer ........................ 58 5.2 Locations of Wal-Mart and Meijer in 1995, 2000, and 2007 ................................................................................... 60 5.3 Nearest Neighbor Analysis .................................................... 74 VI. RETAIL POSITIONING MATRIX .......................................................... 90 6.1 Matrix Compilation ................................................................... 90 6.2 Matrix Results .......................................................................... 98 VII. CONCLUSION ......................................................................................... 105 7.1 Summary ................................................................................... 105 7 .2 Predictions . .................... ....... ...... .......... ....... .. ..... ..................... 108 7 .3 Limitations ................................................................................. 111 7.4 Future Research .......................... ................................ ............ 112 REFERENCES .................................................................................................... 114 APPENDICES ...................................................................................................... 122 A. Woods & Poole Michigan County Data - (2000, 2007) Sorted by % Change in Retail Sales..................................................... 122 V Table of Contents-Continued APPENDICES B. Woods & Poole Michigan County Data-(2007, 2015) .................... 124 Sorted by % Change in Retail Sales C. Ann Arbor, Ml CBSA Market Share: 2002-2007 ................................ 126 D. Battle Creek, Ml CBSA Market Share: 2002-2007 ............................ 127 E. Benton Harbor/Niles, Ml CBSA Market Share: 2002-2007 .............. 128 F. Detroit,.. Ml CBSA Market Share: 2002-2007 ....................................... 129 G. Flint, Ml CBSA Market Share: 2002-2007 ........................................... 130 H. Grand Rapids, MI CBSA Market Share: 2002-2007 .......................... 131 I. Jackson, Ml CBSA Market Share: 2002-2007 .................................... 132 J. Kalamazoo, Ml CBSAr MarketY Share: 2002-2007 .............................. 133 K. Lansing, Ml CBSA Market Share: 2002-2007 .................................... 134 L. Muskegon, Ml CBSA Market Share: 2002-2007 ................................ 135 M. Saginaw, Ml CBSA Market Share: 2002-2007 ................................... 136 vi LIST OF TABLES 4.6a Target Corporation Financial Statistics (1998-2006) ......................... 45 4.6b Kmart Finarial Statistics (1998-2006) ................................................ 46 4.6c