Sample Business Research Paper: Why Do People Love Big Box Stores
A business research paper is a written project commonly assigned to business students. The content of this coursework may vary but it often features information from real-life companies and organizations to illuminate business theories, concepts, and models. The analysis is also an essential part of this paper. The sample below discusses the reasons why shoppers love big-box stores by looking into business practices that give them strategic advantages.
One of the most prominent features of the modern retail industry is the big-box store. Since its emergence in the early 1960s, the big-box store has risen to become a ubiquitous feature of the American social and physical landscape. Whether from the city, the suburbs, or even rural areas, the average American is most likely familiar with how this establishment works and what it feels like to shop in one. This is not to say, however, that the big-box store is beyond reproach. Its rise comes with a long list of criticism. Not only is it denigrated for being architecturally uninspired, but many have also associated it with gentrification (Dunham-Jones 2011, p. 50-51), consumerism, and the decline of small businesses including mom-and-pop stores (Yin 2012, p. 220). But in spite of the disapproval it gets, the big-box store remains a magnet for countless shoppers. The sheer volume of the people it serves is definitely a measure of its popularity, and its popularity is by extension a measure of its success. It, therefore, begs certain questions. Why do people love big-box stores? More importantly, what allows these stores to succeed? Shoppers love big box stores because of their myriad value propositions including large selections, low prices, big discounts, and convenience, all of which are made possible through efficient supply chain management systems, economies of scale, and strong bargaining powers.
Big-Box Stores Defined
A big-box store is generally defined as a large retail store that offers shoppers a wide variety of goods. Such stores are housed in plainly designed, sprawling, box-shaped buildings, hence the name. Big-box stores are also known as hypermarkets, megastores, superstores, and supercenters among other terms. It is not uncommon for such stores to occupy a floor area upwards of 50,000 square feet (4,645 square meters). Most big-box stores are known to sell almost anything, from dry goods to fresh produce (Hayes 2021). For example, Walmart, Kmart, and Target are general superstores. Meanwhile, some stores specialize on specific types of products. For instance, The Home Depot specializes in home improvement and construction materials while Best Buy specializes in electronics and appliances.
The concept of the big-box store emerged in the 1960s with the opening of the first superstores by companies like Walmart, Target, and Kmart in the United States (Lam 2016; Zmuda 2012). Since its inception, this store format has come to dominate the retail industry. Walmart alone has 3,570 supercenters in the United States (Statista 2020), followed by Target which has 1,915 stores across the country (Target 2021). According to The Real Deal (2020), a media outfit specializing in commercial and real estate, 29% of all retail sales in the United States comprise only six major big-box store companies including Costco, Target, Home Depot, and Walmart. The presence of big-box stores not only in the United States but other developed countries across the world is a testament to their prominence and popularity.
The Appeal of Big-Box Stores
There are many reasons why shoppers love big-box stores, and one of these is the sheer variety that they offer. As mentioned earlier, most big-box stores carry general goods. It is not uncommon for a hypermarket to offer thousands of products, from dry food items and fresh produce to school supplies and home improvement items. The average family can go to a hypermarket and expect to leave with everything that they need. According to more recent data, big-box stores on average carry around 120,000 unique items (Boyle 2017). This number is even higher in some stores, which may carry more than 150,000 unique products. Some big-box stores also specialize in specific products. For example, IKEA is known for its furniture and household items. The sheer diversity of goods on offer gives the shopper great flexibility when it comes to design and price.
Big-box stores’ ability to offer shoppers great variety is made possible through efficient supply chain management systems. Globalization has had a profound impact on the transport of goods. Not only are companies now able to transport goods faster and at far bigger volumes, but they also have the technologies to handle goods with special considerations. For example, the consolidation of cold logistics has enabled the transport of highly perishable goods from one corner of the globe to another without compromising quality. Digital technologies also allow such companies to expedite processes essential to trading goods. The amalgamation of advantages offered by such technologies and systems ultimately results in these companies’ ability to bring products from around the world to quite literally the average shopper’s neighborhood. Recent data shows that 90% of Americans live within 24 kilometers of a Walmart (John 2019), which is an astounding feat considering how vast and varied the United States is.
Apart from variety, another reason why shoppers like hypermarkets are the cost. Big-box stores generally have lower costs than smaller establishments like mom-and-pop stores. These hypermarkets draw in large crowds because they promise shoppers big savings. There are also promos offered on any given day. It is not unusual for such stores to slash prices for bulk purchases or offer discounts for bundled purchases. In fact, these stores have lower prices than even the largest e-commerce companies like Amazon. Despite using an e-commerce business model and thereby benefitting from lower operating costs, many items listed on Amazon are still cheaper in big-box stores. The discrepancy in prices varies, but it can be as low as 4.19% such as for some electronics to 52.23% such as for certain food items (Hetrick 2019). Even small differences in prices can mean big savings for large families. The lure of low prices is certainly more than enough to attract millions of shoppers, especially those who are on a budget.
Big-box store companies are able to bring down prices in two ways: economies of scale and strong bargaining powers. "Economies of scale" refers to the cost advantages that a company acquires through efficient operations (Motohashi 2015). As noted earlier, innovative technologies and systems allow companies like Walmart and Target to move large volumes of goods faster and safer while lowering costs. As these companies spend less in getting products from manufacturers to customers, they are able to convert those savings to lower prices. Selling large volumes of goods, in turn, compensate for the low profit acquired per item. Strong bargaining powers also help these hypermarket companies keep prices down. Bargaining power refers to a company’s ability to assert its business interests and persuade business partners. For example, a company that sells rare materials has greater leverage in setting prices than a company that sells widely available goods (Motohashi 2015). Big-box store companies possess this kind of leverage. As these retailers purchase enormous amounts of stock, they are able to demand lower prices from suppliers, which subsequently allows them to sell the goods to customers at cheaper rates.
The Cost of Convenience
Ultimately, the combination of variety and cheap rates makes for a highly convenient shopping experience. Shoppers who go to supercenters can buy everything they need while spending less. The ease that these establishments offer is especially advantageous in today’s fast-paced world. Note, however, that while efficient supply chain systems, economies of scale, and strong bargaining powers have helped giant retailers stay at the top of the game, these and other practices have not gone unremarked. Many business groups and consumer rights advocates, for instance, have criticized hypermarket companies for pressuring suppliers into lowering their prices and in some instances even taking losses (John 2019). These companies also save on expenditures by paying minimum wage, a matter that has been branded as a manifestation of corporate greed in light of the glaring wealth discrepancy between owners and employees. Greater emphasis paid to corporate social responsibility and public scrutiny, in particular, have amplified calls for reforms. Although these companies have made some progress in addressing these issues, much remains to be done.
Conclusion
The big-box store can be rightfully considered a modern paradox. On the one hand, it is detested by many who view it as the face of corporate greed and rampant consumerism, not to mention the blandness of contemporary urban architecture. On the other hand, it is seen as for better or for worse an indelible part of American life. Indeed, the fact that these hypermarkets are able to attract hundreds of millions of customers every day proves how popular they are as far as convenience and affordability in shopping are concerned. While these giant retailers utilize a number of strategies to attract shoppers, three especially important factors are supply chain efficiency, economies of scale, and bargaining power. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.
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References
Boyle, M 2017, “Wal-Mart to Discount One Million Online Items Picked Up in Stores,” Bloomberg , 12 April, viewed 30 October 2021, https://www.bloomberg.com/news/articles/2017-04-12/wal-mart-to-discount-1-million-online-items-picked-up-in-stores
Dunham-Jones, E 2011, Retrofitting Suburbia, John Wiley & Sons, New York.
Hayes, A 2021. “Big-Box Retailer,” Investopedia , viewed 30 October 2021, https://www.investopedia.com/terms/b/big_box_retailer.asp
Hetrick, C 2019, “How a price comparison of 50 items fared for Walmart, Amazon and Target,” The Seattle Times, 12 July, viewed 30 October 2021, https://www.seattletimes.com/explore/shop-northwest/how-a-price-comparison-of-50-items-fared-for-walmart-amazon-and-target/
John, S 2019, “How Walmart keeps its prices so low,” Business Insider, 8 April, viewed 30 October 2021, https://www.businessinsider.com/walmart-low-price-strategy-tips-2019-4
Lam, B 2016. “Why the Biggest Big-Box Stores Survive,” The Atlantic, 11 May, viewed 30 October 2021, https://www.theatlantic.com/business/archive/2016/05/big-box-future/482211/
Motohashi, K 2015, Global Business Strategy: Multinational Corporations Venturing into Emerging Markets, Springer, Tokyo.
Statista 2021, “Number of Walmart U.S. stores in the United States from fiscal year 2012 to 2021, by type,” Statista , viewed 30 October 2021, https://www.statista.com/statistics/269425/total-number-of-walmart-stores-in-the-united-states-by-type/
Target 2021, “Our Locations,” Target , viewed 30 October 2021, https://corporate.target.com/about/locations
The Real Deal 2020, “A few big-box stores now account for 29% of US sales,” The Real Deal , 25 August, viewed 30 October 2021, https://therealdeal.com/2020/08/25/a-few-big-box-stores-now-account-for-29-of-us-sales/
Yin, J 2012, Urban Planning for Dummies , John Wiley & Sons, New York.
Zmuda, N 2012. “Walmart, Target, Kmart, Kohl’s, Lead 50 Years of Retail Revolution,” AdAge , 19 March, viewed 30 October 2021, https://adage.com/article/news/walmart-target-kmart-kohl-s-lead-retail-revolution/233379
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