Big chain stores setting their prices on a national rather than local basis can help independent retailers survive, according to new research funded by the Economic and Social Research Council (ESRC). It protects them from the intense local competition that could arise from price wars in places where several big name outlets are present, says the study, which backs concerns from policymakers about the potential impact when chain stores opt for local pricing.
Matt Olczak, of the ESRC Centre for Competition Policy, University of East Anglia, examined in detail the situation in the opticians industry, and the implications for consumer choice and the local economy. His investigation highlights the pricing strategies of the major optician chain stores as a key factor in whether the small, local independents can survive.
The study follows a report from the All-Party Parliamentary Small Shops Group, in which MPs predicted that less than a decade from now, many small shops are likely to have stopped trading, with few independent businesses taking their place. They said that people, as consumers and members of communities, stand to be disadvantaged the most 'with restricted choice, entrenched social exclusion and a vulnerable supply chain caused by consolidation'.
Matt Olczak said: "It is clear from my research findings that the opticians market at least needs to be monitored regularly, since a change in pricing strategy by any of the chain stores could have a negative impact on independents." Importantly, he says, he found that it matters whether chain stores set prices nationally - that is, charge the same in all their stores, or locally -setting different prices depending on local market conditions. The four principal chain store retailers Specsavers, Dolland & Aitchison, Boots and Vision Express have a national presence, with stores in all regions of England and Wales.
Prices at Specsavers and Boots are set nationally, an
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Contact: Annika Howard
annika.howard@esrc.ac.uk
44-017-934-13119
Economic & Social Research Council
7-Nov-2006