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Market power and regulation: the last great US department store consolidation?

Market power and regulation: the last great US department store consolidation?
Market power and regulation: the last great US department store consolidation?
Purpose – To examine the impact of the merger of the two largest US department store companies on the competitive state of the sector and specifically the anti-trust implications of the consolidation.

Design/methodology/approach – Based on semi-structured interviews with leading US department store executives as well as an ongoing close dialogue with US retail analysts.

Findings – The consolidation raises considerable anti-trust issues with the creation of a $30bill sales company. However, consistent with previous recent rulings, the Federal Trade Commission has adopted a broad view of the department store market from the standpoint that the consolidation is essentially defensive – in short, the sector is failing because it is not a separate and distinct market. However, the divestiture of 75 stores will give competitors footholds in new markets thereby changing the geography of competition in many catchments. This is likely to be the largest consolidation that the competition authorities will effectively allow, representing the last opportunity for the sector to become a more robust competitor against alternative formats that have intervened in its key product lines.

Originality/value – Recent restructuring of the US department store industry has generated a relatively limited academic literature, despite considerable M&A activity, subsequent organisational reorganisation, and sales of $88 billion per year. Transformation of the competitive landscape of the industry raises important issues of market regulation and corporate strategy.

acquisitions and mergers, department stores, regulation
0959-0552
20-37
Wood, Steve
c21cde08-332e-4002-93e2-aad09a7f4ea9
Wrigley, Neil
e8e2986a-fbf0-4b27-9eef-1b5e6a137805
Wood, Steve
c21cde08-332e-4002-93e2-aad09a7f4ea9
Wrigley, Neil
e8e2986a-fbf0-4b27-9eef-1b5e6a137805

Wood, Steve and Wrigley, Neil (2007) Market power and regulation: the last great US department store consolidation? International Journal of Retail & Distribution Management, 35 (1), 20-37. (doi:10.1108/09590550710722323).

Record type: Article

Abstract

Purpose – To examine the impact of the merger of the two largest US department store companies on the competitive state of the sector and specifically the anti-trust implications of the consolidation.

Design/methodology/approach – Based on semi-structured interviews with leading US department store executives as well as an ongoing close dialogue with US retail analysts.

Findings – The consolidation raises considerable anti-trust issues with the creation of a $30bill sales company. However, consistent with previous recent rulings, the Federal Trade Commission has adopted a broad view of the department store market from the standpoint that the consolidation is essentially defensive – in short, the sector is failing because it is not a separate and distinct market. However, the divestiture of 75 stores will give competitors footholds in new markets thereby changing the geography of competition in many catchments. This is likely to be the largest consolidation that the competition authorities will effectively allow, representing the last opportunity for the sector to become a more robust competitor against alternative formats that have intervened in its key product lines.

Originality/value – Recent restructuring of the US department store industry has generated a relatively limited academic literature, despite considerable M&A activity, subsequent organisational reorganisation, and sales of $88 billion per year. Transformation of the competitive landscape of the industry raises important issues of market regulation and corporate strategy.

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More information

Published date: 2007
Keywords: acquisitions and mergers, department stores, regulation

Identifiers

Local EPrints ID: 54934
URI: http://eprints.soton.ac.uk/id/eprint/54934
ISSN: 0959-0552
PURE UUID: e7cae22f-b060-4676-8505-01cc9e095191
ORCID for Neil Wrigley: ORCID iD orcid.org/0000-0002-3967-5668

Catalogue record

Date deposited: 31 Jul 2008
Last modified: 16 Mar 2024 02:38

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Contributors

Author: Steve Wood
Author: Neil Wrigley ORCID iD

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