Examples of highly segregated markets?

General Questions
#1

Every large town supports a large number of restaurants. There might be one furniture store and fewer than ten grocery stores, but there will be multiple dozens of places where you can buy prepared food to eat either there or somewhere else.

I’m not interested in why this is the case. I know why it’s the case: The restaurant market is finely segregated in two directions, cost and style, enabling Taco Bell to not only co-exist with McDonald’s (style segregation) but with El Cazador or whatever your middle-cost sit-down Mexican place is called (cost segregation). This creates a matrix effect where each individual slot in the matrix seems to provide a fairly stable niche for a restaurant.

And it’s just bleeding obvious. You know, within five seconds, precisely where in that matrix a restaurant fits. In fact, different regions can have different versions of the same restaurant, where ‘same restaurant’ means ‘occupies precisely the same spot in the matrix’; for example, Shoney’s, Perkins, and the late 4B’s all occupied the same spot – low-middle-price American – and coexisted solely through not invading each others’ territories.

Are there any other industries where this is on display as obviously? I can’t think of any with this kind of full two-dimensional segregation. (Also, am I full of shit on this?)

#2

Bars are probably the only other example at that level but they’re pretty much the equivalent.

Maybe auto repair shops and beauty salons.

Offhand, I’d speculate that it’s because most businesses are selling products, which makes their competition more direct. You can’t work up that much competition when the guy across the street is selling the same thing because you’re both getting deliveries from the same manufacturers.

But restaurants, bars, auto repair shops, and beauty salons are selling services. So what you’re buying at one place is not identical to what other businesses in town are selling. That allows for a wider competition.

#3

Spectator sports and performing arts.

#4

Not so much in smaller towns, but what about clothing stores? Definitely different price ranges, but also different styles - younger/older/conservative/modern/sporty/etc.

#5

The challenge with almost any goods is that they are durable, at least compared to a restaurant meal.

Clothing stores exist in exactly that matrix of price & style, with a 3rd dimension for male vs. female. There aren’t as many distinct slots in the clothing matrix as the restaurant matrix, but it still exists.

The key difference is the typical US male buys clothes 3x/year and a restaurant meal 3x/week, if not 15x/week. So restaurant purchases are 50 to 150 times more common than clothing purchases. Which leads to a lot more volume of stores. Which leads to our OP noticing the variety & number of restaurants more than he does of clothing stores.

Rewinding to 40+ years ago when I was a kid and restaurant meals were a once-a-month treat, not a daily necessity, the volume and fine-grained segregation of restaurants didn’t exist. There were still distinct genres & price points, but not so many incumbents or locations.
Bottom line: Find some other retail category you & lots of other people buy from multiple times per week and you’ll find the same fine-grained market segmentation.

#6

A lot of higher-end segregetation will also not be easily visible. You can buy a cheap watch for 15 $ in the dept. store, or go to a Jeweler/ Clock maker and pay several hundreds. But if you want to spend several thousands for watch of brand X, that’s only known in certain circles, you custom-order it from the maker, and have to wait your turn, because it’s completly handmade and they only finish 500 pieces per collection/ 2 year or similar.

#7

Groceries in general.

There are general stores and specialty stores (bakery, butcher, produce), and “trendy” stores (Whole Foods, Trader Joes)
Then there are the price points - warehouse (Sam’s Club, Costco), big box chains (Walmart, Target, Cub Food, Dominics), higher end local stores (Festival, Byerly’s/Lunds in MN)

#8

And to build on that thought…

There are 7/11-type convenience stores and the limited selection convenience stores in gas stations. There are corner groceries. There are bodegas and specialty asian stores. There are cheese shops and butchers and kosher butchers and bakeries and and pasta stores and fish stores and fresh lobster “traps” and vegetarian outlets. There are big public markets and temporary local ones and roadside farm stands and food co-ops. Pharmacies are putting in aisles of grocery products.

You can buy food in hundreds of local outlets, just as highly segmented as the hundreds of restaurants. Sorry, Derleth, but I’m not sure what you were thinking.

#9

Just look for a big box retailer and you’ll find examples of businesses that survive because they fill a niche.

In my little suburb we have a Lowe’s for the home remodelers and contractors, a couple of small hardware stores for quick home repairs, hardware departments in Target and Wal-Mart for maintenance items and a few specialty stores for plumbing supplies, cabinet hardware and the like.

#10

Any market with a big box store in it is not going to be ‘segregated’ in the OP’s sense, as I understand it. A big box store is general, not specific–like a restaurant that served Italian and Chinese and Mexican and steaks and pancakes and popcorn, all in the same place.

Groceries were a ‘segregated’ market in the days before supermarkets–when bread was only from bakeries, meat only from butchers, and so on.

#11

Hotels. There’s a big difference between Motel 6 and the Waldorf Astoria.

#12

I recently heard that typical grocery stores have something like 25,000 products on their shelves. That seems a little outrageous to me, but still it’s kind of hard not to find everything you need in one.

Still doesn’t explain why Stop & Shop doesn’t have Thai curry paste. :frowning:

#13

Or perhaps only 38 of them are ever made, with a price point of about $525,000.

#14

Churches.

There are lots of them in most cities, and significant differences in social and economic status between the membership of various religions.

At a great generalization, Anglican and Unitarian congregations are more wealthy, Catholics, Methodists, & ECLA Lutherans are middle class, and Missouri or Wisconsin Synod Lutherans & Baptists are poorer.

#15

Car dealers have been mentioned. They’re usually all located along a busy highway just outside of town, often adjacent to one another. They can coexist in such close proximity because they all serve slightly different markets, from budget to luxury, foreign/domestic, etc.

Lodging is also similar, the La Quinta Inn isn’t really competing with the Marriott, so they can peacefully coexist relatively close to one another. Actually, they’d probably be found in different parts of town, but in theory they could be right next to each other without stealing each others business.

#16

Thanks for all the examples. I never realized that some towns had a huge number of grocery stores, though; that must happen in places bigger than I’m accustomed to.

#17

In Fremont, California, the Marrriott IS right next to the La Quinta, as a matter of fact!

Of course you are right that they serve two different kinds of customers. And hotels vary much more than that, as I said in my post above. Compare the cheapest motels with the ultra luxorious resorts.

#18

I disagree. They are adjacent because they overlap and serve a common set of markets.

It’s long been known in retailing that the best location is the best location, and even a block away is inferior. That’s why you used to see gas stations on all four corners of a major intersection and today see banks or pharmacies or coffee shops on all corners. It’s why Target and K-Mart and Walmart are all bunched together. It’s why shoe stores used to be in groups in malls and why certain types of fashion stores still are.

In addition to location, it’s been shown that having several choices to compare and contrast increases business to all the stores. Outlying isolated stores are far less likely to drive traffic, unless and until they build up a select clientèle that differentiates them from the rest of the market.

Those not in retail always think that having a location to yourself is ideal. In fact, unless you managed to snag the single best location for your business the opposite is always true.

#19

Also, slightly off topic and of only local interest, but 4B’s is late no longer-- they reopened last year except for the one in Missoula (although I’m not sure about the oddball one in New Mexico).

#20

Interesting. The last time I checked, the last 4B’s in the world was the one in Havre, which was as run-down and hopeless a greasy spoon as you’d ever want to drive past.