The impact of competition and cooperation on the performance of a retail agglomeration and its stores

• Competition and cooperation between stores increase agglomeration performance.
• There is a positive spill-over effect between agglomeration and store performance.
• Cooperation increases store performance indirectly via agglomeration performance.
• The spill-over effect nullifies competition's negative impact on store performance.
• Coopetition capabilities of stores enhance competitiveness of an agglomeration.

Stores in retail and other service agglomerations, such as high streets and shopping malls, compete with each other for customers. Yet they may also cooperate with each other in relation to operational and marketing matters within the agglomeration in which they are located. The aim of this paper is to investigate the impact of both competition and cooperation, i.e. coopetition, on agglomeration and store performance. Drawing on the network debate, this paper develops a conceptual model and tests it in three distinctive agglomerations, each in an urban setting, namely first- and second-order high streets as well as an inner-city retail and service cluster. A total of 277 store managers served as key informants in our survey. Variance-based structural equation modelling reveals that both competition and cooperation improve agglomeration performance directly. Despite competition having a negative direct effect on stores' performance, the overall effect is insignificant. Cooperation affects store performance positively but only indirectly. The contribution of this paper is to reveal and substantiate the complex nature and benefits of the effects of the coopetition of stores located within agglomerations. More widely it underlines the importance of managers of agglomerations understanding the differing effects of competition and cooperation and using this understanding in their management decision making.