Rethinking Retail Logistics-Insights From The Big Middle Theory

This paper revisits the fundamentals of Big Middle theory in the retail sector, emphasizing its value as a framework for analyzing the evolution of companies in highly competitive markets. Initially, new retail formats differentiate themselves by offering low prices, but over time, they tend to broaden their service offerings, which increases costs and brings them closer to traditional models. According to Big Middle theory, large retailers then aim to strike a balance between competitive pricing and service differentiation to appeal to a wider audience, rather than focusing exclusively on one strategy. The purpose of this paper is to explore the relevance of applying Big Middle theory to retail logistics, an area that has yet to be thoroughly examined. The key idea is that large retailers navigate varying levels of logistical performance to meet customer expectations for both cost-efficiency and responsiveness. The primary risk, however, is that they may become trapped in a middle-ground strategy, offering a compromise between cost and logistical service that tries to meet conflicting objectives but fails to fully achieve either.