Cannibalization
What is cannibalization?
The concept of cannibalization refers to the internal competition between outlets of the same chain in the same market.
See also Network Planning.
In what context can cannibalization be a negative factor?
Cannibalization is a negative factor when the opening of a new branch takes a significant part of the sales of the other existing branches of the group, which can then considerably affect the profitability of these branches.
In which contexts can cannibalization be a positive factor?
Cannibalization can be considered a positive factor when it allows, on the one hand, to increase the market share of the group of establishments in a given sector and, on the other hand, to increase the retailer’s notoriety thanks to the presence of several establishments and to spread the marketing costs among several outlets.
What is the most common example of cannibalization?
The big fast food chains will tolerate a certain level of cannibalization to develop indisputable notoriety and occupy people’s subconscious. Thus, it is not uncommon to find a Starbucks, a McDonald’s, or a Tim Hortons in every neighborhood or even on every street corner in large cities.
