An article about Dupin’s research, conducted together with Filippo Carlo Wezel (Università della Svizzera Italiana) and Dirk Deichmann (EUR Rotterdam School of Management), was published in the Harvard Business Review. The article is based on their scientific research published last year in the in Administrative Science Quarterly.

By all accounts, traditionalist bakeries should be out of business. They compete against modernist bakeries that use time and cost-cutting practices that a traditional baker wouldn’t use. So how do they do it? The research findings suggest it comes down to strategic location choice

Location

The researchers looked at data from 19 years of bakery competition in the French city of Lyon. French bakeries are found everywhere and are special-purpose spaces. This means bakery locations often remain bakeries. Dupin tracked the availability of vacant bakeries over time. Across a 19-year period, 264 vacant locations were available to bakers. 203 of these belonged to former traditionalists and 61 to former modernists. What the researchers found was that traditionalists did something surprising and counterintuitive: 74 percent of the locations they chose were near a modernist bakery. In contrast, modernist entrants avoided locations close to those of both traditionalist and modernist competitors.

Traditionalists decided to work across the street from people who don’t share their values, practices, or identity and would likely subject them to tougher competition. Basic economics suggest that locating similar firms within limited room for differentiating their products close to each other would intensify competition. Why did they do it? They told the researchers it’s because they thought it would help them highlight their distinctiveness. As one baker put it, ‘The fact that there is a modernist next to us allows me to differentiate my identity’.

Lesson

Dupin’s research provides valuable strategic insights. This is especially interesting for the many companies competing on the basis of indiscernible traditions or values. These types of businesses tend to struggle when it comes to differentiating their products from those of their competitors. This is one way to get noticed by consumers.