Mergers involve the combination of separately owned retail firms. Some
mergers take place between retailers of different types, such as the ones between
Sears(the department store chain) and Kmart (the full-line discount store chain).
Other mergers occur between similar types of retailers, such as two local banks or
two video rental chains (as took place when Movie Gallery acquired Hollywood
Entertainment). By merging, retailers hope to jointly maximize resources, enlarge
their customer base, improve productivity and bargaining power, limit weaknesses,
and gain competitive advantages. This is a way for resourceful retailers to
grow more rapidly and for weaker ones to enhance their long-term prospects for
survival (or gain some return on investment by selling assets).