COMMENT:

Two recent developments demonstrate that the retail sector remains extremely competitive and participants need to have realistic business models.

The first is the purchase of US bookstore group Barnes & Noble by hedge fund Elliott Advisors for US$638 million ($972.7m) and the other is Costco's plan to open a $90m, 14,000 square-metre store in West Auckland.

These developments reconfirm that retailing is splitting into two major business models, namely specialised stores with an emphasis on customer service and the big store model with a low-price focus.

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Barnes & Noble, which can be traced back to Illinois in 1873, listed