An Empirical Analysis of Assortment Similarities Across U.S. Supermarkets

Abstract

An empirical analysis of assortment similarities across U.S. supermarketsHwang, M.; Bronnenberg, Bart; Thomadsen, R. General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.-Users may download and print one copy of any publication from the public portal for the purpose of private study or research -You may not further distribute the material or use it for any profit-making activity or commercial gain -You may freely distribute the URL identifying the publication in the public portal Take down policyIf you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. T his paper examines pairwise assortment similarities at U.S. supermarkets to understand how assortment composition and size are related to underlying factors that describe local store clientele, local competitive structure, and the retail outlets' characteristics. The top-selling items, which cumulatively make up 50% of sales, are sold at nearly every store, but other items are viewed as optional. We find that, within states, supermarkets owned by the same chain carry similar assortments and that the composition of their clientele and the presence of competing stores have effects on assortment similarity that are an order of magnitude smaller than ownership structure. In contrast, we find that, across states, supermarkets owned by the same chain do version their assortment. We explain this difference using extant work on the minimal efficient scale of supermarkets and on local demand effects. Furthermore, we investigate the distribution and role of regional brands. We find that regional brands are primarily distributed by small regional chains or independent stores. "Value" regional brands are primarily distributed by supermarket firms without store brands, whereas the distribution of "premium" regional brands is unrelated to the presence of store brands. We discuss our findings in the context of modeling assortment decisions and manufacturers designing distribution policies.

Product variety, across‐market demand heterogeneity, and the value of online retail

“…If, for example, there were no across‐market demand heterogeneity and stores stocked products in order of most to least popular, our measure would find complete overlap. Other measures, such as cosine similarity (Hwang, Bronnenberg, and Thomadsen, ), would differ from complete overlap, but this would be entirely driven by differences in store size.…”

The Effect of Retail Distribution on Sales of Alcoholic Beverages

“…Such patterns are common: Reibstein and Farris (1995, p. 190), for instance, state that "in the typical convenience goods distribution system there are a few large outlets that stock many brands and numerous smaller outlets that stock the leading brands only." Hwang et al (2010) half of all sales and that are available at almost all stores and that larger stores carry larger assortments within a given category. The factors that generate the convexity in the setting we study are therefore also likely to play a role in many other retail markets.…”

Demand Estimation with Availability Variation

“…Across three years of quarterly data, within-product-line adoption rates commonly vary from single digit percentages to greater than 50%, reflecting the entry of new technologies and exit of old ones. Hwang, Bronnenberg, and Thomadsen (2010) examines the drivers of assortment variation by regressing measures of assortment similarity between pairs of stores located in the same state on measures of similarity in four groups of variables: (i) store ownership, (ii) size, (iii) customer demographics, and (iv) competitive factors (e.g., number of nearby competitors and the distance between the stores). Their data contain one year of weekly observations on four supermarket categories (cola, ready-to-eat cereal, ground coffee, and toothpaste) from approximately 2,000 stores across 21 states.…”