Effect of Wal-Mart Supercenters on Grocery Prices in New England

Volpe, Richard; Lavoie, Nathalie

doi:10.2139/ssrn.938463

Cited by 26 publications

(31 citation statements)

References 38 publications

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“…42 Notably, little work has looked explicitly at cost differences in less healthful, higher-energy food groups, including sugary beverages, sweets, and savory snacks. Prices at supercenters also result in lower prices at competing supermarkets, including prices of fresh produce, red meat, dairy, and consumer packaged goods, 28,43 for both private-label and nationally branded products, 44 although this price reduction tends to be bigger at smaller grocery outlets than at bigger supermarket chains (e.g., Kroger's, Safeway). 45 Finally, the link between supercenters and nutrition is likely changing -at least in the United States.…”

Section: Link Between Supercenters and Poorer Nutritional Qualitymentioning

confidence: 99%

Global growth of “big box” stores and the potential impact on human health and nutrition

Taillie

2015

Nutr Rev

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Section: Link Between Supercenters and Poorer Nutritional Qualitymentioning

confidence: 99%

Global growth of “big box” stores and the potential impact on human health and nutrition

Taillie

2015

Nutr Rev

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“…We provide a first step toward filling this void. Basker (2005a), Volpe and Lavoie (2007), Leibtag (2007, 2009), and Basker and Noel (2009) all present evidence that Walmart discount stores and Supercenters reduce market prices, either directly through their price advantages or indirectly through their influence on competitors. Most relevant to our study is Basker and Noel (2009), who use 2001 American Chamber of Commerce Researchers Association Cost of Living Index (ACCRA COLI) data to show that entry by a Walmart Supercenter drives down prices among competing grocery stores.…”

mentioning

confidence: 95%

“…Motivated by this trend toward nontraditional retail outlets, a growing body of research examines the effects of Walmart on a number of outcomes, including prices (Basker 2005b;Basker and Noel 2009;Volpe and Lavoie 2007;Leibtag 2007, 2009), labor market outcomes (Basker 2005a;Hicks 2007;Neumark et al 2008;Dube et al 2007;Basker 2006), poverty (Goetz and Swaminathan 2006), small business activity (Sobel and Dean 2008), social capital (Goetz and Rupasingha 2006;Carden et al 2009a), leisure activities (Carden and Courtemanche 2009), traditional values (Carden et al 2009b), and obesity (Courtemanche and Carden 2011). 4 However, to our knowledge no previous research has used nationwide data to explore the effects of other big box chains.…”

mentioning

confidence: 99%

Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices

Courtemanche

Carden

2011

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“…Among other things, Wal-Mart is known for its low prices: 8-27% lower than conventional retailers (Hausman and Leibtag, 2007). In addition, Volpe and Lavoie (2008) show that in response to a Wal-Mart Supercenter's presence, competing supermarkets lower their prices by 6% to 7% lower for national brands and by 3% to 8% for private labels.…”

mentioning

confidence: 99%

“…3 Moreover, competing supermarkets have tended to increase the quality of the shopping experience by including amenities such as delis, on-site bakeries, coffee shops, gas stations, banks, pharmacies etc. (Volpe and Lavoie, 2008) as well as introducing high-end private-label brands. 4 In this paper, we develop a model to study the effects of the presence of a large retailer with buyer market power.…”

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confidence: 99%

Buyer Market Power and Vertically Differentiated Retailers

2010

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Abstract:We consider a model of vertical competition where downstream firms (retailers) purchase an upstream input from a monopolist and are able to differentiate from each other in terms of quality. Our primary focus is to study the effects of introducing a large retailer, such as a WalMart Supercenter, that is able to lower wholesale prices (i.e. buyer market power). We obtain two main results. First, the store with no buyer market power responds to the presence of the large retailer by increasing its quality, a finding that is consistent with recent efforts by traditional retailers to enhance shoppers' buying experience (i.e. quality). Second, the presence of a large retailer causes consumer welfare to increase. There are, however, two reasons for the increase in consumer welfare: consumers gain from the large retailer's low price (because the upstream discount is partially passed on to the retail price) as well as from the high quality level offered by the traditional retailer. Contrary to the conventional wisdom most of the consumer welfare gains seem due to the latter. The intuition for this result is that price competition softens substantially as a result of firms' quality differentiation. We also investigate the effects of buyer market power on retail and wholesale prices as well as on producer welfare. Buyer Market Power and Vertically Differentiated RetailersShinn-Shyr Wang Christian Rojas Nathalie Lavoie * January 2010 AbstractWe consider a model of vertical competition where downstream firms (retailers) purchase an upstream input from a monopolist and are able to differentiate from each other in terms of quality. Our primary focus is to study the effects of introducing a large retailer, such as a WalMart Supercenter, that is able to lower wholesale prices (i.e. buyer market power). We obtain two main results. First, the store with no buyer market power responds to the presence of the large retailer by increasing its quality, a finding that is consistent with recent efforts by traditional retailers to enhance shoppers' buying experience (i.e. quality). Second, the presence of a large retailer causes consumer welfare to increase. There are, however, two reasons for the increase in consumer welfare: consumers gain from the large retailer's low price (because the upstream discount is partially passed on to the retail price) as well as from the high quality level offered by the traditional retailer. Contrary to the conventional wisdom most of the consumer welfare gains seem due to the latter. The intuition for this result is that price competition softens substantially as a result of firms' quality differentiation. We also investigate the effects of buyer market power on retail and wholesale prices as well as on producer welfare.

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Effect of Wal-Mart Supercenters on Grocery Prices in New England

Cited by 26 publications

References 38 publications

Global growth of “big box” stores and the potential impact on human health and nutrition

Global growth of “big box” stores and the potential impact on human health and nutrition

Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices

Buyer Market Power and Vertically Differentiated Retailers

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