Evaluating the Performance of U.S. Supermarkets: Pricing Strategies, Competition from Hypermarkets, and Private Labels

• Main Author: Richard J. Volpe III
• Format: Article
• Language: English
• Published: Western Agricultural Economics Association 2011-12-01
• Series: Journal of Agricultural and Resource Economics
• Subjects: food retail; hypermarkets; market power; pricing strategies; private labels; supermarkets
• Online Access: https://ageconsearch.umn.edu/record/119159

This study draws upon literature from the fields of agricultural economics, industrial organization, and business to study the performance of supermarkets in the United States. The empirical work draws from a rich dataset on the characteristics of supermarkets across the U.S. to test several hypotheses. Supermarkets utilizing everyday low pricing operate more efficiently than those using other strategies. Stores increase their performance by using strategies of their closest competitors. Competition with hypermarkets results in decreased supermarket performance, especially for smaller stores. Increases in private label sales relative to national brand sales are not necessarily related to increased performance.