IDEAS home Printed from https://ideas.repec.org/a/ags/arerjl/10213.html
   My bibliography  Save this article

Food Retailers' Pricing and Marketing Strategies, with Implications for Producers

Author

Listed:
  • Sexton, Richard J.
  • Xia, Tian
  • Li, Lan

Abstract

This paper examines grocery retailers' ability to influence prices charged to consumers and paid to suppliers. We discuss how retailer market power manifests itself in terms of pricing and marketing strategies by setting forth and offering evidence in support of eight "stylized facts" of retailer pricing and brand decisions. We argue that little, if any, of this behavior can be explained by a model of a competitive, price-taking retailer, but that most of the indicated behavior was also inconsistent with traditional models of market power. Finally, we discuss the impacts of aspects of this retailer behavior on the upstream farm sector.

Suggested Citation

  • Sexton, Richard J. & Xia, Tian & Li, Lan, 2006. "Food Retailers' Pricing and Marketing Strategies, with Implications for Producers," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 35(2), pages 1-18, October.
    • Handle: RePEc:ags:arerjl:10213
    DOI: 10.22004/ag.econ.10213
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/10213/files/35020221.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.10213?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sexton, Richard & Zhang, Mingxia & Chalfant, James, 2003. "Grocery Retailer Behavior in the Procurement and Sale of Perishable Fresh Produce," Contractor and Cooperator Reports 291974, United States Department of Agriculture, Economic Research Service.
    2. Mingxia Zhang & Richard J. Sexton, 2002. "Optimal Commodity Promotion when Downstream Markets are Imperfectly Competitive," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 352-365.
    3. Elizabeth Powers & Nicholas Powers, 2001. "The Size and Frequency of Price Changes: Evidence from Grocery Stores," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(4), pages 397-416, June.
    4. Carman, Hoy F., 1998. "California Milk Marketing Margins," Journal of Food Distribution Research, Food Distribution Research Society, vol. 29(3), pages 1-6, November.
    5. Bontems, Philippe & Monier-Dilhan, Sylvette & Requillart, Vincent, 1999. "Strategic Effects of Private Labels," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 26(2), pages 147-165, June.
    6. Mingxia Zhang, 1997. "The Effects of Imperfect Competition on the Size and Distribution of Research Benefits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1252-1265.
    7. Peter Boatwright & Sanjay Dhar & Peter Rossi, 2004. "The Role of Retail Competition, Demographics and Account Retail Strategy as Drivers of Promotional Sensitivity," Quantitative Marketing and Economics (QME), Springer, vol. 2(2), pages 169-190, June.
    8. Daniel H. Pick & Jeffrey Karrenbrock & Hoy F. Carman, 1990. "Price asymmetry and marketing margin behavior: An example for California-Arizona citrus," Agribusiness, John Wiley & Sons, Ltd., vol. 6(1), pages 75-84.
    9. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-528, Fall.
    10. Elizabeth J. Warner & Robert B. Barsky, 1995. "The Timing and Magnitude of Retail Store Markdowns: Evidence from Weekends and Holidays," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 321-352.
    11. Dimitri, Carolyn & Tegene, Abebayehu & Kaufman, Phillip R., 2003. "U.S. Fresh Produce Markets: Marketing Channels, Trade Practices, And Retail Pricing Behavior," Agricultural Economic Reports 33907, United States Department of Agriculture, Economic Research Service.
    12. Richards, Timothy J. & Patterson, Paul M., 2003. "Competition in Fresh Produce Markets: An Empirical Analysis of Marketing Channel Performance," Contractor and Cooperator Reports 291973, United States Department of Agriculture, Economic Research Service.
    13. Mathieu Frigon & Maurice Doyon & Robert F.J. Romain, 1999. "Asymmetry in Farm-Retail Price Transmission in the Northeastern Fluid Milk Market," Food Marketing Policy Center Research Reports 045, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    14. Frigon, Mathieu & Doyon, Maurice & Romain, Robert F.J., 1999. "Asymmetry in Farm-Retail Price Transmission in the Northeastern Fluid Milk Market," Research Reports 25220, University of Connecticut, Food Marketing Policy Center.
    15. Azzeddine M. Azzam, 1999. "Asymmetry and Rigidity in Farm-Retail Price Transmission," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 525-533.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Evert Los & Cornelis Gardebroek & Ruud Huirne, 2021. "Explaining output price heterogeneity in Dutch horticulture," Agribusiness, John Wiley & Sons, Ltd., vol. 37(4), pages 891-914, October.
    2. Alessandro Bonanno & Carlo Russo & Luisa Menapace, 2018. "Market power and bargaining in agrifood markets: A review of emerging topics and tools," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 6-23, December.
    3. Anania, Giovanni & Nisticò, Rosanna, 2014. "Price dispersion and seller heterogeneity in retail food markets," Food Policy, Elsevier, vol. 44(C), pages 190-201.
    4. Castellari, Elena & Moro, Daniele & Platoni, Silvia & Sckokai, Paolo, 2018. "Retailers’ strategies and food price dynamics: Evidence from dairy scanner data," Food Policy, Elsevier, vol. 74(C), pages 212-224.
    5. Carlo Russo & Rachael Goodhue, 2018. "Farmgate prices, retail prices, and supermarkets' pricing decisions: An integrated approach," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 24-43, December.
    6. Giovanni Anania & Rosanna Nisticò, 2011. "Price Dispersion, Search Costs And Consumers And Sellers Heterogeneity In Retail Food Markets," Working Papers 201105, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    7. Richard Volpe, 2013. "Promotional Competition Between Supermarket Chains," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(1), pages 45-61, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Lan & Carman, Hoy F. & Sexton, Richard J., 2005. "Grocery Retailer Pricing Behavior for California Avocados with Implications for Industry Promotion Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19498, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Tian Xia & Brian Sancewich, 2018. "Interaction between buyer power in agricultural procurement and seller power in food retailing, and optimal allocation of anti-trust efforts," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-19, December.
    3. Hoy F. Carman & Richard J. Sexton, 2005. "Supermarket fluid milk pricing practices in the western United States," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 509-530.
    4. Li, Chenguang & Sexton, Richard J., 2009. "Impacts of Retailers’ Pricing Strategies for Produce Commodities on Farmer Welfare," 2009 Conference, August 16-22, 2009, Beijing, China 51720, International Association of Agricultural Economists.
    5. Xia, Tian & Li, Xianghong, 2009. "Asymmetric Price Transmission and Demand Characteristics," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49400, Agricultural and Applied Economics Association.
    6. Plastina, Alejandro S. & Giannakas, Konstantinos, 2007. "Market And Welfare Effects Of Mandatory Country-Of-Origin Labeling In The Us Specialty Crops Sector," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9735, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Steve McCorriston, 2002. "Why should imperfect competition matter to agricultural economists?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 29(3), pages 349-371, July.
    8. Sheldon, Ian M., 2017. "The Competitiveness Of Agricultural Product And Input Markets: A Review And Synthesis Of Recent Research," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 49(1), pages 1-44, February.
    9. Alejandro Plastina & Konstantinos Giannakas & Daniel Pick, 2011. "Market and Welfare Effects of Mandatory Country‐of‐Origin Labeling in the U.S. Specialty Crops Sector: An Application to Fresh Market Apples," Southern Economic Journal, John Wiley & Sons, vol. 77(4), pages 1044-1069, April.
    10. Oral Capps & Pablo Sherwell, 2007. "Alternative approaches in detecting asymmetry in farm-retail price transmission of fluid milk," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 313-331.
    11. Volpe, Richard J., III, 2011. "Evaluating the Performance of U.S. Supermarkets: Pricing Strategies, Competition from Hypermarkets, and Private Labels," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(3), pages 1-16, December.
    12. Karsten Hansen & Vishal Singh & Pradeep Chintagunta, 2006. "Understanding Store-Brand Purchase Behavior Across Categories," Marketing Science, INFORMS, vol. 25(1), pages 75-90, 01-02.
    13. Fabian Bergès & Zohra Bouamra-Mechemache, 2012. "Is producing a private label counterproductive for a branded manufacturer?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 39(2), pages 213-239, April.
    14. Xia, Tian & Sexton, Richard J., 2009. "Retail Prices for Milk by Fat Content: A New Theory and Empirical Test of Retailer Pricing Behavior," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), pages 1-20, August.
    15. Hakan Yilmazkuday, 2018. "Spatial dispersion of retail margins: evidence from Turkish agricultural prices," Agricultural Economics, International Association of Agricultural Economists, vol. 49(4), pages 455-462, July.
    16. Li, Chenguang & Volpe, Richard, 2014. "Retail Pricing Patterns and Driving Factors of Price Variation," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 169730, Agricultural Economics Society.
    17. Timothy Richards, 2007. "A nested logit model of strategic promotion," Quantitative Marketing and Economics (QME), Springer, vol. 5(1), pages 63-91, March.
    18. Alan Kackmeister, 2007. "Yesterday's Bad Times Are Today's Good Old Times: Retail Price Changes Are More Frequent Today Than in the 1890s," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(8), pages 1987-2020, December.
    19. Freebairn, John W. & Goddard, Ellen W. & Griffith, Garry R., 2005. "When Can a Generic Advertising Program Increase Farmer Returns?," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    20. Chen, Haipeng (Allan) & Levy, Daniel & Ray, Sourav & Bergen, Mark, 2008. "Asymmetric Price Adjustment in the Small," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 55(4), pages 728-737.

    More about this item

    Keywords

    Agribusiness; Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:arerjl:10213. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/nareaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.