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The impact of Wal-Mart supercenters on supermarket concentration in U.S. metropolitan areas

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  • Andrew W. Franklin

    (Food Marketing Policy Center, University of Connecticut, U-21, Storrs, CT 06269-4021)

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    Abstract

    Wal-Mart's 1999 sales in its Supercenter stores will rival that of Kroger, the leading national supermarket chain. With estimated sales at $45-47 billion plus growth of 40% from $32 billion in prior year sales, Wal-Mart's growth has been accomplished without expansion by acquisition or merger. This growth was achieved by capital investment, building new or reformatting existing Wal-Mart stores with the Supercenter format, a hypermarket with general merchandising and full-size supermarket areas. Currently, the number of Wal-Mart Supercenters exceeds 721. Wal-Mart opened 275 Supercenters during 1998 and 1999 and will continue the pace, exceeding 1,400 by the year 2005. These Supercenters will affect the market position and competitive strategies of other food retailers. To date, most reformatting has been in smaller cities and rural areas, perhaps because they tend to have less organized labor markets. This study finds Wal-Mart Supercenter entry had little impact on food seller concentration in major metropolitan areas between 1993 and 1999. Wal-Mart entered 54 of the largest 100 metro areas. Wal-Mart tended to enter cities in the south and east. There is no correlation between entry and city size. Multiple linear regression analysis however indicates that Wal-Mart's market shares are highest in lower income and smaller metro areas. [Econ-Lit citations: L130, L200] © 2001 John Wiley & Sons, Inc.

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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

    Volume (Year): 17 (2001)
    Issue (Month): 1 ()
    Pages: 105-114

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    Handle: RePEc:wly:agribz:v:17:y:2001:i:1:p:105-114

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    Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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    Cited by:
    1. Emek Basker & Michael Noel, 2007. "The Evolving Food Chain: Competitive Effects of Wal-Marts Entry into the Supermarket Industry," Working Papers 0712, Department of Economics, University of Missouri.
    2. Karande, Kiran & Lombard, John R, 2005. "Location strategies of broad-line retailers: an empirical investigation," Journal of Business Research, Elsevier, vol. 58(5), pages 687-695, May.
    3. Glandon, PJ & Jaremski, Matthew, 2012. "Sales and Firm Entry: The Case of Wal-Mart," Working Papers 2012-03, Department of Economics, Colgate University.
    4. Fernando Borraz & Juan Dubra & Daniel Ferrés & Leandro Zipitría, 2014. "Supermarket Entry and the Survival of Small Stores," Review of Industrial Organization, Springer, vol. 44(1), pages 73-93, February.
    5. Bonanno, Alessandro, 2008. "An Empirical Investigation of Wal-Mart’s Expansion into Food Retailing," Research Reports 149931, University of Connecticut, Food Marketing Policy Center.

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