Retail Sales: Do They Mean Reduced Expenditures? German Grocery Evidence
AbstractRetail pricing strategies incorporate promotions, sales, and rigidities. A number of models have been proposed in particular to explain the occurrence of sales. Focussing on the market for fresh foods the model by Varian and the loss leader argument seem to be intuitively best fitting to the conditions in the fresh food market. From these models we derive several hypotheses that are tested for a unique data set of the German fresh food retail market. The data set consists of weekly prices for ten food items in 131 grocery shops over the period from 1995 to 2000. Following Varian sales should lead to reduced expenditures, while the loss leader argument assumes that consumers are lured into the shop by promotional sales which are covered by higher prices for other products. The results indicate that expenditures decrease with the number of sales in the short run but this effect is outweighed by a dynamic price adjustment thereafter.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa with number 25914.
Date of creation: 2003
Date of revision:
Food Consumption/Nutrition/Food Safety; Marketing;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pashigian, B Peter & Bowen, Brian, 1991. "Why Are Products Sold on Sale? Explanations of Pricing Regularities," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1015-38, November.
- Conlisk, John & Gerstner, Eitan & Sobel, Joel, 1984. "Cyclic Pricing by a Durable Goods Monopolist," The Quarterly Journal of Economics, MIT Press, vol. 99(3), pages 489-505, August.
- Salop, Steven & Stiglitz, Joseph E, 1977.
"Bargains and Ripoffs: A Model of Monopolistically Competitive Price Dispersion,"
Review of Economic Studies,
Wiley Blackwell, vol. 44(3), pages 493-510, October.
- Steven Salop & Joseph Stiglitz, 1977. "Bargains and ripoffs: a model of monopolistically competitive price dispersion," Special Studies Papers 94, Board of Governors of the Federal Reserve System (U.S.).
- Gerstner, Eitan, 1986. "Peak Load Pricing in Competitive Markets," Economic Inquiry, Western Economic Association International, vol. 24(2), pages 349-61, April.
- Lazear, Edward P, 1986.
"Retail Pricing and Clearance Sales,"
American Economic Review,
American Economic Association, vol. 76(1), pages 14-32, March.
- Shantanu Dutta & Mark Bergen & Daniel Levy & Robert Venable, 2005.
"Menu Costs, Posted Prices, and Multiproduct Retailers,"
- Dutta, Shantanu, et al, 1999. "Menu Costs, Posted Prices, and Multiproduct Retailers," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(4), pages 683-703, November.
- Chakravarthi Narasimhan, 1984. "A Price Discrimination Theory of Coupons," Marketing Science, INFORMS, vol. 3(2), pages 128-147.
- Villas-Boas, J Miguel, 1995. "Models of Competitive Price Promotions: Some Empirical Evidence from the Coffee and Saltine Crackers Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(1), pages 85-107, Spring.
- Warner, Elizabeth J & Barsky, Robert B, 1995. "The Timing and Magnitude of Retail Store Markdowns: Evidence from Weekends and Holidays," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 321-52, May.
- Banks, Jeffrey & Moorthy, Sridhar, 1999.
"A model of price promotions with consumer search,"
International Journal of Industrial Organization,
Elsevier, vol. 17(3), pages 371-398, April.
- Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, October.
- Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September.
- Lal, Rajiv & Matutes, Carmen, 1994. "Retail Pricing and Advertising Strategies," The Journal of Business, University of Chicago Press, vol. 67(3), pages 345-70, July.
- Bass, Frank M, 1980. "The Relationship between Diffusion Rates, Experience Curves, and Demand Elasticities for Consumer Durable Technological Innovations," The Journal of Business, University of Chicago Press, vol. 53(3), pages S51-67, July.
- Daniel Hosken & David Reiffen, 2001. "Multiproduct retailers and the sale phenomenon," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 115-137.
- Blinder, Alan S, 1982.
"Inventories and Sticky Prices: More on the Microfoundations of Macroeconomics,"
American Economic Review,
American Economic Association, vol. 72(3), pages 334-48, June.
- Alan S. Blinder, 1981. "Inventories and Sticky Prices: More on the Microfoundations of Macroeconomics," NBER Working Papers 0620, National Bureau of Economic Research, Inc.
- James D. Hess & Eitan Gerstner, 1987. "Loss Leader Pricing and Rain Check Policy," Marketing Science, INFORMS, vol. 6(4), pages 358-374.
- Reagan, Patricia B, 1982. "Inventory and Price Behaviour," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 137-42, January.
- Bliss, Christopher, 1988. "A Theory of Retail Pricing," Journal of Industrial Economics, Wiley Blackwell, vol. 36(4), pages 375-91, June.
- Sobel, Joel, 1984. "The Timing of Sales," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 353-68, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.