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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), October.
  • Handle: RePEc:ags:arerjl:10213
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    File URL: http://purl.umn.edu/10213
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-528, Fall.
    4. Dimitri, Carolyn & Tegene, Abebayehu & Kaufman, Phillip R., 2003. "U.S. Fresh Produce Markets: Marketing Channels, Trade Practices, And Retail Pricing Behavior," Agricultural Economics Reports 33907, United States Department of Agriculture, Economic Research Service.
    5. Bontems, Philippe & Monier-Dilhan, Sylvette & Requillart, Vincent, 1999. "Strategic Effects of Private Labels," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, 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. 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.
    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.
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    Cited by:

    1. Anania, Giovanni & Nisticò, Rosanna, 2014. "Price dispersion and seller heterogeneity in retail food markets," Food Policy, Elsevier, vol. 44(C), pages 190-201.
    2. Richard Volpe, 2013. "Promotional Competition Between Supermarket Chains," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(1), pages 45-61, February.

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