Cheap Thrills! An Empirical Analysis of the Impact of Supercenters on Consumer Waste

Problem definition : To generate more sales, retailers are incentivized to open large stores. However, large store formats can carry negative environmental externalities. Entry of large stores in a community may stimulate mass consumption through its impact on consumer behaviors and local competition. In this study, we examine the local impact on the amount of consumer waste generated following an expansion of retail Supercenters. Methodology/results : We leverage the staggered expansion of Walmart Supercenters and adopt a difference-in-differences approach to investigate the impact of Supercenter entry on consumer waste. Our difference-in-differences estimates suggest that Supercenter entry results in up to a 6.97% increase in consumer waste in the affected counties. The increase is larger for new Supercenter launches compared with Supercenter conversions. In addition, we examine the roles of convenience stores and circular economy channels in mitigating the impact of Supercenter expansion. Managerial implications : For policymakers, our results also highlight a silver lining: the negative environmental effect of Supercenter entry can be mitigated through a balanced retail strategy that includes both convenience stores and Supercenters. Furthermore, we show that developing and promoting local circular economy channels may also mitigate the Supercenter effect.