IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v26y2010i2p220-242.html
   My bibliography  Save this article

An empirical investigation of Wal-Mart's expansion into food retailing

Author

Listed:
  • Alessandro Bonanno

    (Department of Agricultural Economics and Rural Sociology, The Pennsylvania State University, 207-D, Armsby Building, University Park, PA 16802-5600)

Abstract

After revolutionizing the concept of mass merchandising with its Discount Stores, Wal-Mart has entered food retailing with its Supercenters, and has become the largest food retailer in the United States. Despite its relevance, little empirical research has focused on explaining the company's entry and expansion into food retailing. Wal-Mart's expansion into food retailing through its store conversion strategy is analyzed using an industrial organization entry framework. The results show that Wal-Mart's store conversion strategy has targeted largely populated areas with low population density, a high percentage of population receiving food stamps, and where the presence of incumbents is modest. The results also provide evidence that as the company moves toward saturation of local markets and increases store conversion rates, it may be forced to reconsider some of its strategic decisions based on the exploitation of economies of density and store conversion. © 2010 Wiley Periodicals, Inc.

Suggested Citation

  • Alessandro Bonanno, 2010. "An empirical investigation of Wal-Mart's expansion into food retailing," Agribusiness, John Wiley & Sons, Ltd., vol. 26(2), pages 220-242.
  • Handle: RePEc:wly:agribz:v:26:y:2010:i:2:p:220-242
    DOI: 10.1002/agr.20215
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/agr.20215
    File Function: Link to full text; subscription required
    Download Restriction: no

    References listed on IDEAS

    as
    1. Neumark, David & Zhang, Junfu & Ciccarella, Stephen, 2008. "The effects of Wal-Mart on local labor markets," Journal of Urban Economics, Elsevier, vol. 63(2), pages 405-430, March.
    2. Emek Basker, 2005. "Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 174-183, February.
    3. Jerry Hausman & Ephraim Leibtag, 2007. "Consumer benefits from increased competition in shopping outlets: Measuring the effect of Wal-Mart," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1157-1177.
    4. Bonanno, Alessandro & Lopez, Rigoberto, 2008. "Wal-Mart’s Monopsony Power in Local Labor Markets," Research Reports 149210, University of Connecticut, Food Marketing Policy Center.
    5. Berry, Steven T, 1992. "Estimation of a Model of Entry in the Airline Industry," Econometrica, Econometric Society, vol. 60(4), pages 889-917, July.
    6. Roger Sherman & Thomas D. Willett, 1967. "Potential Entrants Discourage Entry," Journal of Political Economy, University of Chicago Press, vol. 75, pages 400-400.
    7. Cotterill, Ronald W & Haller, Lawrence E, 1992. "Barrier and Queue Effects: A Study of Leading U.S. Supermarket Chain Entry Patterns," Journal of Industrial Economics, Wiley Blackwell, vol. 40(4), pages 427-440, December.
    8. Peter M. Feather, 2003. "Valuing Food Store Access: Policy Implications for the Food Stamp Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 162-172.
    9. Khanna, Naveen & Tice, Sheri, 2000. "Strategic Responses of Incumbents to New Entry: The Effect of Ownership Structure, Capital Structure, and Focus," Review of Financial Studies, Society for Financial Studies, vol. 13(3), pages 749-779.
    10. Thomas J. Holmes, 2006. "The Diffusion of Wal-Mart and Economies of Density," 2006 Meeting Papers 15, Society for Economic Dynamics.
    11. Michael J. Mazzeo, 2002. "Product Choice and Oligopoly Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 221-242, Summer.
    12. Emek Basker & Michael Noel, 2009. "The Evolving Food Chain: Competitive Effects of Wal-Mart's Entry into the Supermarket Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 977-1009, December.
    13. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
    14. Kyle W. Stiegert & Todd Sharkey, 2007. "Food pricing, competition, and the emerging supercenter format," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 295-312.
    15. Panle Jia, 2008. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry," Econometrica, Econometric Society, vol. 76(6), pages 1263-1316, November.
    16. Richard J. Volpe & Nathalie Lavoie, 2008. "The Effect of Wal-Mart Supercenters on Grocery Prices in New England," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(1), pages 4-26.
    17. Stephan J. Goetz & Hema Swaminathan, 2006. "Wal-Mart and County-Wide Poverty," Social Science Quarterly, Southwestern Social Science Association, vol. 87(2), pages 211-226.
    18. J. Scott Long & Jeremy Freese, 2006. "Regression Models for Categorical Dependent Variables using Stata, 2nd Edition," Stata Press books, StataCorp LP, edition 2, number long2, April.
    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. repec:zbw:espost:157986 is not listed on IDEAS
    2. Bonanno, Alessandro & Goetz, Stephan J., 2012. "Food Store Density, Nutrition Education, Eating Habits and Obesity," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 15(4).

    More about this item

    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:wly:agribz:v:26:y:2010:i:2:p:220-242. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.