Price sensitivity within and across retail formats
Does the perceived pricing environment affect consumer reactions in food retail? Applying a synthetic demand system approach, we examine if customers of discount stores reveal different demand elasticities than those of conventional supermarkets. Based on a RollAMA dataset containing information on consumption in 12 2 different retail chains in Austria, we first analyze demand patterns when consumers only frequent either discounters or supermarkets, followed by an investigation of potential cross-foormat effects when both types of stores are visited. T Tests for significance of the differences in demand reactions evaluate their importance. Our empirical findings suggest that for the 3 categories of milk products under examination, price elasticities in discount stores are by tendency higher, despite uniform product characteristics. The hypothesis of equal cross-format price elasticities is mostly rejected, which particularly holds for the case of drinking milk.
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