How Much Lower Are Prices at Discount Stores? An Examination of Retail Food Prices

Ephraim Leibtag, Catherine Barker and Paula Dutko

No 96767, Economic Research Report from United States Department of Agriculture, Economic Research Service

Abstract: Nontraditional stores, including mass merchandisers, supercenters, club warehouse stores, and dollar stores, have increased their food offerings over the past 15 years and often promote themselves as lower priced alternatives to traditional supermarkets. How much lower are food prices at these stores? In order to better understand nontraditional stores’ impact on the cost of food, ERS analysts evaluate food price differences between nontraditional and traditional stores at the national and market level using 2004-06 Nielsen Homescan data. Findings show that nontraditional retailers offer lower prices than traditional stores even after controlling for brand and package size. Comparisons of identical items, at the Universal Product Code (UPC) level, show an expenditure-weighted average price discount of 7.5 percent, with differences ranging from 3 to 28 percent lower in nontraditional stores than in traditional stores. Nontraditional stores in metro areas where such stores have a higher-than-average market share have smaller and less frequent price discounts than those in areas where such stores have a lower market share.

Keywords: Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Industrial Organization; Marketing (search for similar items in EconPapers)
Pages: 45
Date: 2010-10
New Economics Papers: this item is included in nep-agr, nep-com and nep-mkt
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uersrr:96767

DOI: 10.22004/ag.econ.96767

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