Schepers, Bram (2021) Walmart, Always Low Prices? Master thesis.
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Master Thesis Bram Schepers Final Version PDF.pdf Download (3MB) | Preview |
Abstract
The American retail market has undergone extreme structural changes in the last decades. Small independent retailers are shutting down and are being replaced by large warehouse-style big box stores. Especially in the grocery sector, local markets have become more and more concentrated, with large discounters like Walmart becoming the dominant players. By offering extremely low prices these big box stores gain an advantage over their smaller competitors and increase their market power. Seeing that regional monopolies have started to emerge, this paper tries to find out if big box retailers exploit their gained regional market power by raising their prices in the specific stores located within the dominated markets. The research is focused on Walmart Supercenters in the states of Kansas, Nebraska and Oklahoma, in which some of the most concentrated local markets are located. A statistical analysis is carried out to identify a potential link between price levels and the number of competitors of a big box store. An additional focus on the spatial scale at which competitors should be deemed influential for big box grocers is included into the analysis. The results show a small but highly significant negative effect of competitors on price, indicating that prices tend to be higher in markets in which consumers have less store choices available to them. Competition seems to have an influential impact within a distance of five to ten miles around the Supercenter, which is considered the general catchment area of these types of stores. Although the effects are small, the results highlight the importance of competitive local markets. Big box retailers are suspected to adapt regional pricing strategies related to the level of competition, causing more dependent consumers to pay more for the same products than others.
| Item Type: | Thesis (Master) |
|---|---|
| Degree programme: | Economic Geography: Regional Competitiveness and Trade (track) |
| Supervisor: | Koster, S. |
| Date Deposited: | 02 Feb 2021 13:09 |
| Last Modified: | 02 Feb 2021 13:09 |
| URI: | https://frw.studenttheses.ub.rug.nl/id/eprint/3417 |
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