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Supersize It: The Growth of Retail Chains and the Rise of the 'Big Box' Retail Format

Emek Basker
University of Missouri - Department of Economics

Shawn D. Klimek
U.S. Census Bureau - Center for Economic Studies

Van H. Pham
Baylor University - Department of Economics


August 20, 2008


Abstract:     
We offer a theory for the complementarity between the size of a retail chain and the scope of its business to explain the growth of general-merchandise firms and the expansion of the "superstore" format. The complementarity results from an interaction of the retailer's economies of scale and consumer gains from "one-stop shopping." We find support for our model in micro data from the Census of Retail Trade for 1977-2002. Retail chains with more stores carry more distinct product lines and as retail chains grow they add both stores and product lines. On average, we find that a chain adds one product line, such as shoes, computers, or jewelry, to an existing store with every new store it opens. For the average large chain, adding a new product line throughout the chain is correlated with adding 400 new stores, competing in over 8,000 new markets and increasing its competitive pressure in more than 10,000 additional markets.

Keywords: Retail, Chain, Big Box, Superstore, Economies of Scale, General Merchandise, One Stop Shopping

JEL Classifications: L11, L25, L81

Working Paper Series

Date posted: August 21, 2008 ; Last revised: August 26, 2008

Suggested Citation

Basker, Emek, Klimek, Shawn D. and Pham, Van H., Supersize It: The Growth of Retail Chains and the Rise of the 'Big Box' Retail Format (August 20, 2008). Available at SSRN: http://ssrn.com/abstract=1240860


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Contact Information

Emek Basker (Contact Author)
University of Missouri - Department of Economics ( email )
118 Professional Building
Columbia, MO 65211
United States
573-882-6023 (Phone)
573-882-2697 (Fax)
HOME PAGE: http://web.missouri.edu/~baskere/
Shawn D. Klimek
U.S. Census Bureau - Center for Economic Studies ( email )
4600 Silver Hill Road
Washington, DC 20233
United States
(301) 763-2861 (Phone)
(301 763-5935 (Fax)
HOME PAGE: http://www.ces.census.gov
Van H. Pham
Baylor University - Department of Economics ( email )
One Bear Place #98003
Waco, TX 76798
United States
(254) 710-3521 (Phone)
(254) 710-6142 (Fax)
HOME PAGE: http://www.baylor.edu/van_pham
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References: 30
Citations: 2

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