Download this Paper Open PDF in Browser

Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices

46 Pages Posted: 1 Mar 2011  

Charles Courtemanche

University of North Carolina (UNC) at Greensboro - Department of Economics

Art Carden

Brock School of Business, Samford University; Independent Institute

Multiple version iconThere are 2 versions of this paper

Date Written: February 28, 2011

Abstract

Research shows that grocery stores reduce prices to compete with Walmart Supercenters. This study finds evidence that the competitive effects of two other big box retailers – Costco and Walmart-owned Sam's Club – are quite different. Using city-level panel grocery price data matched with a unique data set on Walmart and warehouse club locations, we find that Costco entry is associated with higher grocery prices at incumbent retailers, and that the effect is strongest in cities with small populations and high grocery store densities. This is consistent with incumbents competing with Costco along non-price dimensions such as product quality or quality of the shopping experience. We find no evidence that Sam’s Club entry affects grocery stores’ prices, consistent with Sam’s Club’s focus on small businesses instead of consumers.

Keywords: Wal-Mart, Walmart, Costco, Sam’s Club, Warehouse Clubs, Grocery Prices, Competition, Retail

JEL Classification: L11, L13, L81, R10

Suggested Citation

Courtemanche, Charles and Carden, Art, Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices (February 28, 2011). Available at SSRN: https://ssrn.com/abstract=1772822 or http://dx.doi.org/10.2139/ssrn.1772822

Charles Courtemanche (Contact Author)

University of North Carolina (UNC) at Greensboro - Department of Economics ( email )

Greensboro, NC 27402-6165
United States

Art Carden

Brock School of Business, Samford University ( email )

800 Lakeshore Drive
Birmingham, AL 35229
United States

HOME PAGE: http://www.artcarden.com

Independent Institute ( email )

100 Swan Way
Oakland, CA 94621-1428
United States

Paper statistics

Downloads
190
Rank
122,048
Abstract Views
1,844