Brand Performance Across Store Formats: Beyond Walmart's Low Prices

Abstract

We study whether certain types of brands are more likely to perform better at Walmart supercenters as compared to supermarkets. We correlate the variation in brand sales performance at these two store formats (over time and across markets) with marketing mix variables such as prices, promotions, assortments, and competition while controlling for market and time specific trends, and differences in consumers shopping at different formats. Based on data from four product categories in the Nielsen homescan panel, we consistently find that value brands perform better at Walmart supercenters, while premium brands perform better at supermarkets. We find substantial differences in assortments carried at Walmart supercenters and supermarkets. On average, assortment explains 30% of the variation in relative brand shares while prices and promotions explain 24% of the variation. Importantly, this pattern persists among consumers not loyal to either format i.e., who split their spending at different formats. We also find that consumers spending over 75% of their basket expenditures on Walmart shop premium and value brands in more similar proportions across formats as compared to consumers spending over 75% in supermarkets. These latter consumers purchase premium brands in greater proportions when shopping at the supermarkets and value brands in greater proportions when shopping at Walmart. Finally, consumers who split their baskets more evenly across formats are more price sensitive than loyal consumers. These results provide several managerial and policy implications for retail managers looking to increase sales of or focus on specific brand tiers. Our analysis can be extended to other store formats beyond Walmart supercenters and supermarkets.