International retail buying groups and consumer prices

Abstract

The aim of the research described in this paper is to investigate the effect of international retail buying groups on consumer prices. The study focuses on EDEKA, the leading grocery retailer in Germany, and its membership in AgeCore, the largest European international retail buying group. The empirical analysis is based on an extensive EDEKA scanner dataset, including over 6 million observations of monthly consumer prices for 138,000 stock-keeping units (SKUs) across 20 food categories, over a six-year period. The analysis shows that EDEKA’s membership in AgeCore led to reduced prices for its customers. These findings are consistent with recent studies on the influence of retail buying groups on consumer prices and contribute to an increasing body of evidence that international retail buying groups reduce consumer prices. The paper shows that international buying groups are a force for the good, as they contribute to reduce consumer prices while simultaneously offering a cost-efficient mechanism for retailers to create scale to obtain competitive buying conditions.