Supermarket Prices Research Articles

The influence of supermarket prices on consumer inflation expectations

Using data on the inflation expectations of 85 thousand consumers and a unique data set of price changes at Australian supermarkets, we show that consumers form inflation expectations that are excessively influenced by particular elements of the cross-sectional distribution of price changes. The estimates provide novel evidence that the right tail of supermarket price changes, which has largely been ignored in the literature to date, is a material factor in explaining inflation expectations. The right tail of supermarket price changes materially raises inflation expectations, particularly for lower income households, leading to the presence of income-dependence in the expectation formation process. The results shed new light on the informativeness of cross-sectional supermarket price changes for consumer beliefs about inflation.

Research on supermarket pricing strategy based on deep learning and optimization model

To carry out reliable market demand analysis and improve the profit of supermarkets, this paper studied the automatic pricing and replenishment decision-making problem of vegetable products in fresh supermarkets. Firstly, the time series-LSTM prediction model is established. Secondly, the parameters of the Adam optimization algorithm and LSTM model are adjusted by grid search, Through the trained model, the daily sales volume, wholesale price, and sales price of each category in the next week are predicted. Finally, the pricing strategy of the total daily replenishment of each vegetable category in the next week is calculated.

Price setting on the two sides of the Atlantic - Evidence from supermarket scanner data

We compare supermarket price setting in the US and the euro area and assess its impact on food inflation. We introduce a novel scanner dataset of Germany, the Netherlands, France, and Italy (EA4) and contrast it with an equivalent dataset from the US. We find that both higher frequency and stronger state dependence of price changes contribute to higher flexibility of supermarket inflation in the US relative to the euro area. We argue that the driving force behind both factors is higher cross-sectional volatility in the US. Larger product-level fluctuations both force retailers to adjust prices more frequently and increase price misalignments, which increase the selection of large price changes. Both facts are well represented by a mildly state-dependent price-setting model, and they jointly explain over a third of the difference in food-inflation volatility between the US and the euro area as well as around a third of the difference between the inflation responses to the COVID-19 shock in Germany and Italy.

Food industry perspectives on potential policies targeting unhealthy food and beverage price promotions in Australian supermarkets

Current supermarket price promotions are likely to encourage unhealthy diets, leading some governments to recently endorse restrictions on price promotions for unhealthy food and beverages. However, little is known about the likely industry response to policy action in this area. The aim of this study was to understand how potential government policies targeting food and beverage price promotions in supermarkets are perceived by food industry stakeholders in Australia. Twelve semi-structured in-depth interviews were conducted with current and former employees of major food manufacturers and food retailers as well as other industry experts with experience related to price promotion practices in the Australian supermarket setting. Data were analysed deductively based on Lewin’s organisational change theories and inductively to highlight forces that might drive or restrain change.From an industry perspective, forces likely to create industry opposition to implementation of price promotion policy included: fear of losing competitive advantage; potential financial loss for food retailers and their suppliers; a perception that restrictions on price promotions for unhealthy products will not impact health; and a perception of increased financial cost to consumers. Forces perceived to drive implementation of a policy that would benefit public health included: mandatory regulation; extensive compliance monitoring; support for promoting healthy products; consumer education; and sufficient lead time and support from retailers for implementation. These forces, and the way in which they interact, need to be actively considered as part of efforts to change the healthiness of food and beverage price promotions in supermarkets.

Strategic supermarket pricing of private labels and manufacturer brands

Strategic supermarket pricing of private labels and manufacturer brands

Transportation & Rising Public Health Concerns in America

Obesity is one of the leading causes of preventable deaths in the United States, as it causes a variety of serious health problems including type 2 diabetes, high blood pressure, heart disease, stroke, some cancers, kidney disease, and more. In the United States, obesity has been on the rise for decades and has shown no sign of slowing down. The epidemic disproportionately affects low-income and minority individuals. One factor contributing to this health disparity is inadequate public and private transportation among such communities, making access to supermarkets (which carry fresh, healthy produce) less attainable. Solving the obesity epidemic in the United States will require significant government support and will likely take a combination of efforts to improve multiple contributing factors: corporate marketing, city zoning, supermarket pricing, transportation, etc. This review discusses the consequences – and potential solutions - of one aspect of the obesity epidemic: transportation. This focus of this paper is on the United States, but its content has international relevance relating to transportation’s effects on public health as a whole. Keyword : Obesity Epidemic, Transportation, Public Health, Public Policy, Nutrition

Acceptability to parents of a baby-led approach to introducing solids

AbstractIn Baby-Led Weaning (BLW), infants are offered foods they can pick up and feed themselves from the start of complementary feeding. Infants who are fully BLW are not spoonfed at all by their parents, feeding themselves all their foods instead. The Baby-Led Introduction to SolidS (BLISS) study was a randomised controlled trial of the effect of a modified version of BLW5 on infant growth, iron status, and risk of choking, and provides an opportunity to investigate parents’ experiences of using a baby-led approach to infant feeding. Complementary feeding methods are usually chosen by parents, so it is important to ascertain whether parents find a baby-led method of introducing solids acceptable if they are assigned to follow it. This is both to determine whether it would be feasible to randomise them to follow BLW in future randomised controlled trials and because, if beneficial effects of BLW are shown, policy makers need to know whether parents would find it acceptable to follow BLW. The aim of this analysis was to determine the acceptability to parents of a baby-led approach to complementary feeding when their infant was 7 to 12 months of age. In total, 206 participants were randomised to Control (n = 101) or BLISS (n = 105) groups in the third trimester of pregnancy. When the infants were 7, 8, 9, and 12 months of age, questionnaires were administered to determine parents’ happiness and frustration with their feeding method, and attitudes regarding its convenience, mess, and expense. Food cost was estimated using supermarket prices linked to a 3-day weighed diet record collected at 7 months of age. Both groups reported high levels of happiness and convenience, but also reported finding complementary feeding very frustrating. There were two significant differences between the groups – the BLISS group reported less messiness, and were more likely to perceive their method as expensive. The actual food cost per day was not statistically significantly different between the two groups (NZ$1.70 for BLISS, NZ$1.90 for Controls). In conclusion, parents did not find a baby-led approach to introducing solids any less acceptable than control parents found standard infant feeding. It is, therefore, feasible to run studies where parents are randomised to follow a baby-led approach to complementary feeding and, should health advantages to BLW be identified, parents are likely to find BLW acceptable to follow.

The frequency and magnitude of price‐promoted beverages available for sale in Australian supermarkets

ObjectivePrice promotions are used to influence purchases and represent an important target for obesity prevention policy. However, no long‐term contemporary data on the extent and frequency of supermarket price promotions exists. We aimed to evaluate the frequency, magnitude and weekly variation of beverage price promotions available online at two major Australian supermarket chains over 50 weeks. MethodsBeverages were categorised into four policy‐relevant categories (sugar‐sweetened beverages, artificially‐sweetened beverages, flavoured milk and 100% juice, milk and water). The proportional contribution of each category to the total number of price proportions, the proportion of price promotions within the available product category, the mean discount, and weekly variation in price promotions were calculated. ResultsFor Coles and Woolworths respectively, 26% and 30% of all beverages were price promoted in any given week. Sugar‐sweetened beverages made up the greatest proportion of all price promotions (Coles: 46%, Woolworths: 49%). Within each product category, the proportion of sugar‐sweetened and artificially‐sweetened beverages that were price promoted was similar, higher than the other categories and reasonably constant over time. Diet drinks and sugar‐sweetened soft drinks were most heavily discounted (by 29–40%). ConclusionsBeverage price promotions are used extensively in Australian supermarkets, undermining efforts to promote healthy population diets. Implications for public healthPolicies restricting price promotions on sugar‐sweetened beverages are likely to be an important part of strategies to reduce obesity and improve population nutrition.

The Impact of a City-Level Minimum Wage Policy on Supermarket Food Prices by Food Quality Metrics: A Two-Year Follow Up Study.

Objective: To examine the effects of increasing minimum wage on supermarket food prices in Seattle over 2 years of policy implementation, overall and differentially across food quality metrics. Methods: Prices for the UW Center for Public Health Nutrition (CPHN) market basket of 106 foods were obtained for 6 large supermarket chain stores in Seattle (“intervention”) and for the same chain stores in King County (“control”) at four time points: 1-month pre- (March 2015), 1-month post- (May 2015), 1-year post- (May 2016), and 2-years post-policy implementation (May 2017). Prices for all food items were standardized and converted to price per 100 kcal. Food quality metrics were used to explore potential differential price increases by (a) food groups, as defined by US Department of Agriculture; (b) NOVA food processing categories, and (c) nutrient density quartiles, based on the Nutrient Rich Foods Index 9.3. Separate difference-in-differences linear regression models with robust standard errors, examined price differences per 100 kcal overall, clustered by store chain, and stratified by each food quality metric. Results: There were no overall market basket price changes attributable to Seattle’s minimum wage policy. Moreover, no minimum wage effect was detected by USDA food group, food processing, or nutrient density categories. Conclusions: Local area supermarket food prices were not impacted by Seattle’s minimum wage policy 2 years into policy implementation and after the first increase to $15/h overall or by sub-classification. Low-income workers may be able to afford higher quality diets if wages increase yet supermarket prices stay the same.

Price convergence in the UK supermarket chains: Evidence from nonlinear cointegration approach

Supermarket chain is an important sector of the UK grocery stores and the growing dominance of supermarket chains has brought public concern over exploitation of market power in the UK retail grocery industry. This paper therefore aims to examine the price convergence of the UK supermarket products. Since the cointegrating relationship between supermarket prices may not be exact or linear, we adopt the rank tests for analysis which do not require prior knowledge and specification of the linear or nonlinear functional form. Our results confirm the evidence of the price convergence of all grocery products and then validate the price competition between the UK supermarket chains. Furthermore, a subset of the cointegration relationships exhibits nonlinear long-run price co-movements.

Multi-Category Competition and Supermarket Pricing

Consumers buy products from multiple categories in their regular shopping. Some prefer to buy from a single firm, which owns lots of retailers, generating cross-category demand interactions. To attract consumer, retailers set lower prices and sell tail brands in some categories (vertical differentiation), or alternatively they create unbranded products that they sell exclusively to earn a high markup (horizontal differentiation). To study supermarket pricing, I develop a multi-category multi-seller demand model and estimate it using the Nielsen Consumer Panel Dataset. I quantify cross-category pricing effects and find strong substitution between categories. Although horizontal differentiation is an importance source of profit, the profit mainly comes from vertical differentiation.

Quantitative analysis on the fluctuation of vegetable price in supermarket

In this paper we analyze the variables affecting the determination of vegetable sale price in supermarket and investigate each amount considered into the formulation. We use the supermarket pricing strategies literatures, cost management theory, and any information obtained from suppliers and supermarket to investigate the variables influenced the sale price gap between supplier sale price and supermarket sale price. In order to obtain the supermarket sale price, it is required to understand the concept of costs. Supermarket as a merchandising firm has two components of costs called purchase costs and operating expenses which are computed to be Cost of Goods Sold (COGS). We found that supplier sale price is the purchase costs and plays has the main role in determining the supermarket sale price. The operating expenses considered is the holding cost. The vegetable characteristics and consumer behaviour have driven the contribution of amount of variables into the sale price at supermarket. Finally, we present the variables satisfying the vegetable sale price formulation and how they are calculated becoming the supermarket sale price.

The Effects of Mandatory Disclosure of Supermarket Prices

We study how mandatory online disclosure of supermarket prices affects prices and price dispersion in brick-and-mortar stores. Using data collected before and after a transparency regulation went into effect in the Israeli food retail market, multiple complementary control groups and relying on a differences-in-differences research design, we document a sharp decline in price dispersion and a 4% to 5% drop in prices following the transparency regulation. The price drop varied across stores and products; it was smaller among branded products than among private-label products, and it was smaller among stores and products that were likely to have been associated with more intense search patterns even before prices became transparent (e.g., products in heavy-discount chains; popular products; products that meet stringent kosher requirements). Finally, we show that prices declined as more consumers used price-comparison websites, and we highlight the role of media coverage in encouraging retailers to set lower prices.

Local Excise Taxes, Sticky Prices, and Spillovers: Evidence from Berkeley's Soda Tax

This paper evaluates the price and consumption effects of the first municipal soda tax imposed in the United States. Using high-resolution scanner data and data-driven approaches to select comparison units for counterfactual analysis, we estimate the tax has no effect on prices or consumption at drugstores, but modestly increases supermarket prices of some soda products, constituting a minority of soda consumption. We find limited evidence of reduced supermarket purchases of soda in the taxed jurisdiction. Half of these reduced purchases are substituted to just outside the taxed jurisdiction. Retailers' limited price responses are attributed to the localness of the tax.

The Effects of Mandatory Disclosure of Supermarket Prices

We study how mandatory online disclosure of supermarket prices affects prices and price dispersion in brick-and-mortar stores. Using data collected before and after a transparency regulation went into effect in the Israeli food retail market, multiple complementary control groups and relying on a differences-in-differences research design, we document a sharp decline in price dispersion and a 4% to 5% drop in prices following the transparency regulation. The price drop varied across stores and products; it was smaller among branded products than among private-label products, and it was smaller among stores and products that were likely to have been associated with more intense search patterns even before prices became transparent (e.g., products in heavy-discount chains; popular products; products that meet stringent kosher requirements). Finally, we show that prices declined as more consumers used price-comparison websites, and we highlight the role of media coverage in encouraging retailers to set lower prices.

The Competitive Effects of Entry: Evidence from Supercenter Expansion

Coupling weekly grocery transactions with the exact location and opening date of Walmarts over an 11-year period, we examine how Supercenter entry affects prices and revenues at incumbent supermarkets. We find that entry within 1 mile of an incumbent causes a sharp 16 percent drop in revenue, a competitive effect that decays quickly with distance. Surprisingly, despite large cross-sectional differences in supermarket prices by exposure to Walmart, our findings also indicate that Supercenter entry has no causal effect on incumbent prices. This result is robust across many dimensions, including a lack of price response for individual products, and across brands within a category. (JEL D22, L81, R32)

Supermarket Pricing Model Impact on Private Label Brands versus National Brands among Millennial Consumers

Are national brands (NB) manufacturers at risk of losing sales to private label brands (PLB) in low quality variance categories, as the Millennial generation continues to outpace previous generational cohorts in absolute size and spending power? A quantitative examination of archival home scan panel data from over 100,000 U.S. households, investigated actual purchase data over a three-year period. Consumer metrics for Rice and Pasta category; trip conversion, buyer conversion, and loyalty served as dependent variables interacting with a multivariable grouping of independent variables; branding (NB vs. PLB), age cohort (Millennial vs. Generation X), and grocery pricing model format (Hi-Lo vs. EDLP vs. Hybrid). A MANOVA provided consistent findings for both rice and pasta categories to support significance level .002 (rice) and

Inflation Expectations, Learning, and Supermarket Prices: Evidence from Survey Experiments

Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, individuals in low inflation contexts have significantly weaker priors about the inflation rate. This finding suggests that rational inattention may be an important source of information frictions. Second, cognitive limitations also appear to be a source of information frictions: even when information about inflation statistics is available, individuals still place a significant weight on inaccurate sources of information, such as their memories of the price changes of the supermarket products they purchase. We discuss the implications of these findings for macroeconomic models and policymaking. (JEL D83, D84, E31, L11, L81, O11)

Multi-Category Competition and Market Power: A Model of Supermarket Pricing

In many competitive settings consumers buy multiple product categories, and some prefer to use a single firm, generating complementary cross-category price effects. To study pricing in supermarkets, an organizational form where these effects are internalized, we develop a multi-category multi-seller demand model and estimate it using UK consumer data. This class of model is used widely in theoretical analysis of retail pricing. We quantify cross-category pricing effects and find that internalizing them substantially reduces market power. We find that consumers inclined to one-stop (rather than multi-stop) shopping have a greater pro-competitive impact because they generate relatively large cross-category effects.

Multi-Category Competition and Market Power: A Model of Supermarket Pricing

In many competitive settings, consumers buy multiple product categories, and some prefer to use a single firm, generating complementary cross-category price effects. To study pricing in supermarkets, an organizational form where these effects are internalized, we develop a multi-category, multi-seller demand model and estimate it using UK consumer data. This class of model is used widely in theoretical analysis of retail pricing. We quantify cross-category pricing effects and find that internalizing them substantially reduces market power. We find that consumers inclined to one-stop (rather than multi-stop) shopping have a greater pro-competitive impact because they generate relatively large cross-category effects. (JEL D12, L11, L13, L81)