US Supermarkets Research Articles

What foods are US supermarkets promoting? A content analysis of supermarket sales circulars

This study compared the types of foods advertised in supermarket newspaper circulars across geographic region (US Census regions: northeast [n=9], midwest [n=15], south [n=14], and west [n=13]), obesity-rate region (i.e., states with CDC adult obesity rates of <25% [n=14], 25 to <30% [n=24], and ⩾30% [n=13]), and with MyPlate recommendations. All food advertisements on the first page of each circular were measured (±0.12-in.) to determine the proportion of space occupied and categorized according to food group. Overall, ⩾50% of the front page of supermarket sales circulars was devoted to protein foods and grains; fruits, vegetables, and dairy, combined, were allocated only about 25% of the front page. The southern geographic region and the highest obesity-rate region both devoted significantly more advertising space to sweets, particularly sugar-sweetened beverages. The lowest obesity-rate region and western geographic region allocated the most space to fruits. Vegetables were allocated the least space in the western geographic region. Grains were the only food group represented in ads in proportions approximately equal to amounts depicted in the MyPlate icon. Protein foods exceeded and fruits, dairy, and vegetables fell below comparable MyPlate proportional areas. Findings suggest supermarket ads do not consistently emphasize foods that support healthy weight and MyPlate recommendations. More research is needed to determine how supermarket newspaper circulars can be used to promote healthy dietary patterns.

Promotional Timing for Substitutes and Complements at Major US Supermarkets

The purpose of this study is to investigate empirically the major determinants of the supermarket manager’s decision rule for placing products on promotions. Specifically, I examine the roles of substitutes and close complements as well as the potential interaction between national brands and private labels in determining promotional timing. The results expand upon the literature by demonstrating that complementary considerations, both within stores and among competitors, are highly significant determinants of promotional timing. Additionally, the results indicate that private labels are promoted heavily and that retailers incorporate the promotional timing of private labels when setting national brand promotions. This study provides further evidence that retail sales pricing typically does not conform to theoretical models of pricing.

Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity

There is evidence that 9-ending prices are more common and more rigid than other prices. We use data from three sources: a laboratory experiment, a field study, and a large US supermarket chain, to study the cognitive underpinning and the ensuing asymmetry in rigidity associated with 9-ending prices. We find that consumers use 9-endings as a signal for low prices, and that this signal interferes with price information processing. Consequently, consumers are less likely to notice a bigger price when it ends with 9, or a price increase when the new price ends with 9, in comparison to a situation where the prices end with some other digit. We also find that retailers respond strategically to this consumer bias by setting 9-ending prices more often after price increases than after price decreases. 9-ending prices, therefore, usually increase only if the new prices are also 9-ending. Consequently, there is an asymmetry in the rigidity of 9-ending prices: they are more rigid than non 9-ending prices upward but not downward.

Tailored nutrition education: is it really effective?

There has been a growing interest in tailored nutrition education over the previous decade, with a number of literature reviews suggesting this intervention strategy holds considerable potential. Nevertheless, the majority of intervention trials undertaken to date have employed subjective self-report outcome measures (such as dietary recalls). The aim of the present review is to further consider the likely true effect of tailored nutrition education by assessing the findings of tailored nutrition education intervention trials where objective outcome measures (such as sales data) have been employed. Four trials of tailored nutrition education employing objective outcome measures were identified: one was undertaken in eight low-cost supermarkets in New Zealand (2010; n 1104); one was an online intervention trial in Australia (2006; n 497); and two were undertaken in US supermarkets (1997 and 2001; n 105 and 296, respectively). Findings from the high-quality New Zealand trial were negative. Findings from the US trials were also generally negative, although reporting was poor making it difficult to assess quality. Findings from the high-quality online trial were positive, although have limited generalisability for public health. Trials employing objective outcome measures strongly suggest tailored nutrition education is not effective as a stand-alone strategy. However, further large, high-quality trials employing objective outcome measures are needed to determine the true effectiveness of this popular nutrition intervention strategy. Regardless, education plays an important role in generating social understanding and acceptance of broader interventions to improve nutrition.

A cost comparison of more and less nutritious food choices in US supermarkets

The present study directly compared prices of more and less nutritious foods within given categories in US supermarkets. Foods selected from six supermarkets in Jackson County were categorized using the five criteria of the Nutrition Detectives™ (ND) programme and an item-to-item cost comparison was made using posted prices. The nutritional quality of foods was distinguished using the clues of the ND nutrition education programme for elementary-school children and validated using the Overall Nutritional Quality Index. Supermarkets in Jackson County, MO, USA. Not applicable. The average price of the item for more nutritious foods did not differ significantly from that of less nutritious foods overall ($US 2·89 (sd $US 0·74) v. $US 2·85 (sd $0·68), P = 0·76). More nutritious breads cost more than less nutritious breads ($US 3·36 (sd $ US 0·28) v. $US 2·56 (sd $US 0·80, P = 0·03), whereas more nutritious cereals ($US 2·46 (sd $US 0·69) v. $US 3·50 (sd $US 0·30), P < 0·01) and cookies ($US 2·76 (sd $US 0·50) v. $US 3·40 (sd $US0·28), P < 0·01) cost less. Our findings indicate that it is possible to choose more nutritious foods within many common categories without spending more money and suggest that making small improvements in dietary choices does not invariably cost more.

Productivity and efficiency impacts of human resources practices in food retailing

Data from an annual survey of US supermarkets including detailed information on store characteristics, operations, and performance are used to develop an index of Human Resource (HR) practices for food retailers. A stochastic frontier analysis demonstrates that HR policies have a positive impact on value added in food retailing establishments while efficiency is not adversely influenced by HR practices. Managerial implications of the model link technical inefficiency estimates for retailers to slight declines in store level gross margins. Evaluated on the basis of technical efficiency, retailers choosing a portfolio of HR practices that score high on the HR index are able to match the performance of competitors pursuing an alternative low HR strategy.

French Roast: Explaining Consumer Responses to the 2003 Iraq War

During international disputes do consumers boycott an adversary country’s products? We show that during the 2003 US-France dispute over the Iraq War, the market share of French-sounding, US supermarket brands declined. The dispute was a negative shock to US consumers’ associations with France. French-sounding brands, brands that consumers perceive to be French imports, allow us to isolate the dispute’s effect on economic behavior because these brands’ only link to France is through consumers’ associations. Our causal estimates, derived from a nationwide sample of weekly supermarket sales for over 8000 brands, are robust to a variety of alternate explanations. Additionally, we show that supermarkets with a higher proportion of customers who are US citizens (e.g. more strongly identify with US national identity) exhibit sharper boycotts. Customers’ partisan affiliations do not correlate with boycott response.

How supplier category management policy influences category sales performance

PurposeThe purpose of this paper is to examine how several aspects of supplier category management policy might affect category sales performance at Korean supermarkets.Design/methodology/approachAggregated (market‐level) Nielsen time‐series category management and sales data for several variety enhancer categories in the Korean supermarket industry are analyzed.FindingsAcross both small and large supermarkets, both the number of brands and the forward inventory level had positive effects on sales while days of supply of a product had a significant negative effect. For large supermarkets, the out‐of‐stock rate also had a significant negative effect, while for small supermarkets the retail distribution rate had a significant positive effect.Research limitations/implicationsUsing data for the Korean supermarket industry, this study demonstrates which policies for product assortment, pricing, stocking, and product replenishment can affect category sales and how these effects may vary between large and small stores. However, the findings rest on market‐level aggregated data and may be limited in scope to variety enhancer (i.e. low purchase frequency and high penetration) categories. Future research could try to relax these limitations.Originality/valueThe value of this study lies in confirming findings such as how category sales are higher in categories with a relatively larger number of brands (as has been observed in the US supermarket industry), as well as in the surprising finding that category pricing policies do not have a significant effect on category sales even though variety enhancer categories are generally considered price sensitive.

Market power and trade promotions in US supermarkets

PurposeTrade promotions are manufacturer incentives directed to retailers rather than to consumers, aiming at influencing retailer's sales, prices and merchandising practices. Although they are a growing element in the promotional mix of food manufacturers worldwide, trade promotions often raise concerns about their impacts on performance and coordination in the food supply chain, which in turn affect retail food prices. This paper aims to measure the influence of market power on the outcomes of trade promotions negotiated between food manufacturers and supermarkets.Design/methodology/approachThe paper employs Rangan's conceptual model to develop hypotheses about the links between three dimensions of market power (size, brand and institutional power) and trade promotion budgets and their allocation between discount‐ and performance‐based types. The paper employs trade promotion data collected from 36 supermarkets in the USA to statistically test these links.FindingsThe results suggest that brand, size, and institutional power of food manufacturers and retailers affect trade promotion budgets and their allocation among discount‐ and performance‐based types. Food manufacturers have relatively more control over their trade promotion budgets whereas retailers may have more influence on the allocation decisions.Originality/valueThe findings can help food manufacturers and retailers identify institutional, brand and size variables that may help them leverage trade promotion negotiations. The results are relevant to policymakers, in particular for the study of antitrust and performance issues in the food distribution system.

US supermarket clinics are popular with all but doctors

US supermarket clinics are popular with all but doctors

Non‐price rigidity and cost of adjustment

AbstractThere has been increasing interest in understanding how firms undertake non‐price adjustment activities, especially in situations where prices may be rigid despite changes in market conditions. Using scanner price data for over 4500 different food products from a large US supermarket chain, we document periods of rigidity in product additions and deletions: new products are less likely to be introduced, and existing products are less likely to be discontinued during holiday periods than throughout the rest of the year. We argue that this is due to higher costs of undertaking these kinds of product assortment activities during holiday periods. We discuss how this relates to the exiting literature on non‐price adjustment and price rigidity. Copyright © 2007 John Wiley &amp; Sons, Ltd.

Private label price rigidity during holiday periods

Using weekly retail transaction scanner price data from a large US supermarket chain, significantly higher retail price rigidity is found for private label products than for nationally branded products during the Christmas and Thanksgiving holiday periods relative to the rest of the year. The finding cannot be explained by changes in holiday period promotional practices because it is found that private label promotions appear to diminish at least as much as national brands. The increased rigidity of private label products relative to national brands is only partially accounted for by increased rigidity of wholesale prices. After ruling out other potential explanations, it is suggested that the higher private label price rigidity might be due to the increased emphasis on social consumption during holiday periods, raising the customers’ value of nationally branded products relative to the private labels.

Non-Price Rigidity and Cost of Adjustment

There has been increasing interest in understanding how firms undertake non-price adjustment activities, especially in situations where prices may be rigid despite changes in market conditions. Using scanner price data for over 4,500 different food products from a large US supermarket chain, we document periods of rigidity in product additions and deletions: new products are less likely to be introduced, and existing products are less likely to be discontinued during holiday periods than throughout the rest of the year. We argue that this is due to higher costs of undertaking these kinds of product assortment activities during holiday periods. We discuss how this relates to the exiting literature on non-price adjustment and price rigidity.

Sales Promotion and Cooperative Retail Pricing Strategies

Supermarket retailers make strategic pricing decisions in a high-frequency, repeated game environment both in buying and selling fresh produce. In this context, there is some question as to whether a non-cooperative equilibrium can emerge that produces margins above the competitive level. Supermarket pricing results from tacitly collusive equilibria supported by trigger price strategies played in upstream markets. Upstream activities are, in turn, driven by periodic retail price promotions. This hypothesis is tested using a sample of fresh produce pricing data from 20 US supermarket chains. The results support the existence of tacitly collusive non-cooperative equilibria in upstream and downstream markets.

GLOBALISATION AND RESTRUCTURING IN RURAL MEXICO: THE CASE OF FRUIT GROWERS

ABSTRACTMexico is the leading mango‐exporting country in the world. In this global commodity chain there is an important participation by small‐scale farmers whose products end up in US supermarkets. This paper analyses the linkages between the agriculture sector in a developing country and the global agro‐food system. Drawing on the development geography approach and the global commodity‐chain perspective, the effects and responses of global processes on local development are analysed by examining the relations between fruit export companies, local growers and consumer markets. Our case study is of small farmers (ejidatarios) who grow mangos in one of Mexico's main export‐oriented agricultural areas, the Bahía de Banderas Valley, and whose situation is similar to other small‐scale producers of non‐traditional products. The study examines the impact on the farmers of structural adjustment policies that have been implemented in Mexico since the mid‐1980s. It also examines the main livelihood strategies that ejidatarios and their households have been adopting during the same period.

Assessment of business potential at retail sites: empirical findings from a US supermarket chain

We address the problem of estimating retail business potential at alternative sites, with concern for assessing performance relative to potential in existing markets and for identifying the best sites for expansion into new markets. At question is the utility of information typically used in formal retail patronage models, in comparison with additional information considered important by retail executives. Relevant data are gathered from secondary sources and intensive in-store surveys are conducted to produce a portfolio of information about neighbourhood demographics, store ambience, variety and quality of products and services, relative prices of selected products, etc. for stores in a retail grocery chain and competitive stores in the chain's markets. We experiment with alternative statistical models for store performance to determine the consequence of restricting the types of data available when constructing the models. Our findings suggest that while information about store location and surrounding areas, store characteristics and competitive position are all required to obtain the best assessment for business potential at a site, a few key variables on each dimension offer the bulk of explanatory power. Further, the spatial-locational variables affect all measures of store performance in intuitive directions, whereas the effects of other variables differ according to performance measure and reflect the store's market position.

The Impact of Frequent Shopper Programs in Grocery Retailing

Frequent Shopper programs are becoming ubiquitous in retailing. Retailers seem unsure however about whether these programs are leading to higher loyalty, or to higher profits. In this paper we analyze data from a US supermarket chain that has used a number of frequent shopper rewards to improve sales and profitability. We find that while these programs are profitable, this is only because substantial incremental sales to casual shoppers (cherry pickers) oset subsidies to already loyal customers. In this way our findings are inconsistent with existing theories about how frequent shopper programs are supposed to work. We construct our own Hotelling - like model that explicitly models cherry picking behavior and show that its predictions match the data quite closely. We further test the predictions of our model by characterizing the impact of such programs on trip frequency and basket size. We then use the model to examine more complex scenarios. For example, our analysis suggests that frequent shopper programs may be unprofitable if they eliminate all cherry picking. This may explain why some retailers seem dissatisfied with their programs. We end by proposing a solution that retains the benefits of the frequent shopper programs and yet continues to let supermarkets benefit from price discrimination.

Positioning of Store Brands

We examine the retailer's store brand positioning problem. Our game-theoretic model helps us identify a set of conditions under which the optimal strategy for the retailer is to position the store brand as close as possible to the stronger national brand. In three empirical studies, we examined whether market data are consistent with some of the implications of our model. In the first study, using observational data from two US supermarket chains, we found that store brands are more likely to target stronger national brands. Our second study estimated cross-price effects in 19 product categories, and found that only in categories with high-quality store brands, store brand and the leading national brand compete more intensely with each other than with the secondary national brand. In a third product perception study, we found that although explicit targeting by store brands influenced consumer perceptions of physical similarity, it had no influence on consumers' perceptions of overall or product quality similarity. While it appears that retailers do follow a positioning strategy consistent with our model, it changes buying behavior in the intended fashion only if the store brand offers quality comparable to the leading national brands.

The Transformation of Mexican Retailing with NAFTA

With the signing of the North American Free Trade Agreement, NAFTA, in 1994, the opening up of Mexican commercial sectors was completed. Thereafter, the growth of multinational supermarket chains accelerated and Mexican food distributors and retailers were forced into redefinition and regrouping, not only at company level but also at the regional–location level. The central and northern regions are witnessing increased efforts on the part of supermarket chains to capture local market segments, a process which imposes new demands on producers, wholesalers, and consumers. This article addresses the strategies of competition and collaboration of Mexican and US supermarket chains in the new regional context, and highlights the lack of Mexican public policy to help domestic retailers to compete effectively.

Demand, Information, and Competition: Why Do Food Prices Fall at Seasonal Demand Peaks?

Prices for seasonal food products fall at demand peaks. Price declines are not driven by falling agricultural input prices; indeed, farm to retail margins narrow sharply. I use electronic scanner data from a sample of US supermarkets to show that seasonal price declines are closely linked to market concentration, and are much larger in markets with several rivals than where a single brand dominates. Seasonal demand increases reduce the effective costs of informative advertising, and increased informative advertising by retailers and manufacturers in turn may allow for increased market information and greater price sensitivity on the part of buyers.