The Effect of Wal-Mart Supercenters on Grocery Prices in New England

Abstract

This study analyzes the effect of the presence of Wal-Mart Supercenters on the prices at conventional supermarkets in Massachusetts, Connecticut, and Rhode Island. Using price indexes constructed from primary price data on a basket of 54 goods and holding several demographics and market conditions constant, we determine that Supercenters result in a 7.79% average price reduction in national brand goods and a 6.38% average price reduction in private label goods. Wal-Mart Supercenters also price their groceries on average 15.65% lower than supermarkets competing with Supercenters and 22.28% lower than supermarkets geographically distant from Supercenters.Marketing,