Impacts of Time and Transportation Costs on Food Shopping

This research examines the effects of transportation and time costs on the market basket costs of shopping at more than one supermarket. A 95-item market basket was priced in sixteen supermarkets representing four grocery chains in four geographically separated areas of Columbus, Ohio. The lowest cost market basket for each area was calculated and the costs of transportation and time added to determine their effect upon achieving a lowest cost market basket by shopping several supermarkets. When market basket items only or market basket items plus transportation costs were considered, savings were realized by shopping four supermarkets in an area as opposed to one. The addition of time costs to the total market basket cost caused shopping at two supermarkets to result in the lowest cost market basket in 75% of the observed store combinations.     

The Effects of Market Concentration and Horizontal Mergers on Hospital Costs and Prices

Antitrust advocates believe that horizontal consolidation in hospital markets can reduce competition and increase prices while merger advocates believe it can benefit consumers by reducing service duplication. This study analyzed the market conditions, operating characteristics, and costs and prices of approximately 3500 short-term general hospitals (including 112 within-market-area mergers) from 1986 to 1994 to investigate the effects of market concentration, hospital mergers, and managed care penetration. The results show: a shift away from non-price competition toward price competition in health care markets; that this shift was fueled by increased market penetration by price-sensitive buyers; that horizontal hospital mergers produced average cost savings of approximately 5%, which were generally passed on to consumers as lower prices; that cost savings were generally greater for mergers of similar-size hospitals, with a higher degree of duplicative services, and with lower pre-merger occupancy rates; and some evidence that post-merger price reductions were smaller in less-competitive markets.     

Prices Paid in Grocery Markets: Searching Across Stores and Brands

Using a large sample of prices paid for 21 homogeneous grocery products available in several brands in each of 16 markets, we simulate the search behavior of a consumer following different shopping strategies using as many as four supermarkets. We find that price search can lead to substantial savings. Brand switching can generate savings at least as large as visiting multiple stores to find the lowest price for a single brand. Buying a private label is usually a better way to save than any amount of search for low prices on national brands. A case study in a small metropolitan area grocery market yields results substantially the same as the simulation results.     

Save or (over-)spend? The impact of hard-discounter shopping on consumers' grocery outlay

An increasing number of consumers have come to patronize a hard discounter (HD) to save on their grocery budget. Given the HDs' rock-bottom prices, a complete switch from the traditional supermarket (TS) to the HD format would, indeed, substantially reduce grocery spending. However, consumers typically visit the HD on top of a TS, leading to a more complex purchase allocation and decision process. In addition to limiting the potential savings to part of the basket, these multiple store shopping patterns may therefore result in depletion of self-control resources and to self-licensing, consumers using realized savings to justify additional indulgent purchases. In this study, we explain and empirically analyze the effect of HD patronage on consumer spending, taking the selected shopping pattern (single versus multiple stores, visited on separate versus combined shopping trips) into account. To this end, we use scanner panel data on households' actual weekly purchase behavior. We also examine household differences in these effects, and relate them to household characteristics.Our results show that shifting the entire basket to the HD entails substantial savings. Yet, for the majority of consumers, adding a HD to the store set does not reduce grocery outlay: visiting the HD and TS on separate shopping trips leads to a “status quo”, and visiting them on combined shopping trips even enhances weekly spending. While consumers pay less per unit bought at the HD, this is (more than) offset by the purchase of larger quantities across a broad range of product categories, and of more expensive items at the TS. Especially older consumers or larger households, and consumers who shop more frequently or are easily enticed by promotions, are bound to overspend.     

Fundamental basket size patterns and their relation to retailer performance

This study uses a sample of approximately 60,000 US households to document fundamental shopping basket size patterns across a range of retail types, and examines them in relation to retailer performance metrics (unit sales and dollar revenue). Specifically, this research addresses two main questions: 1) how do shopping basket metrics (mean and median number of items, the distribution of one, two, three … n items) differ by retail type, and 2) how does the Pareto ratio (sales generated by the heaviest 20%, and lightest 80% of buyers) apply to shopping baskets. The results show that basket size patterns in retailers are predictable. Shoppers purchase more items on average in retailers that offer a greater variety of items, and the distribution of basket sizes follows the Poisson lognormal model. The results also show that the largest 20% of shopping baskets on average generate 50% of unit sales, and 40% of dollar revenue. These results set additional benchmarks of the patterns that can be expected when looking at data on a basket-level. This research offers implications to practitioners by showing the importance of small and large baskets for retailer revenue and growth, which can guide more informed decision making to better manage their stores and brands.     

Price Savings to Consumers at Farmers' Markets

This study determined the price savings to be realized by consumers by shopping at 15 certified farmers’ markets in California during the summer and fall of 1979. Substantial savings were found compared to local supermarket prices and the differences appeared in cities of different size and during different seasons of the year.     

Retail Market Power in a Shopping Basket Model of Supermarket Competition

Supermarket retailers typically operate with relatively low margins, suggesting a highly competitive retail environment. However, despite the fact that consumers purchase an entire shopping basket at a time from supermarkets, this evidence is largely based on models of retail competition with single-category purchases. In this paper, we develop and test an empirical model of retail price competition that explicitly accounts for the effect of demand complementarity among items in consumer shopping baskets. Relative to the case where consumers purchase products with independent demands, we demonstrate that equilibrium prices are higher for all items when retailers take demand-complementarity into account. Our findings indicate that non-price strategies intended to encourage complementarity, such as co-merchandising, strategic shelf-positioning, or featuring complementary goods tend to soften price competition, and lead to higher equilibrium prices.     

Competition among European food distribution systems in concentrated markets

This research investigates the quality of competition among food stores in Sweden through a statistical evaluation of prices in two major food markets in the country. The analysis finds mixed results. There is evidence of superior market performance in the passage to the consumer of savings from scale economies and promotional discounts. At the same time indications of weakness were found in the difference in prices levels between major markets with similar costs and competitors employing the same technologies. Public policy recommendations to maintain high levels of competition are derived.     

Robustness of an Intermittent Program of Comparative Retail Food Price Information

This study compares the distribution of food-item market basket prices across stores and relative to a local newspaper retail food price report. Distributions of prices for market baskets comprised of national brands and cheapest alternative brands coincided closely with the intermittent retail food price report. This suggests that consumer organizations with limited resources can produce comparative food-store price reports that provide useful information to consumers.     

Accessing healthy food: availability and price of a healthy food basket in Scotland

Access to healthy food and its marketing have been asserted as limitations on changing behaviour to improve diet. A retailer survey in Scotland is reported that considered availability and affordability of a basket of indicator healthy food items, termed the Healthy Eating Indicator Shopping Basket (HEISB). It comprised 35 items drawn from 5 major food groups. A census of HEISB availability in 466 stores was undertaken in a sample of locations that varied on dimensions of urban-rural and affluent-deprived. Around half of the supermarkets surveyed stocked all the items. Availability of healthy food items was generally seen to be adequate but there were notable variations in availability for specific items. There were large variations in price for the HEISB items across the stores and the survey areas. The total HEISB median price varied by store type. Basket price tended to rise with deprivation with a caveat of the lowest prices in the most deprived areas. Accessibility to a range of healthy food depends more on the presence of medium and large stores than being in a deprived or affluent area.     

Measuring physical access to ‘healthy foods’ in areas of social deprivation: a case study in Cardiff

This paper examines some characteristics of ‘food deserts’– areas of social deprivation which have poor physical access to food shopping – in a large British city, Cardiff. The stereotype of the ‘food desert’ is critically examined, emphasizing the importance attached by residents of such areas to easy access to food shopping, especially in multiple supermarkets. The case study of Cardiff briefly discusses the identification of potential ‘food deserts’, and then examines the structures of ‘healthy food’ availability and prices in four areas of the city (two in the inner city, two in the outer city) where physical access to large multiple supermarkets is poor. The analysis shows that the local shops in these areas cannot compete generally with large supermarkets on either availability of items or their prices, but that the local shops in the inner city areas are rather more competitive than those in the outer areas. Implications for research and policy formulation are finally discussed.     

Street Markets Influencing Urban Consumer Behavior in Mexico

Street markets in the urban setting form the bottom of the pyramid market structure, which caters to consumers of semi-urban settlements. Consumers favor these markets for farm-fresh agricultural products and low-priced consumer goods. This study empirically investigates the role of street markets in urban sociodemographic clusters in the shift of consumer behavior against large shopping malls and supermarkets. Data were gathered from 490 respondents engaged in buying products at 373 vending stalls across 14 street market locations in Mexico City. Data were collected on 31 variables and analyzed using structural equation model. The study also addresses street markets as change agents of consumer behavior in the context of marketplace ambience, vending patterns, ethnic values, and interactive customer relations. The conventional shopping wisdom of customers, competitive gains, and socio-cultural advantages are also addressed based on an empirical survey. The study revealed that shopping behavior is largely motivated by the physical factors such as location of marketplace, distance, and vending stall type within the street market. Findings also indicate that consumers possess a strong conviction that street markets offer fresh products of farm and animal origin as well as ethnic food irrespective of hygiene standard.     

How to serve online consumers in rural markets: Evidence-based recommendations

Online shopping is growing significantly among rural consumers interested in overcoming product assortment limitations in their local markets. Retailers are taking notice, and some are looking for first-mover-advantage opportunities in rural areas where they see greater potential for growth when compared to saturated urban markets. However, expanding to these areas presents significant and unresolved challenges related to last mile fulfillment caused by low levels of population density as well as other socioeconomic and demographic characteristics. In this article, we present an integrated set of recommendations for online retailers to differentiate strategies to serve rural markets efficiently. To that end, we partnered with an online grocery retailer to examine differences between rural and urban consumers across online shopping preferences that significantly impact fulfillment costs. We draw on those differences and existing knowledge on last mile fulfillment operations to propose a tailored consumer value proposition and operational model for last mile fulfillment in rural markets.     

A comparison of produce prices in Costa Rica: farmers' markets,produce markets and supermarkets

Following a review of the history and organization of farmers' markets in Costa Rica, a comparison was made of prices offered to consumers at farmers' markets, produce markets and supermarkets in Costa Rica. Findings reveal there are substantial price savings to Costa Rican consumers that shop at local farmers' markets for fruit and vegetables compared to produce markets and supermarkets.     

网购食品消费者选择行为的影响因素

利用1 790份网络调查问卷数据,采用相关分析、交叉分析等统计方法,研究网购食品消费者选择行为,分析网购食品市场渗透率不高、用户黏性不足的主要原因,结果表明,消费者个性特征差异会导致对网购食品的不同态度,进而影响消费者对网购食品的选择行为;良好的网购环境、物美价廉的食品、优质的网购服务,是促使消费者选择网购食品的主要因素,对网购食品安全的担忧、习惯于传统购物方式、网购维权难度大,是抑制消费者选择网购食品的主要因素,尤其是网购食品"难维权、维权难"可能会放大消费者对网购食品产生的消极态度。为此,应加强网购食品多主体协同监管,消除消费者怀疑心理和不放心态度;建立以消费者需求为中心的网购食品质量安全供应链管理体系,推动线上市场和线下实体店紧密结合、融合发展;完善网购食品维权制度,畅通维权渠道。     

Why is Price Dispersion Higher Online than Offline? The Impact of Retailer Type and Shopping Risk on Price Dispersion

When physically similar products, of similar quality, are offered by retailers both online and offline, we often observe that the dispersion in prices of these products online is greater than the price dispersion offline. This observation runs counter to early theories that suggested price dispersion online would be smaller than that offline due to the ease of search and information availability online. This paper investigates and provides an explanation for this puzzling phenomenon by examining the impact of two important drivers of price dispersion: retailer type and consumers’ shopping risk. Retailer type refers to whether a retailer is a pure offline, pure online, or dual channel retailer. Shopping risk is defined as the product of consumers’ perceived risk of shopping and the transaction uncertainty related to shopping at different types of retailers.A game-theoretic approach is adopted to model consumers’ price search and product purchase, as well as price competition within and across retailer types in online and offline markets. Equilibrium pricing strategies are derived for different retailer types competing for different consumer segments with different levels of perceived shopping risk. The impact of retailer type and shopping risk on online versus offline price dispersion are quantified, and conditions when price dispersion is greater online than offline are identified.Results indicate that price dispersion is greater online when the number of pure online retailers is sufficiently large and is increasing in the number of pure online retailers. In addition, a reduction in online shopping risk may actually increase online price dispersion. Results further suggest that even without any online sales, dual channel retailers should maintain their online presence for the purpose of information dissemination, which justifies the importance for pure offline retailer to incorporate webrooming strategies, where consumers can search for prices online but purchase offline.     

The Tunisia Wheat Market in the Context of World Price Volatility: A Stochastic Partial Equilibrium Approach

Food security is a key objective of agricultural and food policy in Tunisia. The 2007–2008 food crisis highlighted the negative impacts of price volatility on international markets both in terms of food insecurity and budget exposure. Tunisian food subsidy expenditures ranged from $180 million to $710 million in 2006–2010, so volatile world prices meant volatile subsidy costs. Moreover, cereal production in Tunisia still has much instability due to climate conditions, which also influences imports and, consequently, subsidy expenditures. This study applies a structural model to conduct stochastic analyses of trade and policy impacts on food security and budget expenditures in the Tunisian wheat market. The methodology disaggregates durum wheat and soft wheat markets and generates projections of import prices of durum wheat and soft wheat, using projections of world prices provided by the Food and Agricultural Policy Research Institute at University of Missouri (FAPRI-MU). The key innovation is the generated stochastic analyses of subsidy costs based on stochastic world price projections and stochastic domestic wheat yields based on historic yield variances. The analysis highlights the sensitivity of subsidy costs to world prices, volumes imported and domestic production, so that alternative policy tools can be considered.     

Investigating the unobserved heterogeneity in consumers’ sensitivity to the price of gasoline

We empirically examined how gasoline prices impact consumers’ shopping behaviors. Using individual panel data on gasoline transactions, we found that gasoline prices generally have a statistically and economically significant impact. However, our disaggregate analysis indicated that, across consumers, considerable heterogeneity was present in the underlying sensitivity to the price of gasoline and in the income effect, resulting from fluctuating gasoline prices. More interestingly, the significant effect of gasoline prices was largely driven by the consumers with large purchase volume, and consumers with the highest level of gasoline consumption remained almost perfectly insensitive to the price of gasoline. Such heterogeneity is also present in the effect of gasoline prices on grocery expenditures, and notably, consumers with the largest purchase volume were not associated with statistically significant changes in grocery expenditures. Theoretical background suggests that the financial constraints of consumers and primary vehicle use may explain about the differences in responses to gasoline prices. Results based on individual-level data allowed for a comprehensive understanding of how and how much gasoline prices affect consumer behaviors and showed that inelastic gasoline demand and the considerable income effect due to gasoline prices may not best describe the effect of gasoline prices.     

Do the Poor Pay More for Food? An Analysis of Grocery Store Availability and Food Price Disparities

Do the poor pay more for food? To answer this question, this study was conducted to provide an empirical analysis of grocery store access and prices across inner city and suburban communities within the Minneapolis and St. Paul metropolitan area. The comparison among different types of grocers and geographic areas is drawn from a survey of approximately fifty grocery items for fifty-five stores. Results indicate that the poor pay only slightly more in the Twin Cities grocery market. More significantly, those who shop in non-chain stores pay a significant premium, and the poor have less access to chain stores. This study reveals that the biggest factor contributing to higher grocery costs in poor neighborhoods is that large chain stores, where prices tend to be lower, are not located in these neighborhoods.     

Are Farmers' Market Shoppers Different From Cross-Shoppers? The Case of Hawaiian Avocado Purchasers

Small- and medium-size growers use direct marketing and farmers’ markets to access customers and avoid supply chain intermediaries that increase costs of getting products to consumers. This study examined consumers’ use of agricultural product information sources and their shopping outlet patronage preferences for one type of locally grown produce: avocados.

Two farmers’ market segments were identified: 1) shops only farmers’ markets and 2) cross-shops grocery stores. Product information came from a variety of sources: media, retailers, and organizations. “Buy Local” or “product origin” were considered in produce shopping decisions. One dimension, “Buy Local,” was significant in differentiating farmers’ market segments.