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Dynamics in a Mature Industry: Entry, Exit, and Growth of Big‐Box Grocery Retailers

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  • Daniel Hanner
  • Daniel Hosken
  • Luke M. Olson
  • Loren K. Smith

Abstract

This paper measures market dynamics within the U.S. grocery industry (defined as supermarket, supercenter, and club retailers). We find that despite being a mature industry, the grocery industry is remarkably dynamic. Each year retailers open or close roughly 7% of U.S. stores. We also find significant changes in the size of firms’ operations within markets over time. These changes in relative size are largely the result of expansion or contraction by incumbents rather than the result of firm entry or exit. In fact, entry and exit are quite rare, except by small firms. Moreover, only in small markets do new entrants gain substantial market share.

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  • Daniel Hanner & Daniel Hosken & Luke M. Olson & Loren K. Smith, 2015. "Dynamics in a Mature Industry: Entry, Exit, and Growth of Big‐Box Grocery Retailers," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(1), pages 22-46, March.
    • Handle: RePEc:bla:jemstr:v:24:y:2015:i:1:p:22-46
    DOI: 10.1111/jems.12087
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    Cited by:

    1. Elena Argentesi & Paolo Buccirossi & Roberto Cervone & Tomaso Duso & Alessia Marrazzo, 2018. "Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing," CESifo Working Paper Series 7035, CESifo.
    2. Minjee Kim & Tingyu Zhou, 2021. "Does Restricting the Entry of Formula Businesses Help Mom-and-Pop Stores? The Case of Small American Towns With Unique Community Character," Economic Development Quarterly, , vol. 35(2), pages 157-173, May.
    3. Yanghao Wang & Metin Çakır, 2020. "Welfare impacts of new demand‐enhancing agricultural products: The case of Honeycrisp apples," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 445-457, May.
    4. Gian-Claudia Sciara & Kristin Lovejoy & Susan Handy, 2018. "The Impacts of Big Box Retail on Downtown: A Case Study of Target in Davis (CA)," Journal of the American Planning Association, Taylor & Francis Journals, vol. 84(1), pages 45-60, January.
    5. Mian Wang & Jamie Marsden & Ezgi Oguz & Briony Thomas, 2023. "Exploring Sustainable Retail Experiences: Shall We Make It Fashionable?," Sustainability, MDPI, vol. 15(23), pages 1-14, December.
    6. Cho, Clare & Volpe, Richard J., 2017. "Independent Grocery Stores in the Changing Landscape of the U.S. Food Retail Industry," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258517, Agricultural and Applied Economics Association.
    7. Matthew Freedman & Annemarie Kuhns, 2018. "Supply-side subsidies to improve food access and dietary outcomes: Evidence from the New Markets Tax Credit," Urban Studies, Urban Studies Journal Limited, vol. 55(14), pages 3234-3251, November.
    8. Fay, Scott & Feng, Cong & Patel, Pankaj C., 2022. "Staying small, staying strong? Retail store underexpansion and retailer profitability," Journal of Business Research, Elsevier, vol. 144(C), pages 663-678.
    9. Cho, Clare & Volpe, Richard, 2017. "Independent Grocery Stores in the Changing Landscape of the U.S. Food Retail Industry," Economic Research Report 265463, United States Department of Agriculture, Economic Research Service.
    10. Jason R. Blevins & Ahmed Khwaja & Nathan Yang, 2018. "Firm Expansion, Size Spillovers, and Market Dominance in Retail Chain Dynamics," Management Science, INFORMS, vol. 64(9), pages 4070-4093.
    11. MacDonald, James M. & Dong, Xiao & Fuglie, Keith O., 2023. "Concentration and Competition in U.S. Agribusiness," Economic Information Bulletin 337566, United States Department of Agriculture, Economic Research Service.
    12. Butt, Moeen Naseer & Baig, Ahmed S., 2024. "Assessing the firm-level financial consequences of clustering," Journal of Business Research, Elsevier, vol. 178(C).
    13. Patel, Pankaj C. & Struckell, Elisabeth M. & Ojha, Divesh & Manikas, Andrew S., 2020. "Retail store churn and performance – The moderating role of sales amplitude and unpredictability," International Journal of Production Economics, Elsevier, vol. 222(C).
    14. Argentesi, Elena & Buccirossi, Paolo & Cervone, Roberto & Duso, Tomaso & Marrazzo, Alessia, 2016. "The effect of retail mergers on prices and variety: An ex-post evaluation," DICE Discussion Papers 225, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    15. Metin Çakır & Xiangwen Kong & Clare Cho & Alexander Stevens, 2020. "Rural Food Retailing and Independent Grocery Retailer Exits," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1352-1367, October.
    16. Daniel S. Hosken & Luke M. Olson & Loren K. Smith, 2018. "Do retail mergers affect competition? Evidence from grocery retailing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(1), pages 3-22, March.
    17. Rebecca Cleary & Lauren Chenarides, 2022. "Food retail profits, competition, and the Great Recession," Agribusiness, John Wiley & Sons, Ltd., vol. 38(3), pages 557-578, July.

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