IDEAS home Printed from https://ideas.repec.org/a/wly/apecpp/v46y2024i2p514-533.html
   My bibliography  Save this article

Dollar store expansion and independent grocery retailer contraction

Author

Listed:
  • Rigoberto Lopez
  • Keenan Marchesi
  • Sandro Steinbach

Abstract

This paper examines the effects of dollar store entry on independent grocery retailers in the United States between 2000 and 2019. We utilized an establishment‐level dataset comprising all grocery retailers and dollar stores in the country. Our findings indicate that dollar store entry is associated with a 5.7% decrease in sales, a 3.7% reduction in employment, and a 2.3% rise in the likelihood of independent grocery retailers quitting the business. These adverse entry effects are three times larger in rural than urban areas. Event studies indicate that the negative impact on sales and employment disappears gradually in urban areas but persists in rural communities. We document differences in treatment effects of dollar store entry across regions, retail formats, and time.

Suggested Citation

  • Rigoberto Lopez & Keenan Marchesi & Sandro Steinbach, 2024. "Dollar store expansion and independent grocery retailer contraction," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(2), pages 514-533, June.
    • Handle: RePEc:wly:apecpp:v:46:y:2024:i:2:p:514-533
    DOI: 10.1002/aepp.13398
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/aepp.13398
    Download Restriction: no
    File URL: https://libkey.io/10.1002/aepp.13398?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Cameron,A. Colin & Trivedi,Pravin K., 2013. "Regression Analysis of Count Data," Cambridge Books, Cambridge University Press, number 9781107014169.
    2. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    3. 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.
    4. Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Nicholas Trachter, 2021. "Diverging Trends in National and Local Concentration," NBER Macroeconomics Annual, University of Chicago Press, vol. 35(1), pages 115-150.
    5. Stevens, Alexander, 2021. "Rural Counties Losing Share of Grocery Stores, Gaining Other Types of Food Retailers," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, vol. 2021, December.
    6. Clément de Chaisemartin & Xavier D’Haultfœuille, 2023. "Two-way fixed effects and differences-in-differences with heterogeneous treatment effects: a survey," The Econometrics Journal, Royal Economic Society, vol. 26(3), pages 1-30.
    7. Daniel W. Elfenbein & Anne Marie Knott & Rachel Croson, 2017. "Equity stakes and exit: An experimental approach to decomposing exit delay," Strategic Management Journal, Wiley Blackwell, vol. 38(2), pages 278-299, February.
    8. Cho ,Clare & W. McLaughlin, Patrick & Zeballos, Eliana & Kent, Jessica & Dicken, Chris, 2019. "Capturing the Complete Food Environment with Commercial Data: A Comparison of TDLinx, ReCount, and NETS Databases," Technical Bulletins 288291, United States Department of Agriculture, Economic Research Service.
    9. Peter Arcidiacono & Patrick Bayer & Jason R. Blevins & Paul B. Ellickson, 2016. "Estimation of Dynamic Discrete Choice Models in Continuous Time with an Application to Retail Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(3), pages 889-931.
    10. Emek Basker, 2005. "Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 174-183, February.
    11. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    12. David Neumark & Brandon Wall & Junfu Zhang, 2011. "Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 16-29, August.
    13. Jerry Shannon, 2021. "Dollar Stores, Retailer Redlining, and the Metropolitan Geographies of Precarious Consumption," Annals of the American Association of Geographers, Taylor & Francis Journals, vol. 111(4), pages 1200-1218, June.
    14. Thomas Zylkin, 2019. "Verifying the Existence of Maximum Likelihood Estimates in Generalized Linear Models," 2019 Stata Conference 47, Stata Users Group.
    15. Jessie Handbury, 2019. "Are Poor Cities Cheap for Everyone? Non-Homotheticity and the Cost of Living Across U.S. Cities," NBER Working Papers 26574, National Bureau of Economic Research, Inc.
    16. Zeballos, Eliana & Marchesi, Keenan, 2022. "Comparing Food Sector Employment Headcount and Sales Data in the National Establishment Time Series Database to Federal Data," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, vol. 2022(Technical), September.
    17. Paul B. Ellickson, 2007. "Does Sutton apply to supermarkets?," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 43-59, March.
    18. 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.
    19. Sarah A. Low & Martha Bass & Dawn Thilmany & Marcelo Castillo, 2021. "Local Foods Go Downstream: Exploring the Spatial Factors Driving U.S. Food Manufacturing," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 896-915, September.
    20. David A. Matsa, 2011. "Competition and Product Quality in the Supermarket Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(3), pages 1539-1591.
    21. Paul Hunermund & Beyers Louw, 2020. "On the Nuisance of Control Variables in Regression Analysis," Papers 2005.10314, arXiv.org, revised Jan 2024.
    22. Zeballos, Eliana & Marchesi, Keenan, 2022. "Comparing Food Sector Employment Headcount and Sales Data in the National Establishment Time Series Database to Federal Data," USDA Miscellaneous 329070, United States Department of Agriculture.
    23. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    24. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Applications to Poisson Models," Econometrica, Econometric Society, vol. 52(3), pages 701-720, May.
    25. Richard Volpe & Edward C Jaenicke & Lauren Chenarides, 2018. "Store Formats, Market Structure, and Consumers’ Food Shopping Decisions," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 40(4), pages 672-694, December.
    26. Zeballos, Eliana & Marchesi, Keenan, 2022. "Comparing Food Sector Employment Headcount and Sales Data in the National Establishment Time Series Database to Federal Data," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, vol. 2022(Technical), September.
    27. Panle Jia, 2008. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry," Econometrica, Econometric Society, vol. 76(6), pages 1263-1316, November.
    28. 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.
    29. 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.
    30. Cameron,A. Colin & Trivedi,Pravin K., 2013. "Regression Analysis of Count Data," Cambridge Books, Cambridge University Press, number 9781107667273.
    31. Jonathan Roth, 2022. "Pretest with Caution: Event-Study Estimates after Testing for Parallel Trends," American Economic Review: Insights, American Economic Association, vol. 4(3), pages 305-322, September.
    32. José Luis Montiel Olea & Mikkel Plagborg‐Møller, 2019. "Simultaneous confidence bands: Theory, implementation, and an application to SVARs," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 34(1), pages 1-17, January.
    33. Hicks, Michael J. & Wilburn, Kristy L., 2001. "The Regional Impact of Wal-Mart Entrance: A Panel Study of the Retail Trade Sector in West Virginia," The Review of Regional Studies, Southern Regional Science Association, vol. 31(3), pages 305-313, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ags:aaea22:335481 is not listed on IDEAS
    2. Carter, Colin A. & Steinbach, Sandro & Zhuang, Xiting, 2022. "Global Container Trade Disruptions and U.S. Agricultural Exports," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322364, Agricultural and Applied Economics Association.
    3. 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.
    4. Zeballos, Eliana & Dong, Xiao & Islamaj, Ergys, 2023. "A Disaggregated View of Market Concentration in the Food Retail Industry," USDA Miscellaneous 333546, United States Department of Agriculture.
    5. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    6. Andrea Ciaccio, 2023. "The Impact of a Cost-containment Measure on the Quality of Regional Health Services in Italy: a Parametric and a Non-parametric Approach," Working Papers 2023: 24, Department of Economics, University of Venice "Ca' Foscari".
    7. Colin A. Carter & Sandro Steinbach & Xiting Zhuang, 2023. "Supply chain disruptions and containerized agricultural exports from California ports," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 1051-1071, June.
    8. Carter, Colin A. & Steinbach, Sandro & Zhuang, Xiting, 2022. "Global Shipping Container Disruptions and U.S. Agricultural Exports," Working Papers 320397, International Agricultural Trade Research Consortium.
    9. J. M. C. Santos Silva & Silvana Tenreyro, 2022. "The Log of Gravity at 15," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(3), pages 423-437, September.
    10. Stevens, Alexander & Cho, Clare & Cakir, Metin & Kong, Xiangwen & Boland, Michael A, 2021. "The Food Retail Landscape Across Rural America," Economic Information Bulletin 327368, United States Department of Agriculture, Economic Research Service.
    11. repec:ags:aaea22:336007 is not listed on IDEAS
    12. Massimo Filippini & Giuliano Masiero & Sandro Steinbach, 2019. "The impact of ambient air pollution on hospital admissions," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(6), pages 919-931, August.
    13. Gregory Faletto, 2023. "Fused Extended Two-Way Fixed Effects for Difference-in-Differences with Staggered Adoptions," Papers 2312.05985, arXiv.org, revised Apr 2024.
    14. Tidiane Ly, 2019. "Taxes, traffic jam and spillover in the metropolis," IdEP Economic Papers 1903, USI Università della Svizzera italiana.
    15. Goyal, Raghav & Steinbach, Sandro, 2023. "Agricultural commodity markets in the wake of the black sea grain initiative," Economics Letters, Elsevier, vol. 231(C).
    16. Steinbach, Sandro, 2023. "The Russia–Ukraine war and global trade reallocations," Economics Letters, Elsevier, vol. 226(C).
    17. Sandro Steinbach & Xiting Zhuang, 2024. "Global container shipping disruptions, pop‐up ports, and US agricultural exports," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(2), pages 553-571, June.
    18. Emek Basker & Shawn Klimek & Pham Hoang Van, 2012. "Supersize It: The Growth of Retail Chains and the Rise of the “Big‐Box” Store," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 541-582, September.
    19. Rik Chakraborti & Gavin Roberts, 2023. "How price-gouging regulation undermined COVID-19 mitigation: county-level evidence of unintended consequences," Public Choice, Springer, vol. 196(1), pages 51-83, July.
    20. Jules Gazeaud & Victor Stephane, 2023. "Productive Workfare? Evidence from Ethiopia's Productive Safety Net Program," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 265-290, January.
    21. 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.
    22. Pérez, Jorge & Vial, Felipe & Zárate, Román, 2022. "Urban Transit Infrastructure: Spatial Mismatch and Labor Market Power," Research Department working papers 1992, CAF Development Bank Of Latinamerica.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:apecpp:v:46:y:2024:i:2:p:514-533. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2040-5804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.