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The Impact of Walmart Supercenter Conversion on Consumer Shopping Behavior

Author

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  • Minha Hwang

    (McGill University, Montreal, Quebec H3A 1G5, Canada)

  • Sungho Park

    (Arizona State University, Tempe, Arizona 85287)

Abstract
This paper presents an empirical study of the impact of Walmart supercenter conversion on consumer shopping behavior. By using a difference-in-difference estimator, we find that Walmart gains 41% in weekly revenue from the conversion. Decomposing the revenue gains into components attributable to store visits and per-visit expenditures, we find that the majority of these gains were due to larger expenditures, with a much smaller impact from store visits. By contrast, among competing retailers, grocery stores experience the most significant loss (20% weekly revenue) mostly from fewer store visits, with a much smaller impact attributable to per-visit expenditure. Taken together, these findings show that consumers may benefit from reduced shopping costs by making fewer overall trips and increasing their Walmart basket sizes. In addition, we find that overall revenue gains for Walmart from conversion outweigh the small cannibalization loss at the existing Walmart supercenters located farther away. Finally, from category-level analyses, we find evidence of increases in category-level spending in preexisting categories in the converted supercenter. However, we also find that positive demand externality is more pronounced in food categories, mainly as a result of increased purchase incidence. We discuss the implications of our findings for academics and retail managers. This paper was accepted by Pradeep Chintagunta, marketing .

Suggested Citation

  • Minha Hwang & Sungho Park, 2016. "The Impact of Walmart Supercenter Conversion on Consumer Shopping Behavior," Management Science, INFORMS, vol. 62(3), pages 817-828, March.
    • Handle: RePEc:inm:ormnsc:v:62:y:2016:i:3:p:817-828
    DOI: 10.1287/mnsc.2014.2143
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    2. Hunt Allcott & Rebecca Diamond & Jean-Pierre Dubé & Jessie Handbury & Ilya Rahkovsky & Molly Schnell, 2019. "Food Deserts and the Causes of Nutritional Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 1793-1844.
    3. Charles Courtemanche & Art Carden & Xilin Zhou & Murugi Ndirangu, 2019. "Do Walmart Supercenters Improve Food Security?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(2), pages 177-198, June.
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    6. Mi Hyun Lee & Sang Pil Han & Sungho Park & Wonseok Oh, 2023. "Positive Demand Spillover of Popular App Adoption: Implications for Platform Owners’ Management of Complements," Information Systems Research, INFORMS, vol. 34(3), pages 961-995, September.

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