Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices

Charles Courtemanche and Art Carden ()
Additional contact information
Art Carden: University of North Carolina at Greensboro, Department of Economics

No 11-7, UNCG Economics Working Papers from University of North Carolina at Greensboro, Department of Economics

Abstract: Research shows that grocery stores reduce prices to compete with Walmart Supercenters. This study finds evidence that the competitive effects of two other big box retailers – Costco and Walmart-owned Sam's Club – are quite different. Using city-level panel grocery price data matched with a unique data set on Walmart and warehouse club locations, we find that Costco entry is associated with higher grocery prices at incumbent retailers, and that the effect is strongest in cities with small populations and high grocery store densities. This is consistent with incumbents competing with Costco along non-price dimensions such as product quality or quality of the shopping experience. We find no evidence that Sam’s Club entry affects grocery stores’ prices, consistent with Sam’s Club’s focus on small businesses instead of consumers.

Keywords: Wal-Mart; Walmart; Costco; Sam’s Club; warehouse clubs; grocery prices; competition; retail (search for similar items in EconPapers)
JEL-codes: L11 L13 L81 R10 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2011-02-28
New Economics Papers: this item is included in nep-com, nep-mkt and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices (2014)
Working Paper: Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:uncgec:2011_007

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