Supersize It: The Growth of Retail Chains and the Rise of the "Big Box" Retail Format

Emek Basker, Shawn Klimek () and Van Pham

No 809, Working Papers from Department of Economics, University of Missouri

Abstract: We offer a theory for the complementarity between the size of a retail chain and the scope of its business to explain the growth of general-merchandise firms and the expansion of the "superstore" format. The complementarity results from an interaction of the retailer's economies of scale and consumer gains from "one-stop shopping." We find support for our model in micro data from the Census of Retail Trade for 1977-2002. Retail chains with more stores carry more distinct product lines and as retail chains grow they add both stores and product lines. On average, we find that a chain adds one product line, such as shoes, computers, or jewelry, to an existing store with every new store it opens. For the average large chain, adding a new product line throughout the chain is correlated with adding 400 new stores, competing in over 8,000 new markets and increasing its competitive pressure in more than 10,000 additional markets.

Keywords: Retail; Chain; Big Box; Superstore; Economies of Scale; General Merchandise; One Stop Shopping (search for similar items in EconPapers)
JEL-codes: L11 L25 L81 (search for similar items in EconPapers)
Pages: 16 pgs.
Date: 2008-08-20, Revised 2010-09-30
New Economics Papers: this item is included in nep-com and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published in Journal of Economics and Management Strategy 2012

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Working Paper: Supersize It: The Growth of Retail Chains and the Rise of the "Big Box" Retail Format (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:0809

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