The Impact of Wal-Mart Supercenter Conversion on Consumer Shopping Behaviors

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Together with Prof. Sungho Park (at Arizona State University), I conducted an empirical study of the impact of Wal-Mart supercenter conversion (i.e. expansion of traditional discount format store by adding new departments) on consumer shopping behaviors (in terms of store visits and per-visit expenditures) by utilizing Homescan data from AC Nielsen. 

By using a difference-in-difference estimator and a joint model of store visit and expenditure based on zero-inflated Poisson model and log-linear model, we find that Wal-Mart gains 42 % in weekly revenue from the conversion. 

Decomposing the revenue gains into components attributed to store visits and per-visit expenditures, we find the majority of these gains were due to larger expenditures with a much smaller impact on store visit. In contrast, among competing retailers, grocery stores experience the most significant loss - 20% weekly revenue - mostly due to fewer store visits with a much smaller impact attributed to per-visit expenditure. Taken together, these findings suggest that consumers may benefit from reduced shopping costs by making fewer overall trips and increasing their Wal-Mart basket sizes. 

In addition, we find that overall revenue gain for Wal-Mart from the conversion outweighs the small cannibalization loss at the existing Wal-Mart supercenters, which are located farther away. 

Finally, from category-level analyses, we find evidence of increases in category-level spending in pre-existing categories in the converted supercenter. However, we also find that the increase in category-level spending is mostly in food categories and there are only small increases of spending in the non-food categories. We discuss the implications of our findings for academics and retail managers.
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This work is recently featured in "Canadian Grocer" and "Huffington Post", as shown in the link below. Moreover, this paper was accepted by Management Science in November, 2014. 
http://www.canadiangrocer.com/top-stories/when-grocery-stores-meet-the-supercentre-25338





 Shown below is the link to the full paper. 

 https://www.academia.edu/4509914/The_Impact_of_Wal-Mart_Supercenter_Conversion_on_Consumer_Shopping_Behaviors


In addition, I was invited to present this paper at "Big Data and Marketing Innovation Summit" (industry conference) in Miami in November, 2013. For those who are interested in the summit, the link to the summit website is shown below. 

http://theinnovationenterprise.com/summits/big-data-marketing-innovation-summit-miami-2013

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