The Economics of Supermarkets: A Brief Literature Review

Posted by D. Daniel Sokol

Leandro Zipitria, Universidad de Montevideo provides his thoughts on The Economics of Supermarkets: A Brief Literature Review.

ABSTRACT: This article presents a brief review of the literature on the effect of supermarkets on productivity, employment, the survival of small retailers, prices, and competition in retailing. The following stylized facts emerge: (1) the retail sector has undergone a major concentration around the world, (2) the entry of supermarkets tends to expel small competing groceries, and encourage the entry or conversion of others; (3) supermarkets are a source of productivity gains in the sector, (4) they generates a net increase in employment, and (5) has the effect of reducing the level of prices in markets where entry occurs. Some qualifications to these general conclusions are discussed.