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Wal-Mart V.S. Supermarkets: Sales and Quality Impact of Wal-Mart on Supermarkets in Cities Open Access

In 2017, Wal-Mart’s employs 1% of U.S. workers. Its sales account for 2 % of the U.S. Gross Domestic Product. Wal-Mart as a company is not only consequential but also controversial. Wal-Mart “Supercenters” offers fresh food and beverages in addition to the usual discount products. Such deliberate strategies have implications for traditional food and beverage stores. This paper focuses on Wal-Mart Supercenters’ effects on the retail supermarket industry in Metropolitan Statistical Areas (MSA). This paper explores the causal impact of Wal-Mart expansion on supermarkets food sales and supermarkets store quality. Estimation of econometric models reveals that, a 10% increase in Wal-Mart stores in a given city is expected to decrease the aggregate supermarkets sales by 1%. In addition to this sales effect, such a 10% growth in Wal-Mart stores raises the employment to sales ratio, an indicator for store quality, by 0.8%. In addition to making the supermarket industry more competitive and causing competitors to raise store quality better, Wal-Mart does not have a statistically significant impact on supermarket exit and job loss. My findings suggest that Wal-Mart lowers supermarket sales, increases supermarket quality, gives urban consumers more food shopping choices, and potentially offers more food employment opportunities.

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