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The Private Label - Brand Price Gap Narrows When Walmart Comes to Town, Study Finds

January 17, 2012
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The presence of supercenters in a market causes the price gap between private label and national brands to close, a U.S. Department of Agriculture study finds. Grocers also tend to offer fewer promotions on their private labels if a supercenter is located near one of their supermarkets.

 

In The Relationship Between National Food Products: Prices, Promotions, Recessions, and Recoveries, USDA economists find that grocers offer consumers fewer private label promotions when superstores gain more market share.

 

“The presence and market share of Walmart has a significant negative effect on NB/PL competition,” the study says. “This may be because supermarkets focus more on everyday low prices and offer fewer promotions overall when competing with supercenters.”

 

The price gap between private label and national brands narrows as a result, creating a changed environment for supermarket shoppers.

 

Compiled in the latter part of 2011, The Relationship Between National Food Products: Prices, Promotions, Recessions, and Recoveries used pricing and promotion data from 2008 – 2010 from two major supermarket chains in the Western United States.
 
This is the second in a series of stories PLBuyer's eReport is writing about this report.

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