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Dynamics in a Mature Industry: Entry, Exit, and Growth of Big‐Box Grocery Retailers
Author(s) -
Hanner Daniel,
Hosken Daniel,
Olson Luke M.,
Smith Loren K.
Publication year - 2015
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12087
Subject(s) - business , market share , club , market size , grocery store , dynamics (music) , barriers to entry , industrial organization , marketing , commerce , market structure , medicine , physics , acoustics , anatomy
This paper measures market dynamics within the U.S. grocery industry (defined as supermarket, supercenter, and club retailers). We find that despite being a mature industry, the grocery industry is remarkably dynamic. Each year retailers open or close roughly 7% of U.S. stores. We also find significant changes in the size of firms’ operations within markets over time. These changes in relative size are largely the result of expansion or contraction by incumbents rather than the result of firm entry or exit. In fact, entry and exit are quite rare, except by small firms. Moreover, only in small markets do new entrants gain substantial market share.