Abstract
We investigate the food retailing landscape and the exit of independent grocery stores in rural America using U.S. NETS data. Our paper makes several contributions that could potentially help the agenda for future research and public policy. We begin by documenting local concentration trends in food retailing and how they change across rural and urban markets from 1990 to 2015. Then, we conduct two event studies to examine how entry by a large chain is associated with the local market concentration and independent grocery retailer (IGR) exits. Last, we document the IGR exit rate in rural markets for a period of twenty-five years and investigate its determinants in a regression framework. Our results show that market concentration in food retailing has increased since 1990, but the increasing trend after the Great Recession of 2008 is particularly noticeable. The local concentration differs substantially by the urban status of markets. Focusing on rural markets, we show that entry by a large food retailer is associated with higher market concentration and the decreasing number of IGRs. We also find that the annual average IGR exit rate is around 6.6% during the study period. The IGRs that are younger that operate in relatively more competitive markets, and that face entry by a large chain, are more likely to exit. Also, IGR rates are higher in markets with lower median income and higher poverty rates. We discuss how our results can potentially inform policies on sustainable rural development, food access, and food insecurity in rural communities.
Original language | English (US) |
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Pages (from-to) | 1352-1367 |
Number of pages | 16 |
Journal | American Journal of Agricultural Economics |
Volume | 102 |
Issue number | 5 |
DOIs | |
State | Published - Oct 1 2020 |
Bibliographical note
Funding Information:The findings and conclusions in this presentation are those of the authors and should not be construed to represent any official USDA or U.S. government determination or policy. The analysis, findings, and conclusions expressed in this paper should not be attributed to Wallace & Associates. This research has been supported by the USDA Economic Research Service Cooperative Agreement. 1
Publisher Copyright:
© 2020 Agricultural & Applied Economics Association
Keywords
- Food retailing
- independent grocery retailers
- market concentration
- rural markets