Category size and assortment in US macro supermarkets
Retail assortments can have important and systematic effects on industry performance and consumer welfare by trading off brand choice, SKU choice and price. Supermarket retailers offer assortments with supply and demand conditions that vary between categories and between subcategories. From a macro and industry-wide perspective, this paper presents alternative theories relating the size of supermarket subcategory demand to brand and SKU dimensions of assortments. Then, using secondary aggregate data for 304 scanned supermarket subcategories, this study considers several simple structural equation models to examine some macro implications of these theories for the US supermarket industry.
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