The Impact of Comparative Food Price Information on Consumers and Grocery Retailers: Some Preliminary Findings of a Field Experiment (original) (raw)
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The Effects of Mandatory Disclosure of Supermarket Prices
SSRN Electronic Journal, 2017
We study how mandatory online disclosure of supermarket prices affects prices and price dispersion in brick-and-mortar stores. Using data collected before and after a transparency regulation went into effect in the Israeli food retail market, multiple complementary control groups and relying on a differences-indifferences research design, we document a sharp decline in price dispersion and a 4% to 5% drop in prices following the transparency regulation. The price drop varied across stores and products; it was smaller among private-label products than among branded products, and it was smaller among stores and products that were likely to have been associated with more intense search patterns even before prices became transparent (e.g., products in heavy-discount chains; popular products; products that meet stringent kosher requirements). Finally, we show that prices declined as more consumers used price-comparison websites, and we highlight the role of media coverage in encouraging retailers to set lower prices.
Qualitative research on food pricing in regional markets is currently underrepresented in the scholarly literature. The methods used in existing peer-reviewed studies tend to obscure important qualitative differences in the food items they compare and the retail spaces they source. Recently, some non-peer reviewed price comparison studies have emerged that point to some of the complications of earlier studies and offer alternative methods for data collection and comparison. Building upon the contributions of these latter works, this study attempts to improve upon previous studies and provide a set of methods that contribute thoughtfully to future studies. The main goal of this study is to advance research that would better inform consumers and the producers who serve them. The key contribution of this study is a new model for future price comparison studies that accurately provides accessible and practical information for farmers' market producers and consumers.
Joshua Long, M. Anwar Sounny-Slitine, Katherine Castles, Jillian Curran, Harrison Glaser, Ellen Hoyer, Whitney Moore, Lisa Morse, Molly O’Hara, and Ben Parafina
Qualitative research on food pricing in regional markets is currently underrepresented in the scholarly literature. The methods used in existing peer-reviewed studies tend to obscure important qualitative differences in the food items they compare and the retail spaces they source. Recently, some non–peer reviewed price comparison studies have emerged that point to some of the complications of earlier studies and offer alternative methods for data collection and comparison. Building upon the contributions of these latter works, this study attempts to improve upon previous studies and provide a set of methods that contribute thoughtfully to future studies. The main goal of this study is to advance research that would better inform consumers and the producers who serve them. The key contribution of this study is a new model for future price comparison studie that accurately provides accessible and practical information for farmers’ market producers and consumers
Unit Prices on Retail Shelf Labels: An Assessment of Information Prominence
Although unit prices have been provided to consumers for nearly 30 years, the format in which this information is presented has been largely ignored. An examination of major grocery retailers found considerable differences in how prominently unit prices are presented to shoppers on shelf labels. Two methodological approaches are then used to examine the prominence of unit prices in a grocery-shopping context. The results of a field study support expectations that, among consumers who are relatively low in price consciousness, the prominence of unit price information has a positive effect on awareness and usage of such information. In a second study, a controlled experiment shows that increasing the prominence of unit price information affects consumers' shopping behaviors by shifting purchases toward lower unit priced items and ultimately reducing grocery expenditures. Suggestions for future research and implications for retailers and policymakers are discussed.
Effects of shopping information on consumers’ responses to comparative price claims
Journal of Retailing, 2002
This article describes three studies that examine the effects of shopping information on consumers' responses to comparative price claims in retail advertisements. Results of the studies show that 1) the opportunity to shop across retail stores reduces the effect of comparative price claims on consumers' estimates of lowest price for a particular item, but has less impact on their estimates of the store's regular price; 2) access to advertising from competing retailers has the same pattern of effects; and 3) across exposure to a series of ad claims, these effects generalize from estimates of specific item prices to judgments of the store's general pricing. For branded shopping goods, the results show that comparative price claims may prove counterproductive for retail advertisers by leading consumers to believe that the store's regular prices are high without convincing them that its sale prices are low.
2019
We exploit a regulation that required Israeli supermarkets to post online the prices of all items in their brick-and-mortar stores to test theories of informative advertising and consumer search. Using data collected before and after the transparency regulation went into effect, multiple complementary control groups and a differences-indifferences research design, we show that prices have declined by 4% to 5% after the regulation, primarily in premium chains. Price dispersion has also dropped as chains adopted a uniform pricing strategy, setting similar prices across stores affiliated with the same chain. To test the mechanisms driving these effects, we show that after the regulation hard-discount supermarket chains heavily used informative-price advertising campaigns, referencing to price surveys conducted by the media. These media-based ads were used more extensively when prices were lower. In contrast, price comparison platforms that became available after the regulation failed to gain traction. Our findings lend strong support to Robert and Stahl (1993), highlighting the pro-competitive role of advertising and the important role of the media.