Shopping Activity at Warehouse Club Stores and Its Competitive and Network Density Implications

• 成果类型: Article
• 署名作者: Lim, Stanley Frederick W. T.; Rabinovich, Elliot; Park, Sungho; Hwang, Minha
• 署名单位: University of San Diego; Arizona State University; Arizona State University-Tempe; Seoul National University (SNU)
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13226
• 发表日期: 2021
• 页码: 28-46
• 关键词: Retail operations; warehouse club; industry study; Quasi-experimental design; econometrics

摘要

Warehouse club (WC) retailers have typically expanded to new markets using stand-alone stores, rather than pursuing dense store networks as other (non-WC) retailers have in the past. While this strategy generates operating efficiencies, it also imposes high travel costs on households to shop, which calls into question WC stores' resilience to spatial competition from stores operating other formats. We examine this phenomenon by using data on households' shopping activity across markets served by Costco Wholesale stores. Specifically, we evaluate these stores' resilience to spatial competition by estimating the share of households' expenditures relative to travel costs to shop at the stores and comparing this estimate with that for non-WC stores. Controlling for households' travel costs across Costco and non-WC stores, we find that households' share of expenditures at Costco stores exceeds the share at non-WC stores by 61%. This suggests that Costco stores have an advantage over non-WC stores when serving market areas with sparse store networks. Nevertheless, we also find that this advantage diminishes with the distance between Costco stores and households and that there is a finite distance beyond which this advantage disappears. We show that this distance (approximately 21 miles) is an important reference point for the evaluation of spatial competition between Costco stores and other stores and the examination of demand saturation at Costco stores.