Essays On The Empirical Analysis Of Grocery Retailing And Consumer Shopping Behavior

This dissertation consists of three essays on the empirical analysis of grocery retailing and consumer shopping behavior. The first chapter focuses on supermarket loyalty programs and their impact on the demand for private labels. Supermarkets often link loyalty rewards to private label purchases, What are supermarkets' motivations to do this? This empirically examines this link using scanner data on grocery purchases of French households and structural methods of demand estimation. Results are consistent with the industry lore: private labels are less valued products relative to quality-equivalent national brands. However, members of loyalty programs have a larger valuation of private labels than non-members. Moreover, the more prone to subscribe to LPs a customer is, the larger her sensitivity to a price increase and the weaker the expected effects on the demand for private labels. The second chapter, joint with Daniel Herrera Araujo, is inspired by a number of theory papers showing that when shopping costs, that rationalize the observed heterogeneity in consumer shopping patterns, are introduced in economic analysis, policy conclusions can change dramatically. We structurally identify consumer shopping costs using scanner data on grocery purchases of French households. We present a model of demand for multiple stores and products consisting of an optimal stopping problem in terms of individual shopping costs. This rule determines whether to visit one or multiple stores at a shopping period. We then estimate the parameters of the model and recover the distribution of shopping costs. We quantify the total shopping cost in 18.7 € per store sourced on average. This cost has two components, namely, the mean fixed shopping cost, 1.53 € and mean total transport cost of 17.1 € per trip. The third chapter empirically examines the role of nonlinear contracts between manufacturers and retail stores, and Resale Price Maintenance (RPM) on nominal price stability. According to the literature the incomplete transmission of costs shocks into retail prices is explained by the existence of markup adjustment and price adjustment costs. The vertical conduct of the industry and the use of RPM can introduce further price stickiness or reinforce it. I present a structural model of vertical relations allowing for two-part tariffs and RPM, and accounting explicitly for retail price rigidity by including fixed costs of price adjustment in retailer's profit function. Using micro data on sales of breakfast cereals from a large supermarket chain in Chicago, I estimate demand, retrieve margins, and compute bounds for retail price adjustment costs. I find that these costs lie between 1.6% and 3% of its total revenue a year, on average.