The Diffusion of Wal-Mart and Economies of Density
The rollout of Wal-Mart store openings followed a pattern that radiated from the center outward, with Wal-Mart maintaining high store density and a contiguous store network all along the way. This paper estimates the benefits of such a strategy to Wal-Mart, focusing on the savings in distribution co...
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| Veröffentlicht in: | Econometrica 2011-01, Vol.79 (1), p.253-302 |
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| container_title | Econometrica |
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| creator | Holmes, Thomas J. |
| description | The rollout of Wal-Mart store openings followed a pattern that radiated from the center outward, with Wal-Mart maintaining high store density and a contiguous store network all along the way. This paper estimates the benefits of such a strategy to Wal-Mart, focusing on the savings in distribution costs afforded by a dense network of stores. The paper takes a revealed preference approach, inferring the magnitude of density economies from how much sales cannibalization of closely packed stores Wal-Mart is willing to suffer to achieve density economies. The model is dynamic with rich geographic detail on the locations of stores and distribution centers. Given the enormous number of possible combinations of store-opening sequences, it is difficult to directly solve Wal-Mart's problem, making conventional approaches infeasible. The moment inequality approach is used instead and works well. The estimates show the benefits to Wal-Mart of high store density are substantial and likely extend significantly beyond savings in trucking costs. |
| doi_str_mv | 10.3982/ECTA7699 |
| format | Article |
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J.</creatorcontrib><collection>Istex</collection><collection>Pascal-Francis</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Econometrica</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Holmes, Thomas J.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The Diffusion of Wal-Mart and Economies of Density</atitle><jtitle>Econometrica</jtitle><date>2011-01</date><risdate>2011</risdate><volume>79</volume><issue>1</issue><spage>253</spage><epage>302</epage><pages>253-302</pages><issn>0012-9682</issn><eissn>1468-0262</eissn><coden>ECMTA7</coden><abstract>The rollout of Wal-Mart store openings followed a pattern that radiated from the center outward, with 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The estimates show the benefits to Wal-Mart of high store density are substantial and likely extend significantly beyond savings in trucking costs.</abstract><cop>Oxford, UK</cop><pub>Blackwell Publishing Ltd</pub><doi>10.3982/ECTA7699</doi><tpages>50</tpages><oa>free_for_read</oa></addata></record> |
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| ispartof | Econometrica, 2011-01, Vol.79 (1), p.253-302 |
| issn | 0012-9682 1468-0262 |
| language | eng |
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| source | Jstor Complete Legacy; Wiley Online Library Journals Frontfile Complete; JSTOR Mathematics & Statistics |
| subjects | Applications Censuses Cost analysis Cost control Cost estimates Cost of sales Density estimation Discount department stores Distribution costs Distribution theory dynamics Economic models Economies of density Estimating techniques Exact sciences and technology Fixed costs Insurance, economics, finance Labor costs Location of enterprises Mathematics Merchandise moment inequalities Multinational corporations Multinational enterprises New store openings Population density Probability and statistics Probability theory and stochastic processes Retail prices Retail trade Sciences and techniques of general use Shopping Statistics Studies Supermarkets U.S.A Variable costs Wal-Mart |
| title | The Diffusion of Wal-Mart and Economies of Density |
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