The recent period o high infation has renewed concerns about the state o competition in the sector, particularly in terms o the dominance o Coles and Woolworths. [...] Separately, the Federal opposition has proposed the introduction o new powers to allow the breaking-up o the major supermarket chains. [...] This proxies the set o nearby competitors the store aces.7 I ocus on supermarkets located in NSW and the ACT, allowing or analysis over a wide geographic area whilst balancing the time cost o geocoding the transactions. [...] Grouping these consumers by the brand o primary store they visited in the rst month, I calculate their propensity to revisit a primary store o the same brand in the subsequent ve months. [...] Consumer inertia impacts the eld o competitive rivalry between stores Which stores are the strongest competitive rivals? Using the locations that consumers visit or their primary shops over time, I build a network o stores linked by the customers that they share.15 This provides a non-parametric estimate o the ’ eld o competitive rivalry’ between stores, generated by revealed pre erence o s.
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Table of Contents
- 1. A renewed ocus on supermarket competition in Australia 1
- 2. Sales concentration between local supermarkets is generally high 2
- Supermarket concentration at the local level is generally high especially in regional areas 3
- High supermarket concentration exists even in many local areas that contain all four major brands 3
- High concentration does not necessarily mean low competition 4
- 3. Consumers exhibit persistent inertia in the location o their large weekly shops predominantly towards Coles and Woolworths 4
- New estimates suggest consumers exhibit inertia in their choice of supermarket brand 5
- Consumer inertia persists well beyond consecutive months 6
- Possible causes of consumer inertia at Australian supermarkets 7
- 4. Consumer inertia impacts the eld o competitive rivalry between stores 8
- 5. What role can policy play 9
- Reerences 10
