The main purpose of this study is to estimate consumers’ demand reactions in food retailing. To this end, price and income elasticities are of primary interest. These elasticities are estimated for various product groups and compared between different food retail formats. In addition, consumers’ choices are modeled in regard to food retail formats (supermarkets versus discounters). The results provide valuable decision support for food retailing, policymakers and policy modelers. This cumulative, publication-based dissertation refers to three of the candidate’s publications.
The first essay „Using a Generalized Differenced Demand Model to Estimate Price and Expenditure Elasticities for Milk and Meat in Austria” is based on a very general and flexible demand model, which nests several well-known models including the Almost Ideal Demand System (AIDS), the Rotterdam model, the Central Bureau of Statistics (CBS) and the National Bureau of Research (NBR) model. This general model is applied to different product groups and different budgeting structures. Estimation results indicate that demand reactions, as expected, turn less strong the more aggregated the product groups are. Beyond this, the estimation results stress the importance of the underlying budgeting structure in demand models. It is shown that differences in the estimated elasticities of demand between studies may downsize remarkably once the same budgeting structures are considered.
In the second essay „Price Sensitivity Within and Across Retail Formats“, consumer demand reactions are compared between the two most important food retail formats, “conventional” supermarkets and discounters. This question has been largely neglected in literature so far. In particular, I investigate whether consumer responses to milk price changes are statistically different for discounters and supermarkets. Beyond this, price reactions across formats are considered as well, i.e. demand reactions in discounters to price changes in supermarkets and vice versa. Results indicate that significant differences between price reactions in supermarkets and those in discounters do exist. This holds true for both, inner-format reactions to price changes and responses to price changes across retailing formats. With regard to demand reactions to price changes for drinking milk, significant responses across formats illustrate the potential of drinking milk as a loss-leader product.
As far as the third essay „Differentiation in Demand with Different Food Retail Formats“ is concerned, potential differences in consumer behaviour for different food retail formats are analyzed regarding two main aspects. On the one hand, I analyze the factors which influence a household’s likeliness to prefer shopping at a discounter to shopping at a supermarket. On the other hand, price elasticities of demand are estimated for nine different product groups in discounters and supermarkets, applying a method which includes the individual purchase probabilities.
Results provide further indications for significantly different price elasticities between different retail formats. Beyond, supermarket demand is found to be more responsive to inner-format price changes than demand in discounters. However, demand reactions in discounters related to price changes in supermarkets are stronger than those in supermarkets when discounter prices are changed. Apart from this, results show that households with low levels of income and education are more likely to visit discounters, whereas younger people have a high preference for discounters despite spending less of their budget in discounters.
Altogether, two main results can be emphasized. First, comparisons of demand studies must keep in mind the potential for any study’s sensitivity to model and budget structure specification. Second, this study strongly points at the necessity to estimate demand reactions for each food retail format separately, whenever data availability allows for it.
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The main purpose of this study is to estimate consumers’ demand reactions in food retailing. To this end, price and income elasticities are of primary interest. These elasticities are estimated for various product groups and compared between different food retail formats. In addition, consumers’ choices are modeled in regard to food retail formats (supermarkets versus discounters). The results provide valuable decision support for food retailing, policymakers and policy modelers. This cumulative...
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