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Keywords:

  • D220;
  • D400;
  • L200

ABSTRACT

This study examines the phenomenon of advertised sales, or price discounts, at major high–low pricing (HLP) supermarkets in the United States. The authors measure and document price variability and movement using a unique and rich dataset on prices and sales drawn directly from supermarkets. Several of their key findings pertain directly to an influential study by Hosken and Reiffen (2004) on retail price variation. However, the authors’ estimate of price rigidity is lower than Hosken and Reiffen's while their estimate of sale frequency is higher. Moreover, the earlier study's key findings apply only to national brand products and not private labels. The authors also highlight the issue of sale duration, indicating that sales frequently run considerably longer than 1 or 2 weeks, to the point at which they argue they can no longer be considered temporary price reductions. Comparisons with alternative definitions of sale reveal that the empirical definition of a sale impacts the results significantly.