Daniel Hanner, Daniel Hosken, Luke M. Olson and Loren K. Smith
This paper measures market dynamics within the U.S. grocery industry (defined as supermarket, supercenter, and club retailers). We find that despite being a mature industry, the grocery industry is remarkably dynamic. Each year retailers open or close roughly 7% of U.S. stores. We also find significant changes in the size of firms’ operations within markets over time. These changes in relative size are largely the result of expansion or contraction by incumbents rather than the result of firm entry or exit. In fact, entry and exit are quite rare, except by small firms. Moreover, only in small markets do new entrants gain substantial market share.