This research evaluates the effects of entry by supercenters and warehouse club retailers on the location of retail grocery sales. Drawing on location theory and empirical works, spatial econometric convergence models are specifi ed and estimated. Because grocery shopping is generally a local phenomenon, the spatial models are used to capture spillover effects between geographical areas. The results show that supercenter and warehouse club retailers have a signifi cant and large effect on growth of grocery sales, especially in low population areas. The results suggest that the large stores are new grocery distribution channels, which are changing where consumers shop for groceries.

“There’s a lot more business out there in small-town America than I ever dreamed of.” —Sam Walton, Founder of Wal-Mart