Abstract

The evolution of the retail grocery industry is characterized by the progressive concentration of retailers and the dominance of several large chains. Despite this movement toward fewer but larger outlets, many single store enterprises and small chains continue to survive. In Italy, the concentration in the grocery sector is lower than in most European countries, small retail stores coexist with bigger chains and supermarkets are unevenly distributed over the territory. This paper aims at exploring the determinants of prices at retail grocery stores located within a Province in the North of Italy. The analysis highlights that the presence of competitors within a 10 km radius has a negative effect on the supermarkets' prices. The presence of small retailers also has a negative effect on prices. Finally, there are scale economies at a commercial signs level: the four most important distribution chains in Italy show lower prices than less important chains.