An Empirical Investigation of Wal-Mart’s Expansion into Food Retailing

This paper analyzes Wal-Mart’s expansion into food retailing, focusing on its store conversion strategy via a formal IO entry framework. Forty-eight different competing model specifications are considered to determine how the company perceives competition from incumbent food retailers and how its geographic expansion pattern has influenced its store differentiation decisions over time. The results show that Supercenter openings mainly have targeted large areas with low population density and a high percentage of population receiving food stamps. The results also suggest that as the company moves toward geographic saturation of local markets, some of the strategic location decisions creating economies of density may need to be reconsidered in future years.