The ‘supercenter’ effect: How massive, one-stop retailers fuel overconsumption − and waste
In a recent study, researchers, including Suvrat Dhanorkar, Lina Wang, and Sungho Park, have uncovered a troubling trend linked to the rise of ‘big-box’ supercenters such as Walmart, Target, and Costco. Their findings reveal that these expansive retail giants, which often exceed 150,000 square feet and combine grocery and general merchandise, contribute significantly to consumer waste due to overpurchasing. By analyzing the impact of new supercenter openings across the United States over a decade, the study employed a difference-in-differences methodology to compare waste trends in counties with supercenters to those without. The results were striking: the introduction of a supercenter can lead to a 7% increase in consumer waste, with newer stores having a more pronounced effect than converted locations.
This phenomenon can be attributed to various factors inherent in the shopping experience at supercenters. For one, their pricing strategies, like Walmart’s “everyday low price,” encourage consumers to buy more than they need, while their locations, often distant from residential areas, prompt shoppers to maximize their trips by filling their carts. Unfortunately, this behavior leads to an increase in expired goods and unused items, contributing to the staggering 300 million tons of consumer waste generated annually in the U.S. The financial implications are significant, with billions spent on waste management. This situation raises important questions about the sustainability of supercenters and their impact on both the environment and local economies.
To address the issues stemming from supercenters, researchers are exploring potential solutions that encourage more sustainable consumer habits. Initiatives such as pay-as-you-throw policies, which charge individuals based on the amount of waste they produce, aim to incentivize reduced waste generation. Additionally, revitalizing neighborhood convenience stores could facilitate smaller, more frequent shopping trips, thereby reducing waste. These local businesses not only help mitigate the supercenter effect but also support local economies, as they account for a significant portion of net job creation. Furthermore, leveraging the “reuse economy” through thrift stores and online marketplaces can provide viable channels for circulating surplus goods. As the study emphasizes, identifying effective solutions will be crucial in addressing the environmental and economic challenges posed by supercenters, making it an essential area for future research and policy development.
‘Big-box’ supercenters can contribute to overpurchasing by shoppers
Frederic J. Brown/AFP via Getty Images
Imagine walking out of a Walmart, Target or Costco. As you push your large shopping cart to your car, you ask yourself: Did I really need all that stuff?
The answer is you probably didn’t.
In a
recent study
, my co-authors
Lina Wang
,
Sungho Park
and I found that the presence of supercenters – large retailers that sell groceries alongside general merchandise – results in a significant uptick in consumer waste due to overpurchasing.
These supercenters often sit on lots in excess of 150,000 square feet. But figuring out how all that real estate affects people’s shopping habits – if it does at all – is tricky. That’s because a lot of factors influence how much people buy on a single shopping trip.
To answer this question, we looked at the impact of the spread of Walmart supercenters across the U.S. over a decade, using a technique called
difference-in-differences
– an analytical method in which we compared consumer waste trends in counties that saw supercenter launches with “matched” counties that did not. This matching ensured that counties were otherwise closely comparable on socioeconomic factors such as housing, income and education.
Our analysis showed that the launch of a supercenter results in an increase in consumer waste of up to 7%. Furthermore, this increase in consumer waste is larger for new supercenter openings compared with conversions, when existing regular stores are expanded into large-format ones.
Why it matters
For decades, neighborhood stores across the U.S. were edged out by large-format retailers: department stores, supercenters and shopping malls. Although there is evidence that many of these big-name retailers are
beginning to look toward smaller stores
, the shopping landscape remains dotted by supercenters.
And these large stores stimulate mass consumption through gradual shifts in
consumer behaviors
. For example, in their attempt to generate more sales, large-format retailers often underprice smaller neighborhood stores.
Take, for example, Walmart’s “
everyday low price” strategy
, which is key to its business model. This pricing strategy offers shoppers a largely consistent year-round low price rather than relying on occasional sales and discounts.
Further contributing to overpurchasing is the supercenters’ typical location, which tends to be away from residential areas. Naturally, in their effort to avoid multiple trips, consumers tend to maximize the utility of each visit by making their basket sizes larger.
Unfortunately, this overpurchasing often leads to waste as more goods reach expiration date or sit unused in people’s homes.
While this may be a profitable strategy for retailers, it’s bad for society and the environment and creates billions of dollars in waste. To put this into context, the United States generates close to
300 million tons of consumer waste every year
, and then spends
billions of dollars
managing this waste.
What still isn’t known
Now that we have measured the “supercenter effect,” we are keen to look at potential solutions to this problem. Some existing solutions are based on implementing policies that encourage behavioral shifts in consumers. For example, many cities have adopted a
pay-as-you-throw policy
that charges people based on the volume of waste generated.
Other solutions are more structural, such as bringing back neighborhood convenience stores and developing stronger circular economy channels. For example, neighborhood convenience stores can play an important role in mitigating the supercenter effect and could allow for smaller, more frequent shopping trips and significantly less waste.
In many cities,
initiatives promoting local
vendors and stores
are gaining momentum. Such solutions would not only encourage sustainable consumption but also have benefits for local economic growth by promoting small businesses that have historically
accounted for 62%
of net new job creation.
A second solution entails leveraging the “reuse economy,” which can provide a back-end channel for circulating surplus and used goods. While both offline and online reuse channels exist – through the likes of thrift stores, food banks and Facebook Marketplace, for example – they currently remain vastly underused.
Identifying and aggressively implementing such solutions might turn out to be both economically meaningful and environmentally beneficial. But more work needs to be done to figure out which solutions are more effective, and why.
The
Research Brief
is a short take on interesting academic work.
Suvrat Dhanorkar does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
