The convenience store price-location conundrum : empirical evidence from 7-Eleven Singapore.

Abstract

Using store-level prices of a basket of products, this paper aims to provide supporting evidence of spatial price discrimination by convenience store retailers. More importantly, this paper seeks to empirically delineate locational attributes which warrant price differences among 7-Eleven stores in Singapore. Firstly, our study uncovers five locational attributes which accounts for the differing prices exhibited across stores. Specifically, the presence of petrol stations and residential flats lower prices at a store, while that of metro stations, shopping malls and offices in the vicinity generally raise prices. Secondly, our results demonstrate that variables invoke different effects across product categories. Finally, combinations of locational variables are found to have a larger effect on product prices than single factors alone. Given these findings, our study hence provides compelling evidence of discriminatory pricing behavior even within same-chain stores.