Assessing the Impact on Sales of Competing Nearby Supermarkets

ABSTRACT The supermarket industry faces fierce competition in many geographic areas, with various brands competing for a market share that represents a significant portion of a country's GDP. For these businesses, understanding the factors that influence their sales and how they do so is crucial: location, pricing, quality, customer loyalty, and more. While much has been written about how these elements can affect revenue, there is a lack of existing models quantifying the monetary impact of having competitor stores within an own establishment area of influence. This article introduces a hierarchical Bayesian model that quantifies this impact for each product category within the brand's catalog. The model requires careful parameterization to adapt to the specific context, and therefore both its application and design represent a methodological novelty in this area. The main result is a matrix of coefficients that indicate the monetary effect of the presence of every competitor for each product category. The findings revealed by the model show that the influence of the proximity of each competitor does indeed vary depending on these categories. This information is valuable for the company when making decisions, such as choosing new store locations or determining the product assortment to offer in each establishment. The use of the results derived from this model provides a competitive advantage over others and helps to better understand the market by identifying which supermarket brands are the perceived leaders in each product category.