The Evolution and Impact of the General Merchandise Sector

This chapter documents the development of the general merchandise sector and the rise of discounters such as Walmart and Costco. We explore the development of chain stores, mail-order houses, chain stores, and mass-market merchandisers and explain how they emerged in response to changing technology and transaction costs. We discuss the literature on entry by Walmart and other discounters. We also survey the growing literature on the effects of mass-market merchandisers on prices, market structure, labor markets, sociocultural outcomes, and health. These studies rely on a variety of different data sets, regional contexts, and identification strategies, sometimes with conflicting results. Most of this literature focuses on Walmart as the store appears regularly at the top of the Fortune 500, but some studies also consider the effects of other discount stores, warehouse clubs, and supercenters.