Chicago Booth Review Podcast Who sets supermarket prices?
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Feb 25, 2026 Pradeep Chintagunta, Chicago Booth marketing and retail economics researcher, explores who actually sets supermarket prices. He explains geographic price zones and why parents sometimes price uniformly across regions. He discusses delegated local pricing, chain format discrimination, how mergers shape price zones, and why late-added fees like soda taxes persist.
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Why Retailers Decentralize Pricing
- Large retailers often decentralize decisions into regional divisions to tailor prices to local competition, demographics, and transport costs.
- Pradeep Chintagunta explains that geographic differences make uniform national pricing impractical for big parents owning many stores.
Parent Level Beats Chain Level For Price Analysis
- Parents often own multiple chains, so analyzing pricing at the parent level reveals coordination across chains in the same area.
- Chintagunta shows parent-level analysis can overturn prior results that treated each chain as an independent uniform-pricing actor.
What Price Zones Actually Mean
- Price zones are geographic regions where all stores a parent owns charge the same price regardless of banner, unless chains are deliberately positioned differently.
- Discount-format chains can be priced separately to capture low-price, low-service customers within the same zone.