New hypermarkets

J. Leto and P. Rolniak grossly exaggerate the potential growth of hypermarkets in "New hypermarket entrants to challenge existing US gasoline marketers" (OGJ, May 14, 2001, p. 56). They estimate that firms like Wal-Mart, Costco, et al., will capture 16% of retail gasoline sales by 2005, up from 3% in 2000. They further contend that hypermarkets will fundamentally change gasoline marketing.I disagree strongly with their assessment.The market share projections are unrealistically high because zoning laws will severely limit hypermarkets' choices of sites, and because zone pricing-which is widely used and lawful-is an especially effective defense against hypermarkets' low prices.The ...

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