Modelling the effect of store flyers on supermarket sales: An application to olive oil demand

In this paper we study the effect of store flyers on supermarket sales while controlling for other promotional strategies. We use a dataset of weekly sales of 16 olive oil products from a Spanish supermarket chain during the year 2017. We estimate a dynamic panel data model by GMM which allows us to examine both the short- and long-run effects of displaying products in store flyers. Our estimates show that products being featured in a store flyer exhibit 85 percent higher sales in the short-run, being the effect in the long-run of 109 percent. We also provide evidence that olive oil is a highly price-elastic product. Our estimates also indicate that placing the products on the end-of-aisle increases olive oil sales. Conversely, multibuy promotions are negatively related with sales.