Impact of Competitor Store Closures on a Major Retailer

Abstract

W e use a proprietary data set from a national US department store chain to investigate the impact of competitor store closures on a major retailer. The transaction level data set includes nearly 80 million transactions, corresponding to $2 billion in sales over a 25-month period. We find that store sales increase with respect to a store's proximity to closed competitor locations. More interestingly, we find that online channel sales also increase in geographic locations where competitors close stores and where our focal retailer has store locations in close proximity to the markets it serves. This latter finding highlights the important role that stores play in the online channel. Stores provide a level of shopping assurance generally not available online and support customer webrooming and showrooming to mitigate purchase uncertainty. Stores are also integral to omnichannel services like return-to-store wherein stores provide a convenient nearby location to make a free return should an online purchase not meet expectations. Consistent with these shopping behaviors, our results demonstrate that the focal retailer, in markets affected by competitor store closures, is able to capture demand that exhibits greater uncertainty in purchases as evidenced by (i) a disproportionate increase in riskier high value vs. low value store purchases consistent with webrooming, (ii) increased online sales of product categories associated with showrooming, and (iii) an increase in return-to-store instances for online purchases.

Showrooming: a retrospective and prospective review using the SPAR-4-SLR methodological framework

“…The managerial implications of this research even extend to offline businesses attempting to curtail showrooming. This study emphasised the use of various variables that may be considered while developing an optimal strategy, like price, store closings (Akturk and Ketzenberg, 2021), the effectiveness of salesperson interactions, situational factors (Arora et al, 2022), the role of technology like AI, AR, VR and customer proximity to retailers (Lim et al, 2022(Lim et al, , 2023a. However, it was also pointed out that companies may use "loyal showrooming" to their advantage in order to retain customers.…”

A Vanishing Food Infrastructure: The Closure of Food Outlets in Flint in a Pandemic Era

“…Market researchers have conducted studies on consumer perceptions and behaviors (Haans & Gilsbrechts, 2010; Helm et al, 2020; Soysal et al, 2019), the transition from physical stores to e-commerce (Bailey et al, 2010; Helm et al, 2020; McArthur et al, 2016), the impact of new ways of shopping on consumers’ daily lives (Clarke et al, 2006; Reynolds et al, 2007) and benefits associated with the transition to e-commerce (Mandel, 2017). Other studies have examined the impact of competition on store closures (Akturk & Ketzenberg, 2022) and the types of closures that occur (Cavan, 2022).…”

Estimating impacts of logistics processes on online customer ratings: Consequences of providing technology‐enabled order tracking data to customers

“…In addition, freight cost is considered a type of surcharge a retailer imposes on customers, which is separate from the base price (i.e., the order cost of the purchased items themselves). Prior research further demonstrates that customers are sensitive to order cost and surcharges (Akturk & Ketzenberg, 2022a, 2022b; Bolton et al, 2003). Surcharge information, including freight cost, may affect locus of causality such that the third‐party shipping vendor (rather than the retailer) will receive more blame because it is considered an external third party (Pallas et al, 2018).…”