Adding bricks to clicks
Subtitle: the effects of store openings on sales through direct channels
By: Jill Avery, Mary Caravella, John Deighton, Thomas Steenburgh
Contributors: Caravella, Mary; Deighton, John; Steenburgh, Thomas; Harvard Business School. Division of Research
Edition: 2nd rev.
Series: Working paper / Division of Research, Harvard Business School -- 07-043; Working paper (Harvard Business School. Division of Research) -- 07-043
Publisher: Division of Research, Harvard Business School
Published: 2007
Place of publication: Boston]
Language: eng
Number of pages: 30
Description: We assess the effect of opening physical retail stores on direct channel sales. Our data come from a leading U.S. retailer which opened four new stores; two openings occur in retail trading areas which had been previously served by direct channels alone and two openings occur in retail trading areas which had been served by both direct channels and existing physical stores. We hypothesize two effects, cannibalization and complementarity, and conjecture that the magnitude of these effects may be different at different points in time. We find that retail store openings initially cannibalize direct channel sales in the short term if physical stores do not already exist in the retail trading area, but then contribute to longer term complementary effects which work to overcome the losses from cannibalization. Our results are based on both interrupted time series analysis and a difference-in-differences analysis of six years of proprietary sales data and we use a novel zip code matching method to better isolate the effects of channel expansion. We argue for advantages to using zip code level data for methodological and consumer data privacy reasons.
Notes: 2nd revision. Originally published: January 2007.

"Revised 02/07"--Publisher's web site, 2006-2007.

Includes bibliographical references.