The proliferation of broadband internet has sparked concerns about the future of brick-and-mortar retail. This article explores consumer behavior in the U.S. consumer packaged goods sector during broadband's proliferation from 2004 to 2019. Using household panel and retail scanner data covering more than 40,000 brands in 900 categories, the author analyzes nine household and retailer outcomes: brands purchased, trips taken, retailers visited, offline spending, any online spending, online spending share, prices, price dispersion, and demand elasticities. The author combines U.S. Census and Federal Communications Commission data to track the rollout of broadband. In contrast to established notions that broadband adoption would rapidly transform shopping behaviors in this period, the findings reveal a more nuanced and gradual pattern of change. Exploiting geographic variation in broadband growth, the author finds economically modest average effects with significant heterogeneity by age and household income. The analysis reveals generational differences: sharp declines in brick-and-mortar shopping among younger consumers counterbalanced by relative stability in larger older cohorts. In short, this article finds that broadband access drove a gradual evolution in consumer behavior, rather than a dramatic upheaval.
AguiarMarkBilsMarkCharlesKerwin KofiHurstErik (2021), “Leisure Luxuries and the Labor Supply of Young Men,” Journal of Political Economy, 129 (2), 337–82.
2.
AkturkM. SerkanKetzenbergMichael (2021), “Exploring the Competitive Dimension of Omnichannel Retailing,” Management Science, 68 (4), 2732–50.
3.
AndersonChris (2006), The Long Tail: Why the Future of Business Is Selling Less of More. Hyperion.
4.
AngristJoshuaPischkeJörn-Steffen (2009), Mostly Harmless Econometrics: An Empiricist’s Companion. Princeton University Press.
AveryJillSteenburghThomasDeightonJohnCaravellaMary (2012), “Adding Bricks to Clicks: Predicting the Patterns of Cross-Channel Elasticities over Time,” Journal of Marketing, 76 (3), 96–111.
7.
Baum-SnowNathanielFerreiraFernando (2015), “Causal Inference in Urban and Regional Economics,” in Handbook of Regional and Urban Economics, Vol. 5, DurantonGillesHendersonJ. VernonStrangeWilliam C., eds. North-Holland, 3–68.
8.
BayeMichaelMorganJohnScholtenPatrick (2006), “Information, Search, and Price Dispersion,” in Handbook on Economics and Information Systems, HendershottT., ed. Elsevier, 323–76.
9.
BellDavidGallinoSantiagoMorenoAntonio (2018), “Offline Showrooms in Omnichannel Retail: Demand and Operational Benefits,” Management Science, 64 (4), 1629–51.
BerajaMartinHurstErikOspinaJuan (2019), “The Aggregate Implications of Regional Business Cycles,” Econometrica, 87 (6), 1789–1833.
12.
BrandJames (2021), “Differences in Differentiation: Rising Variety and Markups in Retail Food Stores,” SSRN, https://doi.org/10.2139/ssrn.3712513.
13.
BrownJeffreyGoolsbeeAustan (2002), “Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry,” Journal of Political Economy, 110 (3), 481–507.
14.
BrynjolfssonErikHuYuRahmanMohammad (2009), “Battle of the Retail Channels: How Product Selection and Geography Drive Cross-Channel Competition,” Management Science, 55 (11), 1755–65.
15.
BrynjolfssonErikHuYuSimesterDuncan (2011), “Goodbye Pareto Principle, Hello Long Tail: The Effect of Search Costs on the Concentration of Product Sales,” Management Science, 57 (8), 1373–86.
16.
CachonGérardTerwieschChristianXuYi (2008), “On the Effects of Consumer Search and Firm Entry in a Multiproduct Competitive Market,” Marketing Science, 27 (3), 461–73.
17.
CallawayBrantlySant’AnnaPedro (2021), “Difference-in-Differences with Multiple Time Periods,” Journal of Econometrics, 225 (2), 200–230.
18.
CavalloAlberto (2017), “Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers,” American Economic Review, 107 (1), 283–303.
19.
ChernevAlexanderBöckenholtUlfGoodmanJoseph (2015), “Choice Overload: A Conceptual Review and Meta-Analysis,” Journal of Consumer Psychology, 25 (2), 333–58.
ColeCatherineBalasubramanianSiva (1993), “Age Differences in Consumers’ Search for Information: Public Policy Implications,” Journal of Consumer Research, 20 (1), 157–69.
23.
De ChaisemartinClémentd’HaultfoeuilleXavier (2024), “Difference-in-Differences Estimators of Intertemporal Treatment Effects,” Review of Economics and Statistics, 1–45.
24.
De Los SantosBaburHortaçsuAliWildenbeestMatthijs R. (2012), “Testing Models of Consumer Search Using Data on Web Browsing and Purchasing Behavior,” American Economic Review, 102 (6), 2955–80.
25.
DellaVignaStefanoGentzkowMatthew (2019), “Uniform Pricing in US Retail Chains,” Quarterly Journal of Economics, 134, 2011–84.
26.
DinersteinMichaelEinavLiranLevinJonathanSundaresanNeel (2018), “Consumer Price Search and Platform Design in Internet Commerce,” American Economic Review, 108 (7), 1820–59.
27.
DubéJean-PierreHitschGünterRossiPeter (2018), “Income and Wealth Effects on Private-Label Demand: Evidence from the Great Recession,” Marketing Science, 37 (1), 22–53.
28.
DzyaburaDariaHauserJohn (2019), “Recommending Products When Consumers Learn Their Preference Weights,” Marketing Science, 38 (3), 417–41.
29.
EinavLiranLevinJonathanPopovIgorSundaresanNeel (2014), “Growth, Adoption, and use of Mobile e-Commerce,” American Economic Review, 104 (5), 489–94.
30.
EllisonGlennFisher EllisonSara (2009), “Search, Obfuscation, and Price Elasticities on the Internet,” Econometrica, 77 (2), 427–52.
FormanChrisGhoseAnindyaGoldfarbAvi (2009), “Competition Between Local and Electronic Markets: How the Benefit of Buying Online Depends on Where You Live,” Management Science, 55 (1), 47–57.
34.
GabaixXavierLaibsonDavidMolocheGuillermoWeinbergStephen (2006), “Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model,” American Economic Review, 96 (4), 1043–68.
GoldfarbAviPrinceJeff (2008), “Internet Adoption and Usage Patterns Are Different: Implications for the Digital Divide,” Information Economics and Policy, 20 (1), 2–15.
GoolsbeeAustanKlenowPeter (2006), “Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet,” American Economic Review, 96 (2), 108–13.
41.
GrewalDhruvAhlbomCarl-PhilipBeitelspacherLaurenNobleStephanieNordfältJens (2018), “In-Store Mobile Phone Use and Customer Shopping Behavior: Evidence from the Field,” Journal of Marketing, 82 (4), 102–26.
42.
GrilichesZviHausmanJerry (1986), “Errors in Variables in Panel Data,” Journal of Econometrics, 31 (1), 93–118.
43.
HausmanJerry (1996), “Valuation of New Goods Under Perfect and Imperfect Competition,” in The Economics of New Goods, BresnahanTimothy F.GordonRobert J., eds. University of Chicago Press, 207–48.
44.
HerhausenDennisBinderJochenSchoegelMarcusHerrmannAndreas (2015), “Integrating Bricks with Clicks: Retailer-Level and Channel-Level Outcomes of Online–Offline Channel Integration,” Journal of Retailing, 91 (2), 309–25.
45.
HitschGünterHortaçsuAliLinXiliang (2021), “Prices and Promotions in US Retail Markets,” Quantitative Marketing and Economics, 19, 1–80.
46.
HochStephenKimByung-DoMontgomeryAlanRossiPeter (1995), “Determinants of Store-Level Price Elasticity,” Journal of Marketing Research, 32 (1), 17–29.
47.
HortaçsuAliSyversonChad (2015), “The Ongoing Evolution of US Retail: A Format Tug-of-War,” Journal of Economic Perspectives, 29 (4), 89–112.
48.
KalyanamKirthiMcAteerJohnMarekJonathanHodgesJamesLinLifeng (2018), “Cross Channel Effects of Search Engine Advertising on Brick & Mortar Retail Sales: Meta Analysis of Large Scale Field Experiments on Google.com,” Quantitative Marketing and Economics, 16, 1–42.
49.
KowalskaMagdalena (2012), “The Internet Impact on Market Behavior of Young Consumers,” Journal of International Studies, 5 (1), 101–06.
50.
LeeByung-KwanLeeWei-Na (2004), “The Effect of Information Overload on Consumer Choice Quality in an On-Line Environment,” Psychology & Marketing, 21 (3), 159–83.
51.
LelkesYphtachSoodGauravIyengarShanto (2017), “The Hostile Audience: The Effect of Access to Broadband Internet on Partisan Affect,” American Journal of Political Science, 61 (1), 5–20.
52.
LemonKatherine N.VerhoefPeter (2016), “Understanding Customer Experience Throughout the Customer Journey,” Journal of Marketing, 80 (6), 69–96.
53.
LeungJustinLiZhonglin (2022), “Rising Concentration of Household Shopping, Superstar Firms, and Implications for Retail Markups,” SSRN, https://doi.org/10.2139/ssrn.3981995.
54.
LongFeiJerathKinshukSarvaryMiklos (2022), “Designing an Online Retail Marketplace: Leveraging Information from Sponsored Advertising,” Marketing Science, 41 (1), 115–38.
55.
MackElizabethHelderopEdwardMaKangjianGrubesicTonyMannJohnLoveridgeScottMaciejewskiRoss (2021), “A Broadband Integrated Time Series (Bits) for Longitudinal Analyses of the Digital Divide,” PLOS One, 16 (5), e0250732.
56.
MehraAmitKumarSubodhaRajuJagmohan (2018), “Competitive Strategies for Brick-and-Mortar Stores to Counter ‘Showrooming,’” Management Science, 64 (7), 3076–90.
57.
MelisKristinaCampoKatiaBreugelmansElsLameyLien (2015), “The Impact of the Multi-Channel Retail Mix on Online Store Choice: Does Online Experience Matter?” Journal of Retailing, 91 (2), 272–88.
58.
NeimanBrentVavraJoseph (2023), “The Rise of Niche Consumption,” American Economic Journal: Macroeconomics, 15 (3), 224–64.
59.
NgweDonaldFerreiraKris JohnsonTeixeiraThales (2019), “The Impact of Increasing Search Frictions on Online Shopping Behavior: Evidence from a Field Experiment,” Journal of Marketing Research, 56 (6), 944–59.
60.
OfekElieKatonaZsoltSarvaryMiklos (2011), “‘Bricks and Clicks’: The Impact of Product Returns on the Strategies of Multichannel Retailers,” Marketing Science, 30 (1), 42–60.
PanXiaoyanRatchfordBrianShankarVenkatesh (2004), “Price Dispersion on the Internet: A Review and Directions for Future Research,” Journal of Interactive Marketing, 18 (4), 116–35.
63.
PauwelsKoenLeeflangPeter S.H.TeerlingMarijeHuizinghK.R. Eelko (2011), “Does Online Information Drive Offline Revenues?: Only for Specific Products and Consumer Segments!” Journal of Retailing, 87 (1), 1–17.
64.
PozziAndrea (2013), “The Effect of Internet Distribution on Brick-and-Mortar Sales,” RAND Journal of Economics, 44 (3), 569–83.
65.
ReinganumJennifer (1979), “A Simple Model of Equilibrium Price Dispersion,” Journal of Political Economy, 87 (4), 851–8.
SalopSteve (1976), “Information and Monopolistic Competition,” American Economic Review, 66 (2), 240–45.
68.
ShapiroBradley T.HitschGünter J.TuchmanAnna E. (2021), “TV Advertising Effectiveness and Profitability: Generalizable Results From 288 Brands,” Econometrica, 89 (4), 1855–79.
69.
SimonsonItamarCarmonZivDharRaviDroletAimeeNowlisStephen (2001), “Consumer Research: In Search of Identity,” Annual Review of Psychology, 52 (1), 249–75.
70.
SorcePatriciaPerottiVictorWidrickStanley (2005), “Attitude and Age Differences in Online Buying,” International Journal of Retail & Distribution Management, 33 (2), 122–32.
71.
StephensDoug (2013), The Retail Revival: Reimagining Business for the New Age of Consumerism. John Wiley & Sons.
72.
SunLiyangAbrahamSarah (2021), “Estimating Dynamic Treatment Effects in Event Studies with Heterogeneous Treatment Effects,” Journal of Econometrics, 225 (2), 175–99.
TolbertCarolineMossbergerKaren (2020), “U.S. Current Population Survey & American Community Survey Geographic Estimates of Internet Use, 1997–2018,” Center on Technology, Data and Society, Arizona State University, https://techdatasociety.asu.edu/broadband-data-portal/county-data.
75.
TranUyenSpenceForrest (2023), “Told vs. Old: A Textbook Experiment Evaluating Price Beliefs and Consumer Search,” SSRN, https://doi.org/10.2139/ssrn.3116470.
76.
UrsuRaluca (2018), “The Power of Rankings: Quantifying the Effect of Rankings on Online Consumer Search and Purchase Decisions,” Marketing Science, 37 (4), 530–52.
77.
VenkatesanRajkumarKumarVipinRavishankerNalini (2007), “Multichannel Shopping: Causes and Consequences,” Journal of Marketing, 71 (2), 114–32.
78.
VerhoefPeterKannanPallassanaInmanJeffrey (2015), “From Multi-Channel Retailing to Omni-Channel Retailing: Introduction to the Special Issue on Multi-Channel Retailing,” Journal of Retailing, 91 (2), 174–81.
79.
ZickuhrKathrynMaddenMary (2012), “Older Adults and Internet Use,” technical report,Pew Research Center.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
