Customers and Retail Growth / Liran Einav, Peter J. Klenow, Jonathan D. Levin, Raviv Murciano-Goroff.

Format:

Book

Author/Creator:

Einav, Liran.

Contributor:

National Bureau of Economic Research.

Klenow, Peter J.

Levin, Jonathan D.

Murciano-Goroff, Raviv.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29561.

NBER working paper series no. w29561

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

Using Visa debit and credit card transactions in the U.S. from 2016 to 2019, we document the importance of customers in accounting for sales variation across merchants, across stores within retail chains, and over time for individual merchants and stores. Customers, as opposed to transactions per customer or dollar sales per transaction, consistently account for about 80% of sales variation. The top 1% of growing and shrinking merchants account for about 70% of customer and sales reallocation in a given year. In order to illustrate some of the potential implications, we write down an endogenous growth model with and without the customer margin. In the context of this model, we find that the customer margin dramatically increases the size and growth contribution of the largest firms, but lowers the aggregate growth rate by diverting resources from research to customer acquisition activities.

Notes:

Print version record

December 2021.