Consumer Behavior and the Rise of Broadband : A Retail Apocalypse?

I explore US consumer retail behavior during the proliferation of broadband internet from 2004 to 2018. Using household and retail scanner data, I capture consumer behavior using seven outcomes: (1) trip frequency, (2) total spending, (3) unique chains visited, (4) unique brands purchased, (5) prices, (6) price dispersion, and (7) price elasticities of demand. Contrary to popular media reporting, I show aggregate retail trends during the rise of broadband are muted and do not support the hypothesis that the collapse of brick-and-mortar retail is imminent. Only 2 of the 7 outcomes changed by more than 10%: The number of unique brands decreased by 12.5% and average prices grew at 24%, consistent with inflation. Exploiting the differential growth in broadband across counties, I estimate the effect of local broadband access on each of the seven outcomes. I find the direct effects of broadband are also muted: Across all outcomes, the estimates are centered at zero and the upper and lower bounds of the 95% confidence intervals are economically insignificant. These conclusions are consistent with estimates using within-household internet adoption. Taken together, my results show fears of the retail apocalypse are quantitatively unwarranted