The Evolution of National Retail Chains: How We Got Here

52 Pages Posted: 4 Apr 2015

See all articles by Lucia Foster

Lucia Foster

U.S. Census Bureau - Center for Economic Studies

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Shawn D. Klimek

U.S. Census Bureau - Center for Economic Studies

C.J. Krizan

Government of the United States of America - Bureau of the Census

Scott Ohlmacher

University of Maryland

Date Written: March 30, 2015

Abstract

The growth and dominance of large, national chains is a ubiquitous feature of the US retail sector. The recent literature has documented the rise of these chains and the contribution of this structural change to productivity growth in the retail trade sector. Recent studies have also shown that the establishments of large, national chains are both more productive and more stable than the establishments of single-unit firms they are displacing. We build on this literature by following the paths of retail firms and establishments from 1977 to 2007 using establishment- and firm-level data from the Census of Retail Trade and the Longitudinal Business Database. We dissect the shift towards large, national chains on several margins. We explore the differences in entry and exit as well as job creation and destruction patterns at the establishment and firm level. We find that over this period there are consistently high rates of entry and job creation by the establishments of single-unit firms and large, national firms, but net growth is much higher for the large, national firms. Underlying this difference is far lower exit and job destruction rates of establishments from national chains. Thus, the story of the increased dominance of national chains is not so much due to a declining entry rate of new single-unit firms but rather the much greater stability of the new establishments belonging to national chains relative to their single-unit counterparts. Given the increasing dominant role of these chains, we dissect the paths to success of national chains, including an analysis of four key industries in retail trade. We find dramatically different patterns across industries. In General Merchandise, the rise in national chains is dominated by slow but gradual growth of firms into national chain status. In contrast, in Apparel, which has become much more dominated by national chains in recent years, firms that quickly became national chains play a much greater role.

Suggested Citation

Foster, Lucia and Haltiwanger, John C. and Klimek, Shawn D. and Krizan, C.J. and Ohlmacher, Scott, The Evolution of National Retail Chains: How We Got Here (March 30, 2015). US Census Bureau Center for Economic Studies Paper No. CES-WP- 15-10. Available at SSRN: https://ssrn.com/abstract=2589175 or http://dx.doi.org/10.2139/ssrn.2589175

Lucia Foster (Contact Author)

U.S. Census Bureau - Center for Economic Studies ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

John C. Haltiwanger

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3504 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Shawn D. Klimek

U.S. Census Bureau - Center for Economic Studies ( email )

4600 Silver Hill Road
Washington, DC 20233
United States
(301) 763-2861 (Phone)
(301 763-5935 (Fax)

HOME PAGE: http://www.ces.census.gov

C.J. Krizan

Government of the United States of America - Bureau of the Census ( email )

4600 Silver Hill Road
Washington, DC 20233-9100
United States

Scott Ohlmacher

University of Maryland

College Park
College Park, MD 20742
United States

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