The Rise of Broadband and the Retail Apocalypse: Evidence from Consumer Packaged Goods

61 Pages Posted: 9 Feb 2022 Last revised: 8 Feb 2024

See all articles by Uyen Tran

Uyen Tran

University of Chicago - Booth School of Business

Date Written: December 27, 2021

Abstract

 I explore consumer behavior in the US consumer packaged goods (CPG) sector during broadband's proliferation from 2006 to 2016. Using household panel and retail scanner data covering over 40,000 brands across 900 categories, I analyze 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. I combine US Census and FCC data to track the roll out of broadband. Contrary to "retail apocalypse" fears, aggregate CPG trends are muted. Exploiting geographic variation in broadband growth, I find economically small but heterogeneous effects. Digging deeper reveals offsetting generational behaviors, with declines in brick-and-mortar shopping among younger consumers counterbalanced by stability in larger older cohorts, and a concerning "hollowing out" of the middle class. I demonstrate robustness using terrain instruments, within-household adoption, and statistical power tests. This study provides the most comprehensive examination to date of broadband's impact on CPG shopping. The results suggest broadband is driving a gradual evolution rather than a dramatic upheaval in CPGs, while surfacing challenges in engaging key consumer segments.

Keywords: Consumer Behavior, Broadband Internet, Retail, Information Technology, Industrial Organization

JEL Classification: M31, L81, D12, L15, M21

Suggested Citation

Tran, Uyen, The Rise of Broadband and the Retail Apocalypse: Evidence from Consumer Packaged Goods (December 27, 2021). Available at SSRN: https://ssrn.com/abstract=3994862 or http://dx.doi.org/10.2139/ssrn.3994862

Uyen Tran (Contact Author)

University of Chicago - Booth School of Business ( email )

401 North 1st Street
Phoenix, AZ 85004
United States
5203335621 (Phone)

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