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Presentation Title: The COVID Shock to Brick-and-Mortar Retail Establishments
Abstract
We build the first dataset tracking retail establishments based on billions of transactions at active card terminals to the study the impact of technology adoption due to the pandemic on brick-and-mortar retail locations. We find that the accelerated adoption of work-from-home (WFH) is the most important technology shock of the pandemic. Retail establishments have paralleled the exodus of populations from large, expensive cities and city centers in preference for smaller Sun Belt cities and suburbs. In contrast to office markets, the negative behavioral impact of WFH on retail establishment growth is strongest near residential locations, where most shopping trips originate. The effects on retail establishments are also negative where nearby workers transitioned to WFH or which sold products or services tied to employment, such as clothing and hair salons. We also find that the growth of online retail is a secondary effect, concentrated in the adoption of newer online products like groceries and restaurants. This growth may actually support brick-and-mortar stores overall, in contrast to earlier growth in more tradable products. The results highlight the impact of WFH beyond the residential and office sectors and the additional technology shock operating through online retail.
Contact Evan Mast for information.