New Research Confirms Strong Competition Across Online and Offline Retail
A new report from CCIA and the Brattle Group shows that competition is alive and well across channels in the retail space, both online (retailers’ websites and online marketplaces) and offline (brick-and-mortar).
“The latest retail research shows the intense price competition between online and offline sales channels. Any regulations affecting online retail would affect prices in brick-and-mortar retail as well,” noted Trevor Wagener, CCIA Director of Research and Economics.
The report found “competition among retailers and across retail channels is intense, that they respond quickly to each other’s prices and that, as a consequence, regulation affecting online commerce is expected to affect prices in brick-and-mortar stores, and vice versa.” This means that “consumers online face similar pricing trends to consumers offline, and the competition between different retailers across channels is vigorous.”
The report found evidence of “intense price competition” both within and across commerce channels. “Both brick-and-mortar and online prices react similarly when they are the lower price, and tend to adjust upwards. But their responses are clearly different when they are the higher price: brick-and-mortar prices will tend to stay high, while online prices will be pulled down to lower levels.”
The report also noted “the increasing popularity of omnichannel shopping, whereby consumers mix and match online and offline components of their shopping journey, also may encourage convergence between online and offline prices.”
Below are additional key takeaways from the report:
— Online and offline prices are identical 95% of the time for the same product, retailer, location, and date.
— When one channel’s price changes, the other channel typically changes to match it quickly.
— Online prices rarely deviate from brick-and-mortar prices, but when they do, they can deviate both upwards and downwards.
— Online and offline trends in dollar sales volumes closely matched one another, consistent with both sales channels being subject to the same market forces.
The report concludes that there is “intense competition between online and offline” commerce and “that in the context of antitrust, analyses involving dynamic competition and substitutability for retail goods should incorporate information from both online and brick-and-mortar retail sales.”