CBR Briefing #56

Apr 02, 2018

Sections Economics

How Costco, not Amazon, is responsible for the death of your local Sears
Warehouse clubs and superstores have made a bigger impact than e-commerce on the retail sector

While e-commerce saw a tenfold rise in sales, warehouse clubs and superstores grew even faster.
  • E-commerce is less threatening to walk-in stores—particularly department stores—than very large brick-and-mortar operations such as Walmart Supercenter and Costco, according to a study by Ali Hortaçsu of the University of Chicago and Chicago Booth’s Chad Syverson.
  • While e-commerce saw a tenfold rise in sales in the United States, warehouse clubs and superstores grew even faster, the researchers find (see chart). For example, Amazon added $38 billion in sales between 2000 and 2013, while Costco added $50 billion in sales during the same period.
  • The researchers also analyzed US county-level data from 2003 to 2013. Counties with larger increases in the number of warehouse clubs and superstores had larger declines in the number of traditional department stores.
  • E-commerce will likely continue to gain in importance, but the researchers suggest that the strength of very large physical stores could lead to a hybrid format in which customers can explore potential purchases in a brick-andmortar setting before purchasing online.