Can offline stores drive online sales?
Dr. Kitty WANG
Department of Marketing
City University of Hong Kong
The academic literature consistently finds that online and offline channels are substitutes; however, practitioners often emphasize "synergies" between online and offline. In this paper, we use evidence from store openings by a bricks-and-clicks retailer to attempt to reconcile these perspectives. Overall, we find no strong evidence of substitution or of synergies. However, splitting locations by whether the retailer has a strong presence prior to the store opening suggests the coexistence of substitution across channels and complementarity in demand. In particular, in places where the retailer has a strong presence, the opening of an offline store is associated with a decrease in online sales and search. In contrast, in places where the retailer does not have a strong presence, the opening of an offline store is associated with an increase in online sales and search. We provide evidence suggesting that this is driven by a marketing communications role for the offline channel through enhancing brand awareness: We see a large increase in new customers and we see little difference between fit-and-feel products and other products.