Commercial Retail

Clicks and Bricks: The Complementarity of Online Retail and Urban Services [Updated August 2024, Submitted]

Is online retail a complement or substitute to local offline economies? To answer this question, I use transaction data and the staggered introduction of online grocery platforms. This study reveals that online retail reallocates consumer purchases towards offline services through time savings, particularly restaurants. I also find that it changes how consumers make shopping trips, creating diverse spillovers. Consequently, online retail is both a complement and substitute to different offline stores. I develop a discrete choice model capturing nuanced consumer trip choices which predicts the online grocery market will shift consumption from offline goods to services in high-income urban areas.

The Impact of Work-from-Home on Brick-and-Mortar Retail Establishments: Evidence from Card Transactions (with James Duguid, Bryan Kim, and Chris Wheat) [Updated June 2024, Submitted]

COVID-19 induced large increases in working-from-home (WFH). We study the impact of these changing work arrangements on brick-and-mortar retail establishments using a novel dataset based on billions of card transactions. We separately identify the effect of residential population movement from the effect of changing workplace locations. While retail establishments follow population movement, more WFH depresses retail establishments. Surprisingly, retail establishments decline more in locations where the residents transition to WFH compared to locations where workers make the transition. Fewer retail trips and substitution to home production are important features for the distinct effects of WFH on retail markets as compared to office markets.

The Early Impact of COVID-19 on Local Commerce: Changes in Spend Across Neighborhoods and Online (with Marvin Ward, Chris Wheat, and Diana Farrell)
CEP Occasional Paper, Paper No. CEPOP50
Covid Economics, Issue 28

We document a number of striking features about the initial impact of the pandemic on local commerce across 16 US cities. There are two novel contributions from this analysis: exploration of neighborhood-level effects and shifts between offline and online purchasing channels. In our analysis we use approximately 450 million credit card transactions per month from a rolling sample of 11 million anonymized customers between October 2019 and March 2020. Across the 16 cities we profile, consumers decreased spend on the set of goods and services we define as ``local commerce" by 12.8% between March 2019 and March 2020. Growth in all 16 cities was negative. Consumers shifted a substantial share of local commerce spend online, such that year over-year growth in online spend was small, but positive, at 1.5%. With respect to grocery and pharmacy purchases, online spend grew at least three times as fast as offline spend. Overall spend declines were uniform across neighborhoods of differing median household income, though lower-income neighborhoods experienced the highest proportion of extreme negative declines. We also find evidence that many low-income neighborhoods are increasing spend on online grocery slower than others, but increasing their use of online restaurants the fastest. Consumers in low-income neighborhoods also tend to live farther from the grocery stores at which they shop. Compared to their counterparts in higher-income neighborhoods, consumers in low-income neighborhoods have not been more likely to shop at grocery stores closer to where they live since the onset of the pandemic.

 Mortgage Markets

Affordability, Financial Innovation, and the Start of the Housing Boom (with Benjamin Keys and Jane Dokko) [Updated September 2024, Submitted]

Non-traditional mortgage features are the subject of extensive regulatory and popular criticism for their role in the housing boom and bust. In this paper, we construct a novel county-level dataset to analyze how mortgage products transmitted the mid-2000s credit supply shock to local markets. Using quasi-experimental spatial variation in exposure to the private label securities (PLS) market and the heterogeneous timing of housing booms, we provide new evidence that non-traditional mortgage products allowed lenders to expand credit in an environment with rising interest rates and house prices by maintaining payment affordability, thereby fueling house price growth.

Branches in Local Mortgage Markets

This paper studies the impact of branch presence on mortgage credit outcomes in the surrounding neighborhood using the density of nearby branch networks to instrument for actual branch presence. I find that lenders with branches lend more mortgages to borrowers in the surrounding neighborhood and that those operated by local lenders have the most positive impact for low socioeconomic-status borrowers. However, I show that branches disadvantage competing lenders by lowering the credit-quality of the competing lenders' applicant pool. This adverse selection causes an aggregate negative effect of branch presence on neighborhood mortgage outcomes.