Paper Type
Complete
Paper Number
PACIS2025-1911
Description
As franchise systems expand, concerns arise regarding whether intra-brand proximity intensifies intra-brand competition or contributes to market expansion across online and offline channels. Existing studies neglect the channel-specific variations of these effects and the moderating role of inter-brand competition. This study examines how intra-brand and inter-brand competition influence store performance in an omnichannel retail context, applying a 1.5 km threshold. Leveraging sales data from a South Korean multi-brand retailer, we apply a multilevel random intercept model and the Gaussian copula method to mitigate endogeneity concerns. The findings indicate that in offline markets, intra-brand proximity initially enhances sales through agglomeration effects; however, this effect dissipates after accounting for endogeneity. Inter-brand competition enhances offline sales, particularly in low-density areas. In online markets, intra-brand proximity exacerbates intra-brand competition, leading to lower sales, whereas inter-brand competition amplifies these pressures further. These findings underscore the necessity of strategically managing store proximity in omnichannel retail environments.
Recommended Citation
JIN, XUANTING; Kim, Taekyung; Um, Sungyong; and Lee, Dongwon, "Proximity on Online and Offline Channels: Agglomeration or Competition" (2025). PACIS 2025 Proceedings. 9.
https://aisel.aisnet.org/pacis2025/it_strategy/it_strategy/9
Proximity on Online and Offline Channels: Agglomeration or Competition
As franchise systems expand, concerns arise regarding whether intra-brand proximity intensifies intra-brand competition or contributes to market expansion across online and offline channels. Existing studies neglect the channel-specific variations of these effects and the moderating role of inter-brand competition. This study examines how intra-brand and inter-brand competition influence store performance in an omnichannel retail context, applying a 1.5 km threshold. Leveraging sales data from a South Korean multi-brand retailer, we apply a multilevel random intercept model and the Gaussian copula method to mitigate endogeneity concerns. The findings indicate that in offline markets, intra-brand proximity initially enhances sales through agglomeration effects; however, this effect dissipates after accounting for endogeneity. Inter-brand competition enhances offline sales, particularly in low-density areas. In online markets, intra-brand proximity exacerbates intra-brand competition, leading to lower sales, whereas inter-brand competition amplifies these pressures further. These findings underscore the necessity of strategically managing store proximity in omnichannel retail environments.
Comments
Strategy