Online Channel Usage: Does it Create Opportunities for Share-of-Wallet Expansion or Entail a Risk of Offline Cannibalization

Does a shift from single to multi-channel shopping affect the allocation of grocery spending across retail chains? Given the increase in operational costs associated with a multi-channel strategy, it is important for retailers to know whether consumers who start buying online will spend a larger share at the chain (expansion) or will merely shift part of their spending at the chain from offline to online (cannibalization). We model the effect of online channel usage on a consumer’s share-of-wallet and explore the underlying drivers of this effect. Preliminary results confirm that online shoppers tend to expand the chain’s share-of-wallet.