Smart Retail, Replaces All? Some? : Different Influence of Amazon Go to Local Restaurant Industry

Abstract

Amazon Go, the pioneering smart retailer, has been opening physical stores in metropolitan areas of the USA, and seductively distracted customers from adjacent competitors by provisioning quick-and-easy service. This study focuses on how the appearance of the smart retailer affects adjacent competing businesses. We constructed a panel dataset with various features and reviews of restaurants from Yelp.com, and created two dummies, Adjacent, one if the restaurant is in a certain radius of a smart retailer and zero outside, and After, one after the introduction and zero before. By using Difference-in-Difference estimation, we find that (1) negative impacts on the adjacent restaurants after Amazon Go compared to non-adjacent and before the appearance, and (2) less negative impact on adjacent fine-dining restaurants than fast-food restaurants. After Amazon Go, customers' sentiments about the adjacent restaurants have changed more negatively. This paper may provide businesses with useful implications for their strategies.