Retention Ratios in Retail Networks and Their Application to Post Offices

Matthias Hafner (), Lory Iunius and Urs Trinkner
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Matthias Hafner: Swiss Economics and University of Zurich
Lory Iunius: University of Lausanne

Chapter Chapter 7 in The Postal and Delivery Contribution in Hard Times, 2023, pp 99-109 from Springer

Abstract: Abstract Diversion ratios indicate the fraction of demand that is “diverted” to another company. By analogy, we define retention ratios as the fraction of demand of a particular store or product that is “retained” within a company. In case of a post office closure, retention ratios express how much of the sales in the closed post offices are retained in the remaining post offices. Both retention ratios and diversion ratios are, although defined differently, closely linked to elasticity of demand relative to changes in prices and/or quality. Despite its considerable importance, there is a clear lack of research on diversion and retention ratios in the postal sector. In our paper, we contribute to the literature in three ways. We provide a review of the relevant literature on diversion and retention ratios for post office and retail networks as well as in merger cases. We identify existing estimates and relevant factors that drive the results. We then qualitatively limit possible ranges of retention ratios of post office closures. We validate our results by comparing empirical volume effects in Swiss Post’s restructured retail network between 2013 and 2019.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:topchp:978-3-031-11413-7_7

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DOI: 10.1007/978-3-031-11413-7_7

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