GovWire

Accurate market definitions are important for competition agencies, but traditional survey-based measures are costly, time-consuming and noisy at low aggregations. This paper explores the use of consumer card spending data to improve the timeliness and accuracy of retail market estimates. With the help of a standard machine-learning algorithm, we cluster spending flows from cardholder postcode sectors to merchant postcode sectors for detailed categories of retail merchants in the UK at a monthly frequency.

We find geographical retail markets that differ systematically by merchant good category and across space. Market size is also predicted by demographic and economic characteristics. Over time, market size is relatively stable but shrinks during periods of pandemic-induced travel restrictions.

Beyond applications to competition agency casework, this method allows researchers to investigate local competition and the impact of technology and government policies on spatial consumer searchand purchasing behaviour.

We have also published local retail market estimates for 23 retail merchant categories for use in analysis by other researchers and analysts.