The Impact of a New Retail Brand In-Store Boutique and its Perceived Fit with the Parent Retail Brand on Store Performance and Customer Spending

With data from a specialty apparel retailer, we present two studies that investigate the impact of an in-store boutique displaying merchandise of a new retail brand on overall performance of the parent stores in which the boutiques are placed, and on customer spending on merchandise offered by each of the two brands. Findings from the two studies generally support that the in-store boutique enhances three key store-level metrics: average customer transaction value per store visit; comparable sales growth from one year to the next; and customer conversion ratio. At the customer-level both studies show that average customer transaction value on merchandise offered by the new brand is negatively related to average customer transaction value on the parent brand, and vice versa. Furthermore, both studies reveal that the relationship between the perceived fit between the two brands and average customer transaction value on the parent brand increases at an increasing rate (positive main and quadratic effects of perceived fit), but that the impact of perceived fit on average customer transaction value on the in-store boutique brand increases at a deceasing rate (positive main effect, but a negative quadratic effect of perceived fit). Implications for retail practice and theory are offered.     

“One-deal-fits-all?” On Category Sales Promotion Effectiveness in Smaller versus Larger Supermarkets

Even within a store chain and format, supermarket outlets often exhibit substantial differences in selling surface. For chain managers, this raises the issue of correctly anticipating the promotion lift, and of profitably managing promotion activities, across these outlets. In this paper, we conceptualize why and how store size influences the category sales effectiveness of four promotional indicators (depth of the promotional discount, display support, feature support, and whether the promotion is quantity-based). We then estimate the net moderating effect on four product categories for 103 store outlets belonging to four chains. For each of the promotion instruments, we find the percentage sales increases to be lower in large stores. For instance, whereas a 10% point increase in feature activity enhances category sales by about 1.64% in a 700 m² store, this figure drops to only 1.03% in a 1300 m² store – a 59% reduction. This moderating effect is especially pronounced for discount depth, the relative sales lift from a typical price cut being about 78% lower in the larger-sized outlet. However, since large outlets also have larger base sales, the picture changes when we consider absolute sales effects. The net outcome is that deeper discounts or quantity-based promotions do not systematically generate larger or smaller absolute sales bumps in large stores, whereas for in-store displays and features, we obtain a clear positive (be it less than proportional) link between store size and absolute category sales lift. When it comes to margin implications, we show that large stores gain higher profit from price cuts than small outlets only as long as the retailer keeps part of the manufacturer discount to himself. Managers can use these insights to improve their promotional forecasts across outlets, as well as to tailor their mix of instruments to store selling surface.     

Evaluating store location and department composition based on spatial heterogeneity in sales potential

In this paper, we extend a retail location evaluation model with the possibility to include the effect of department size adaptation at the store level. We relate department-level store sales to a store's competitive and demographic environment, thereby providing richer insights into the drivers of department sales than a model of just aggregate sales. Further, we accommodate heterogeneity in consumer characteristics over space by using zip code level data and unobserved spatial effects in department sales by including spatially autocorrelated error terms.Using spatial panel data for 30 clothing stores belonging to one Dutch retail chain, we demonstrate how to use the modeling approach to analyze and predict sales performance of new and existing stores. We show that the predictive performance of our model is superior to that of a benchmark model that does not include spatial autocorrelation.     

An Empirical Analysis of the Impact of Promotional Discounts on Store Performance

The received wisdom, reflected in popular marketing textbooks, is that featuring deeply discounted items will generate additional store traffic for retailers that in turn will lead to increased sales and profits. However, there is surprisingly little systematic evidence about the impact of these deep discounts on aggregate store traffic, sales, and profits. In this paper, we study the effects of promotional discounts and their characteristics on various store performance metrics employing a store level dataset pooled over 55 weeks and 24 stores. Many findings of our study lend credence to the continued popularity of such promotions by retailers. We find that feature promotions build store traffic, especially when the categories being featured are high penetration, high frequency. Also, promotions of branded items are found to be more effective than promotions of unbranded items. Discounting on more items in a category leads to lower store margins suggesting that the cost of discounting a large proportion of items in a category may not be justified by the profits generated by the sale. Using the coefficients from our model estimates, various counterfactuals provide insights into strategic change in level of discounts across categories. We discuss several implications of our findings for retailers.     

The Role of Customer Factors in Multiple Store Patronage: A Cost-Benefit Approach

This paper is concerned with the use of multiple stores by supermarket customers. It relates the number of stores patronized to a set of customer factors under a unifying theoretical framework emphasizing cost-benefit analysis. Respective hypotheses are tested in a large random sample. This study is a first attempt to empirically address the structure of multiple store patronage. It is demonstrated that multiple store patronage is affected by variables such as customer income, satisfaction, and expenditure that are suggestive of heterogeneous cost-benefit tradeoffs and opportunity costs of time. It is shown that customers are intrinsically different in the predisposition to being loyal. In this respect, store patronage is a continuum between single store loyalty and use of several different stores, on which customers vary depending on individual preferences. The empirical analysis also suggests that exclusive patronage of the favorite store arises from two observationally equivalent latent segments that differ in their inclination to remain loyal. The results yield valuable insights into the structure of store patronage and lead to important implications for retail managers. Several extensions are considered. A broad set of research questions surrounding store patronage can be considered from a cost-benefit viewpoint in the sense that consumer decisions in this area involve trading off economic resources against assortment, spatial and temporal benefits.     

The inter-store mobility of supermarket shoppers

The allegiance of a particular customer, and the distribution across customers of strength of affiliation to a store are important indicators of store health. It is therefore important to understand the extent and determinants of shopper mobility among competing retailers. While shoppers often patronize many stores, they typically have a primary affiliation to a “main store” that captures the majority of their purchases. We examine, in detail, the tendencies of shoppers to transition away from the current main store and adopt another in its place. That is, rather than study all types of store switching behavior, we focus on the decision to change primary allegiance. The model is established in a discrete time hazard framework and estimated as random-effects probit. Data from 548 households taking 88,945 shopping trips among five stores are used to calibrate the model.We find that state dependence is prevalent with nearly three quarters of the shoppers showing progressive attachment to their current main store. Interestingly, this finding is not simply driven by location (i.e., because shoppers are captive to a single store based on geographical distance). More likely, shoppers are unwilling to give up the benefits of store-specific knowledge of assortment, layout and prices. Second, the decision to transition from a current main store is not influenced by temporary price promotions on a common basket of items: Shoppers will cherry-pick, but this alone does not cause them to change primary allegiance. The majority of transitions occur across competing stores of the same price format, which suggests “format loyalty” is an important aspect of shopper behavior. After controlling for unobserved heterogeneity, we find little relationship between observable demographics and the transition probability. We do, however, find that shoppers who spend more per trip are less likely to change main stores, as are less frequent shoppers. Implications for retail management strategy are discussed.     

Multiple store patronage: The effects of store characteristics

The present study contributes to the literature on multiple store patronage in two important directions. First, it examines whether consumers׳ perceived importance of store characteristics have effects on multiple store patronage. Second, it examines the relationship between multiple store patronage and consumers׳ share of wallet at the primary store. Our results show that consumers who attach high value to sales promotions are more likely to visit multiple stores. However, store characteristic factors generally did not exert significant effect on multiple store patronage. Furthermore, we find that multiple store patronage and share of wallet are not interdependent and the profiles of consumers in terms of them do not share many common characteristics.     

An empirical analysis of tenant location patterns near department stores in planned regional shopping centers

The location of a store within a mall can affect the sales and profits of the store and its neighbors, and those of the mall׳s owner/developer. Because the interests of retail stores and the mall׳s owner/developer with respect to choice of location might not coincide, bargaining power might come into play. To assess empirically whether relative bargaining power as between a retail store and the mall owner/developer affects store location within a center, we focus on locations of stores near the department store tenants of malls. Department stores might have the bargaining power necessary to affect which tenants are chosen as neighbors of the department store.Using data collected from 148 regional shopping centers (malls) in 2007 in the five westernmost provinces of Canada, we examine the relationship between variables that reflect store location patterns near a department store׳s entrance, and variables associated with the bargaining power of developers. We find that the density of stores selling comparison shopping goods is larger near department stores within centers that are older or have a larger gross leasable area. In addition, such density is negatively related to the number of department stores contained in the center. Because a shopping center׳s age, gross leasable area, and the number of department stores in a center are expected to be associated with a developer׳s bargaining power, the above findings are consistent with the hypothesis that the store location patterns near department stores depend on the relative bargaining power of the developer and the department stores.     

Flatlined: Combatting the death of retail stores

The recent wave of retail bankruptcies as well as poor sales performance has resulted in a large number of store closings. Low sales in store-based retailers can also be attributed to the rapid growth of web-based retailers (largely, Amazon) as well as an excess of store space per capita in the U.S. as compared to other developed nations. Strategies to stem the decline of retail stores include: (1) utilizing omnichannel-based synergies among channels and devices to increase store sales; (2) making stores more attractive and engaging through personalization, interactivity, and a constantly changing environment; and (3) improving productivity through introducing small-size store formats and downsizing existing stores.     

Online customer service and retail type-product congruence

This study investigates how various elements of customer service affect the behavioral intention to shop at the online or the offline store for different product categories. We focus on the perceived value, trust, interface, empathy, and offline presence as the dimensions of the customer service for the retail store (online or offline). Using 317 respondents from the online stores’ users, this study finds that perceived value is the strongest predictor for future intention to shop at online stores, whereas offline presence of an online store did not enhance the future intention to shop at online stores. Other dimensions such as enhanced trust and ease of interface strengthen the intention to purchase at the offline stores. Finally, perceived value and empathy associated with online stores harm the offline stores. In synch with the Theory of Congruence, this study supports the notion that the perceived congruence between product type and retail store type affect their intention to purchase certain product categories at the online stores and to purchase other groups of product categories at offline stores. Further ramifications of these findings are discussed in the paper.     

Retailing strategy for customer growth and new customer attraction

The image that current and potential customers have of a retail store affects the magnitude of patronage at that store. In attempting to increase store patronage, management of a retail store must look to people who already are customers, as well as to people who are not current customers. The appropriate strategy depends upon the dimensions used by people in their evaluation of the store. The hypothesis is tested that the strategy used for gaining increased patronage from customers may have to differ from that used to gain patronage from noncustomers.Field survey techniques were used to collect data from 225 adult females. Respondents evaluated three large retail department stores, which were believed to have distinct images in the minds of female shoppers, on the basis of a set of 12 semantic scales that represented various store attributes. Each respondent indicated frequency of shopping at each store. The data were analyzed by two different multiple discriminant analyses. For the customer growth strategy, the semantic scale measures were used to develop a discriminant model for each store to determine which attributes would be the best predictors of shopping frequency. The analysis relevant to the strategy of new customer attraction differed. First, shoppers were classified as loyal to one store on the basis of their rates of shopping at each store. Second, the 36 attribute measurements (12 scales for 3 stores) were factor analyzed, and three factors were extracted. Those attributes which loaded highest on each of the factors for each store were used as predictor variables in the discriminant analysis.The results of this study indicate that different marketing strategies may be required for increasing sales to existing customers and attracting new customers. In addition, consumers do not necessarily differentiate similar type retail stores on the same dimension.     

Convenience stores in the digital age: A focus on the customer experience and revisit intentions

The digital age has posed challenges to the convenience store (c-store) industry regarding the types of technology investment required to compete in the digital world, and the c-store industry has experienced years of customer count declines. This research empirically examines what store stimuli are important to c-store consumers and how these factors affect the customer experience, satisfaction, and revisit intentions. The data were collected from 502 c-store consumers, and the covariance-based structural equation modeling technique was used to test the hypothesized associations. We found that hedonic customer experience mediates the association between store image, price, service quality, omnichannel, and customer satisfaction. Utilitarian customer experience mediates the association between store image, product assortment, price, and customer satisfaction. In addition, customer satisfaction has a positive effect on the revisit intentions. The findings of the research contribute to the theory building of customer experience of convenience stores. This research reveals that emphasizing hedonic experiences could be the answer to reversing the declining consumer trips in the convenience store industry. Theoretical and practical implications are discussed.     

When nature calls: The role of customer toilets in retail stores

The scarce previous literature indicates that the customer toilet facilities influence shopping value and should be a concern for retailers. However, customer toilets are often inadequately capitalised in retail stores. This study aims to provide a scientifically robust argument about the critical role of customer toilets in retail stores. The explanatory survey data (n=655) from a Finnish out-of-town department store is examined to explore (1) the importance that consumers place on the customer toilets and (2) the effect of toilet usage on actual shopping behaviour. The results support the assumptions of previous literature by suggesting that customer toilets are considered as an important store attribute and, more importantly, the use of toilets is associated with prolonged in-store time which, in turn, increases spending. The findings offer both academic and managerial contribution and encourage academics and practitioners to regard customer toilets as more than mere an unwanted property expense and discover their full marketing potential.     

Sales employees’ polychronicity and sales-service ambidexterity: Mediation of work engagement and moderation of store manager support

Sales employees are encountered with increasing job demands and volatile changes in the retail environment. In particular, the adoption of smart technologies in the retail sector has pressurized sales employees to be versatile and agile in the new marketplace. In this sense, performing multiple tasks within a limited time frame has become an important quality required for sales employees. Grounded in the job demands-resources model, we proposed that sales employees’ individualized resource (i.e., polychronicity) would be positively related to their sales-service ambidexterity though work engagement. We further posited that an organizational resource (i.e., store manager support) synergistically interacted with polychronicity to predict work engagement and subsequent sales–service ambidexterity. To test propositions, we collected multilevel data from 292 sales employees in 43 home-furnishing stores in India. Results demonstrated that the positive association among work engagement, polychronicity, and sales–service ambidexterity was more pronounced when store manager support was high than when it was low. These findings offer implications to overcome challenges faced by retail stores by indicating factors predicting sales–service ambidexterity in retail.     

Store and store format loyalty measures based on budget allocation

In highly competitive environments, such as retail markets, characterized by a growing heterogeneity of demand and the proliferation of new retail formats, cross-shopping behavior between stores and formats is becoming increasingly common. This process makes customer loyalty a key strategic challenge for retailers that want to consolidate their position within the market. To contribute to the analysis and comprehension of this reality, the authors propose and assess different objective indicators of store loyalty, store format loyalty, and intra-format store loyalty based on budget allocation. Specifically, they analyze the role of retail format in observable loyalty patterns in a market. Through an empirical analysis of grocery purchase patterns of a sample of 580 Spanish households, the authors find that diverse objective loyalty indicators based on budget allocations provide very similar information from a practical point of view. They also find that consumers' regular use of various formats (specifically, supermarkets, hypermarkets, and discount stores) for their purchases explain observed disloyalty better than does purchasing in several stores within these formats. The observed patterns reveal that retail formats define differentiated store profiles that relate to the benefits sought in different purchase situations.     

Factors That Affect the Probability That a Food Retailer Sells a Specialty Food Product,Hybrid Striped Bass

ABSTRACT

Survey data from grocery retailers are analyzed to determine if sellers of hybrid striped bass have different socioeco-nomic and demographic characteristics than nonsellers. The results indicate that sellers are more likely to be chain stores, have larger seafood sales per customer, and have upper income clientele. Probit and logit analyses indicate that the probability that a retailer is a seller of hybrid striped bass increases as the firm sells more aquaculture products. The probability also increases if the retailer is a chain store whose average seafood sales per customer exceed $10, and whose annual seafood sales per store exceed $100,000.     

The impact of weather on consumer behavior and retail performance: Evidence from a convenience store chain in China

Despite extensive use of weather data to adjust replenishment and inventory strategies in the retail industry, these companies do clearly know the effect of weather on consumer behavior and retail performance. How does weather affect consumers' purchasing behavior and thus retail performance? We study empirically these questions by analyzing more than 6 million transactions made by more than 1.62 million unique consumers at 146 convenience stores in a convenience store chain in China. We choose sun, rain, temperature, and air quality index as the main weather variables. We use the average number of items per order and the average price of each item in each order as indicators of consumer behavior, and use store daily sales as an indicator of retail performance. We found that under rainy weather, people will buy more products with higher item prices in one order. When temperature rises, people will buy fewer products with a lower item price in one order. In addition, sunny weather and rainy weather have a positive impact on daily sales than cloudy weather. Air quality has a negative impact on daily sales, while temperature has a positive impact on sales. Finally, we study the impact of weather on different product categories. We find that the results depend on the product category characteristics.     

Store-, Market-, and Consumer-Characteristics: The Drivers of Store Performance

Four factors have traditionally been identified in influencing store performance: store-, market-, and consumer characteristics and competition. Given partially conflicting and, in some cases, dated findings in the literature we want to re-assess the effects. In particular, past research has usually considered only two out of the four constructs at any time, which is likely to result in erroneous interpretation of results. We draw upon a unique cross-sectional sample of grocery stores with a wide array of store characteristic, store performance, trade area, and consumer demographic variables. Using structural modeling, our prime interest is to assess the differential impact of store attractiveness, market potential, and socio-economic status on two different store performance measures, while controlling for competitive effects. We find that the market potential of a store is by far the most important driver of store sales performance and sales productivity performance. With one exception, the model and the data support the hypothesized relationships about the direction and the strength of the impact of a store's attractiveness, market potential and socio-economic characteristics of the trade area on a store's performance.     

Customer showrooming behavior,customer orientation,and emotional labor: Sales control as a moderator

Despite the popularity of customer showrooming behavior (CSB), few studies have investigated how this phenomenon affects salespeople's sales behavior. To answer this research call, we explored the effect of CSB on customer orientation (CO), as they are associated with emotional labor (EL) and perceived sales control as a moderator. We gathered data from 397 salespeople in South Korean department stores. Our study showed that CSB affected deep acting negatively by reducing CO. Perceived outcome-based sales control enhances CSB's negative impact on CO. Nevertheless, perceived behavior-based sales control does not moderate the relationship between CSB and CO. Our results indicate that supervising salespeople using outcome-based control only worsens the effect of CSB on salespeople who combat CSB.     

Drivers of customer satisfaction in the grocery retail industry: A longitudinal analysis across store formats

The design of satisfactory shopping experiences remains one of the main challenges for building long-term profitability in modern retailing. Therefore, companies are interested in identifying the key drivers of the service execution that shape customer shopping satisfaction. In this study, we developed a standardized questionnaire for evaluating the shopping experience, and conducted a large study in several grocery stores across different formats during a time span of five years. The resulting rich dataset enabled us to uncover interesting patterns using both individual and store-level analyses. Our results indicate that larger store formats are associated with greater satisfaction levels. When looking at the marginal effects of the various elements of customer service, we found that some specific elements of service execution present significant differences across store formats. In addition, we identified loss aversion on shopping experience, since poor performance impacts more on customer satisfaction than superior performance. Finally, our store-level analysis sheds light on how changes in the service performance determine changes in the shopping experience in the same store. These implied results may guide store and chain managers to evaluate the role of the store execution elements better, and to design the customer shopping experience successfully.