What is happening to my nearby stores? The own- and cross-effect of a radical store transformation on existing customers

Els Breugelmans (), Marleen Hermans, Manfred Krafft, Mirja Kroschke, Felix Lehmkuhle and Murali Mantrala
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Els Breugelmans: KU Leuven
Marleen Hermans: Radboud University Nijmegen
Manfred Krafft: Chair of Marketing Management, University of Muenster
Mirja Kroschke: Chair of Marketing Management, University of Muenster
Felix Lehmkuhle: Chair of Marketing Management, University of Muenster
Murali Mantrala: University of Kansas

Journal of the Academy of Marketing Science, 2024, vol. 52, issue 1, No 11, 217-238

Abstract: Abstract Brick-and-mortar grocery retailers that undertake major format changes often do so in a staggered rollout and radically transform just one store at a time. This approach begs two questions: What effects does a radical store transformation have on existing customers’ sales at the transformed store (own-effect) and at the chain’s nearby untransformed stores (cross-effect)? Do the effects vary with customer characteristics? These questions are investigated using a quasi-field experiment of a staggered radical store transformation of a German retailer. Conventional wisdom would predict cannibalization of nearby untransformed stores’ sales. However, applying our proposed theoretical framework shows, for this empirical case, a negative own- but a positive cross-effect on existing customers. Further, existing customers who had a greater preference for and shopped more at the old format are most likely to migrate. Thus, nearby untransformed stores can help retain existing customers who may get turned off by a radical store transformation.

Keywords: Quasi-field experiment; Major format change; Own- and cross-effect; Sales performance; Store choice (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11747-023-00946-2

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