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

Author

Listed:
  • Els Breugelmans

    (KU Leuven)

  • Marleen Hermans

    (Radboud University Nijmegen)

  • Manfred Krafft

    (Chair of Marketing Management, University of Muenster
    University of Auckland)

  • Mirja Kroschke

    (Chair of Marketing Management, University of Muenster
    Otto GmbH & Co KG)

  • Felix Lehmkuhle

    (Chair of Marketing Management, University of Muenster)

  • Murali Mantrala

    (University of Kansas)

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.

Suggested Citation

  • Els Breugelmans & Marleen Hermans & Manfred Krafft & Mirja Kroschke & Felix Lehmkuhle & Murali Mantrala, 2024. "What is happening to my nearby stores? The own- and cross-effect of a radical store transformation on existing customers," Journal of the Academy of Marketing Science, Springer, vol. 52(1), pages 217-238, January.
    • Handle: RePEc:spr:joamsc:v:52:y:2024:i:1:d:10.1007_s11747-023-00946-2
    DOI: 10.1007/s11747-023-00946-2
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    References listed on IDEAS

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