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.

.Figure optionsDownload as PowerPoint slideHighlights
► We examine how an in-store boutique of a new concept brand affects store performance and customer spending.
► At the store-level, the in-store boutique enhances three store performance metrics.
► At the customer-level, customer spending on new concept brand is negatively related to spending on the parent brand.
► Perceived fit between the two brands is positively related to customer spending on both brands.
► At the highest levels of fit, parent brand spending is positively affected; new concept brand spending is negatively affected.