Effects of opening and closing stores on chain retailer performance

Chain retailers continually open stores and close stores to improve their performance. Yet, there are few insights on the effects of store openings and closings on chain retailer performance. The authors examine the effect of changes in opening and closing stores on retailers’ performance. They hypothesize that a chain retailer's market share, advertising intensity, age, and size moderate the effects of opening and closing stores on firm value. They test and find support for the contingent effects of opening and closing stores on firm value using a panel of 1,447 retailer-years of 132 publicly listed US chain retailers from 1998 to 2009. By relating chain retailers’ store openings and closings to their performance, using a contingent framework, the findings extend the marketing literature, which has hitherto not examined the effects of changes in distribution strategy on shareholder value. Insights on the performance implications of opening and closing stores are also useful to chain retailers to achieve superior performance.

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► We examine the effect of changes in opening and closing stores on retailers’ performance.
► We find that chain retailer's market share, advertising intensity, age and size influence the effects of opening and closing stores on firm value.
► The findings have implications for marketing theory and managerial practice.