The effect of retail store environment on retailer performance

Retail stouts are segmented using socioeconomic characteristics of the trade area, and it is shown that the effects of stove environment on store performance vary across segments. Store performance is measured by a market-based measure-sales and a productivity-based measure-sales per square feet. The internal stove environment includes the number of checkout counters per square foot of selling area, the number of nongrocery products sold (extent of scrambled merchandising). whether the stove at least doubles manufacturers coupons, whether there is a banking facility, and whether the stove is open for 24 hours. The external stove environment includes the type of neighborhood it is located in. A methodology for predicting stove performance (for existing and new stores) based on the type of environment and stove location by using aggregate secondary data is demonstrated. The proposed models are estimated and validated using Market Metrics geodemographic data for 646 grocery stoves provided by A.C. Nielsen. It is shown how the findings of this retail environment study can be used to offer guidelines to retailers for attaining desired levels of sales and sales per square feet by using readily available data. (C) 2000 Elsevier Science Inc. All rights reserved.