The Retail Value Chain: Linking Employee Perceptions to Employee Performance, Customer Evaluations, and Store Performance

Abstract

The authors test a value chain model entailing a progression of influence from retail employee job perceptions -> retail employee job performances -> customer evaluations -> customer spending and comparable store sales growth. The authors test the model using three matched samples of 1,615 retail employees, 57,656 customers, and 306 stores of a single retail chain. The authors find that three retail employee job perceptions (conscientiousness, perceived organizational justice, and organizational identification) have main and interactive effects on three dimensions of employee job performance (in-role performance, extra-role performance toward customers, and extra-role performance toward the organization). In turn, these performance dimensions exert influence on customer evaluations of the retailer (a satisfaction, purchase intent, loyalty, and word-of-mouth composite). The authors also show that employee perceptions exert a direct influence on customer evaluations, and that customer evaluations affect retail store performance (customer spending and comparable store sales growth). Finally, the authors conduct some simple simulations that show: (1) how changes in employee perceptions may raise average employee performances; (2) how changes in employee performances enhance average customer evaluations; and (3) how changes in customer evaluations raise average customer spending and comparable store sales growth. The authors then show that employee job perceptions and performances “ripple thru the system” to affect customer spending and store sales growth. The authors offer implications for theory and practice.retail value chain, customer service employees, customer satisfaction, customer spending, sales growth

Social Identity and the Service-Profit Chain

“…The link between employee satisfaction and a variety of outcomes (such as customer satisfaction, productivity, and profit) has also been established by Harter et al (2002). In a retail setting, Maxham et al (2007) found that employee performance and perceptions influence customer evaluations of the retailer, which, in turn, affects store performance. Kamakura et.al (2002) provided general support for the service chain but note that firms must be careful to effectively manage both the employee inputs as well as customer perceptions in order to increase profitability.…”

Stakeholder marketing: a definition and conceptual framework

“…Empirical evidence also points to the importance of treating employees with respect and dignity (Ramaswami and Singh 2003), compensating them fairly (Maxham et al 2008;Ramaswami and Singh 2003), and recognizing them for their efforts (Kohli 1985). For instance, a study of merit pay fairness for industrial salespeople found that interactional fairness, which focuses on the social enactment of procedures, is an important determinant of job satisfaction (Ramaswami and Singh 2003).…”

Effects of retail employees' behaviours on customers' service evaluation

“…A number of variables feature prominently: perceived service quality, perceived value, customer satisfaction, and behavioural intentions (Cronin et al, 2000;Maxham et al, 2008). Service quality is how well a delivered service matches customers' expectations of that service (Parasuraman et al, 1988).…”