Essays on Retail Store Delivery System Design Strategies.

This research develops and empirically tests multiple theory-based models of retail store design strategies. Specifically, we examine the impact that different 'bricks and mortar' (store channel) service delivery system design strategies have on merchandise retailer effectiveness; which we measure in terms of satisfaction, operating, and financial performance. We draw our theory from a multidisciplinary literature base in the areas of organizational design, service marketing and operations strategy, retail management, and analyses of capital markets. The aim is to provide insights for advancing service operations research and to offer retail store managers and designers a method to weigh the tradeoffs associated with specific store design choices. In particular, retailers can test the effectiveness of their store design strategies using these performance models. Towards this end, three essays are developed to address gaps in the extant service operations and marketing literatures with respect to the evaluation of retail store design strategies that focus on customer service encounters and environmental changes. We use a combination of empirical methods, including survey and dynamic panel data analysis techniques, to address the several important issues. First, we conduct a field survey of 175 store managers in the Southeast U.S. to develop and empirically validate multi-item measures of important retail store design factors that can be used by retail store managers to monitor the alignment of the service concept intent to actual store operating design strategies. In the second essay, we construct a retail store design strategy model to show the structural links among store operating complexity factors, customer information requirements, store encounter design choices, and customer satisfaction. We find that the store's perception of customer service encounter information requirements is the primary motivator of customer encounter store design choice - particularly how much stores will use design for customer self-selection or will give task empowerment to front-line store employees. We establish an important link between high customer information requirements and the need to use more front-line employee empowerment to enhance both employee and customer satisfaction. Finally, the third essay applies panel data collected from retail company 10-K reports and the Compustat financial database, to examine retailer store system design responses to product line margin shifts over time. We operationalize measures of store system 'design responsiveness' to evaluate retail firm design performance. Using econometric modeling and dynamic panel analysis techniques, we find that aligning store capital with product margin shifts over time is critical to grow firm profits. Moreover, we find that not aligning store labor requirements with product margins tends to quickly diminish retail firm performance. While the financial benefits of being design responsive are seen only in the short-term, there may also be positive carryover effects of being responsive on forward customer satisfaction scores. Collectively, these essays argue for the importance of aligning store design strategy decisions with retail-specific operational complexity factors to promote the longterm sustainability and survival of retail service firms.