Retail service innovations and their impact on retailer shareholder value: evidence from an event study

To survive in the competitive retail landscape, retailers launch service innovations designed to grant additional value to consumers. This study investigates whether and in which circumstances retail service innovations create shareholder value, using stock returns to capture investors' point of view. An event study is used to analyze a broad, varied set of 350 service innovation announcements by publicly listed retailers. The study shows that the customer value benefit(s) aimed for by the retail service innovation (i.e., its level of convenience and engagement) has an impact on shareholder value. Moreover, this impact is contingent upon the stage of the consumer purchase process that the innovation targets, and upon the hedonic or utilitarian nature of the products offered by the retailer that initiates the innovation. The impact on retailer shareholder value is more positive for service innovations high on convenience that speed up and simplify the shopping process, when implemented at the purchase stage or by retailers offering utilitarian products. Service innovations high on engagement that focus more on non-transactional initiatives instead fare well in the post-purchase stage.

Automated summary

The study finds that the impact of retail service innovations on shareholder value depends on the level of convenience and engagement, as well as the consumer purchase process stage and product nature targeted by the innovation. Service innovations high on convenience have a more positive impact on retailer shareholder value when implemented at the purchase stage, while service innovations high on engagement perform well in the post-purchase stage.