LAUSR

While store remodeling can increase customer sales, not all remodeling efforts are successful. In this study, two treatment stores from a large national retailer are matched with control stores in a field experiment. Even though the cost of remodeling the treatment stores was the same, and the remodeled stores had identical layout, color, furnishing and interior design, one store had a 12% lift in sales while the other had only 1%. We show that a key determinant of remodeling success is the perceived magnitude of change between the initial and final condition of the store. Indeed, customer psychological and sales responses are greater when the perceived magnitude of change between the condition of the store prior to remodeling and the store after remodeling is larger. Importantly, these positive effects continue for as long as 12 months after remodeling. We further find that the profile of customers drawn to the remodeled stores differs based on the perceived magnitude of change, as do the environmental attributes that contribute to customer perceptions of the remodel.