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

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.