Retailer Brand Equity: Conceptualization and Measurement

In the last two decades, research on brand equity and brand value has flourished. If products and services have often been the focus of brand equity research, a few studies attempt to examine brand equity related to retailers. Yet, Consumer-Based Retailer Brand Equity (CB-RBE) should not be built with a transposition of usual brand equity definitions. Indeed, retailer specific attributes and the rich in-store experiences offered to consumers involve a conceptualization adapted to this particular brand. The paper refines the concept of retailer brand equity and validates a new measure that offers specific insights to academics and practitioners.

Brand equity is defined as the “added value” with which a brand endows a product (Farquhar 1989) or “the enhancement in the perceived utility and desirability a brand name confers on a product” (Lassar et al. 1995). Considering that the store should be viewed as the product in the retail area (Dicke 1992), we define CB-RBE as the value the retailer brings through its stores and the combination of products, services and experiences that is delivered in these outlets.

Since Ailawadi and Keller’s (2004) call for a specific measure of the retailer brand equity, several research have outlined the relevance of both store attributes (e.g., Hartman and Spiro 2005; Pappu and Quester 2006; Burt and Davies 2010) and the value of consumers’ experiences (Babin et al. 1994; Mathwick et al. 2001; Verhoef et al. 2009). Eighteen in-depth interviews were conducted with consumers to explore their shopping goals and experiences. The analysis confirms the influence of the attributes related to the products and services but also the influence of in-store interactions. More specifically, eight dimensions, or variables of the retailer’s marketing mix, emerge and serve the retailer in order to create value and build its equity.

We argue that the concept of CB-RBE is a second-order construct that involves a formative measure with the aforementioned eight first-order dimensions that are reflectively measured. The statistical results confirm the relevance of a second-order model (Reflective-Formative or Type II according to Jarvis et al. 2003) with eight dimensions related to the products and services, to the store and to consumers’ experiences. Since the PLS approach allows to compute the latent variable scores, managerial tool such as the Impact-Performance Matrix Analysis (IPMA) can serve managers to better understand the equity of their brand, to work on each specific dimension in order to increase the added-value and finally to build a strong and unique brand with a high equity (Keller 1993). The analysis reveals that the in-store appeal (0.2305) and the quality (0.2185) and value of the products (0.2063) offer the greatest potential for marketing activities of retailers. In others words, it means that consumers are very demanding on these dimensions. Retailers have to offer a high performance on these dimensions in order to reap the benefits of a virtuous circle by building a strong brand equity, which, in turn, increases the loyalty and the commitment toward the retailer.

This paper takes into account the limitations and research perspectives of several former research done on this topic. More precisely, the mix of experiential and functional dimensions may provide a model devoted to the retailer and a better measure of its equity (Ailawadi and Keller 2004; Hartman and Spiro 2005; Pappu and Quester 2006; Burt and Davies 2010).