Reciprocal Effects of the Corporate Reputation and Store Equity of Retailers

Retailers aim to strengthen their ability to influence consumer behavior by building corporate reputation and store equity: for instance, by making promotional investments. However, little is known about the directionality of consumers’ corporate and store associations, that is, how reciprocal relationships between consumers’ perceptions of corporate reputation and store equity affect store loyalty. To illuminate this issue, we draw upon a study with a cross-sectional design and two studies with longitudinal designs. We find that retail store equity interacts with corporate reputation and is a more important driver of increased loyalty than corporate reputation. We conclude that retailers should pay attention to reciprocal effects, especially in determining the relative allocation of investments across corporate and store levels.