Hedonic service consumption and its dynamic effects on sales in the brick-and-mortar retail context

Abstract

This study investigates how hedonic consumption experiences within a shopping mall dynamically affect the mall's overall sales performance. Using weekly sales data of various products and services compiled from 2013 to 2019 by a large shopping mall owner, we examine how customers' spending on certain hedonic services (i.e., food, entertainment, and lifestyle) generates immediate, transient, and long-term sales for other product categories. We develop a conceptual framework based on the customer experience literature to predict these effects. A time-series model is then employed to estimate the dynamic effects empirically. The results indicate that the consumption of hedonic services can induce an immediate increase in the sales of certain product categories, such as apparel and necessities. However, while the transient effects of the consumption of food and lifestyle services appear to be positive, those of entertainment services consumption are either negative or insignificant. Furthermore, customer spending on hedonic services is unlikely to permanently change other product categories' sales. This study provides critical insights into how hedonic shopping experiences influence retailers' short- and long-term sales performance. Further, the study's findings can help retailers anticipate how their investment in hedonic elements would alter overall store performance over time.