Abstract
Store-in-store agreements occur when retailers lease their retail space to other retailers or brand manufacturers. Although this phenomenon is popular in practice academic research has not offered insight into how it impacts retailers. In addition, extant studies are mute on what retailer-specific characteristics determine the outcome of pursuing this strategy. Results from an event study of 185 announcements of store-in-store agreements show that they increase firm value by an average of 1.06% highlighting the effectiveness of the approach. Further analysis reveals that several characteristics of store-in-store agreements augment firm value. Specifically, positive firm value accrues when retailers enter store-in-store agreements with retail partners that are dissimilar and have a congruent brand image. The results also show that for retailers leasing retail space store-in-store agreements with reputable retailers increases their firm value. Whereas, for retailers renting retail space partnering with a retailer that has a large retail presence augments their firm value.
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