Retailing Notes

Journal of Retailing 85 (2, 2009) 129-144 Understanding Retail Managers’ Role in the Sales of Products and Services Todd J. Arnold , Robert W. Paltrier b,l , Thru Grew c,2 , Run Sahara Spears School of Business, Oklahoma State University, Stillwater, K 74078, United States b University of Washington, Seattle, WA 98195-3200, United States c Bassoon College, Mallory Hall, Bassoon Park, MA 02457, United States d Department of Marketing, University of Miami, Jenkins Room 521, Coral Gables, FL 33124, United States a Abstract This research investigates the influence of retail chain-level activities (e. , district supervisor directives and policies) and store manager behaviors on the sale of physical products versus services. Using data gathered within a U. S. -based retail automotive parts chain, the authors discover that to sell services, especially in competitive environments, store managers should focus on sales planning and transformation leadership behaviors, which accentuate both the long-term planning horizon and the effects of managerial actions. In less competitive environments though, a more transactional approach (e. G. Selling orientation) can be effective for ailing services. Alternatively, to sell products, store managers’ selling effort appears to be the most important driver of success, and a transformation leadership approach may be detrimental when the retailer faces a high level of direct competition. In total, the findings suggest that corporate chain activities, such as the level and clarity of store managers’ goals and supervisor monitoring, influence store manager behaviors, which in turn affect the sale of physical products and services.

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O 2008 New York University. Published by Elsevier Inc. All rights reserved. Keywords: Retail chain-level activities; Store manager behaviors; Service versus product sales Retailing is the second largest industry in the United States in terms of the number of both establishments and employees (winces. Gob). The competitive nature of this massive industry receives considerable attention in marketing literature (e. G. Homburg, Hoer, and Fastbacks 2002; Moore 2003), and potential drivers of successful retail performance and differentiation strategies-including market orientation (Kara, Spinal, and Diesels 2005), generic strategic orientations (Moore 2003), the use of promotions (Aladdin et al. 006), and the service-profit chain (Pritchard and Sylvester 2005)-constitute focal elements of many academic studies. Given this depth of investigation into retail performance, it is remarkable that one of the key players in retailing, the retail store manager, has received considerably less attention Corresponding author.

Tell. : +1 918. 594. 8596; fax: +1 918 594 8281. E-mail addresses: Todd. [email protected] Dude (T. J. Arnold), [email protected] Washington. Dude (R. W. Paltrier), [email protected] Dude (D. Grew), [email protected] Dude (A. Sahara). 1 Tell. : +1 206 543 4348. 2 Tell. : +1 781 239 3902. 3 Tell. : +1 305 284 1770. Han other potential performance determinants. Furthermore, in direct relation to retail store performance, the effect of managerial behaviors on the sale of both physical products and services within a retail setting is only poorly understood.

This article presents and empirically tests a conceptual model that investigates (1) how retail chain activities might affect the behavior of store managers, (2) how store manager behavior in turn influences a given store’s sale of physical products and services, and (3) the influence of a competitive retail environment on the relationship between managerial behaviors and service/product sales. To realize how a retail chain might influence store manager behavior, we investigate the influence of corporate chain activities on store managers.

Corporate chain activities include the directives and policies that a store manager might receive from his or her supervisors; such linkages have received very limited investigation within retailing research. Examining chain activities is critical, however, because retail managers often operate remotely from direct corporate oversight (both geographically and managerially), leaving the implementation of chain activities and directives open to the retail manager’s interpretation. Furthermore, managerial behaviors have a broad impact on 0022-4359/$ – see front matter 0 2008 New York University.

Published by Elsevier Inc. All rights reserved. Dot:10. 1016/J. Cretan. 2008. 09. 006 130 T. J. Arnold et al. / Journal of Retailing 85 (2, 2009) 129-144 potential drivers of store performance, such as strategic implementation, employee motivation, cost management, physical product sales, and service provision. Such factors highlight the importance of the store manager for the development of a successful retail chain and present a stark contrast between the position of the retail anger and the position of a retail clerk (Mason, Mayer, and Ouzel 1984).

This study also seeks to shed light on the relationship between store manager behaviors and the sale of physical products and services, especially as the level of retail competition varies (I. E. , number of direct competitors within the same geographic space). Exploring such relationships is especially relevant in the modern retailing environment, in which the role of service selling is becoming paramount (Bolton, Grew, and Levy 2007; Fang, Paltrier, and Statement 2008; Lush, Fargo, and O’Brien 2007). Retail stores have evolved from providing only physical products that address consumers’ needs (e. G. Pan and Zinnias 2006) to offering a “solution center” that integrates the sale of both physical products and value-added services to attain competitive advantages (Davies, Brady and Hobby 2006; Lush et al. 2007). As Bolton et al. (2007, p. 1) note, “firms that leverage service can build strong relationships with customers that will generate barriers to competition, increase customer loyalty and switching costs, and make market activities more efficient. ” Such an investigation tot a al-selling environment sets the current research apart from a pure service or pure product environment, further highlighting the relevance of the research.

This research therefore addresses relationships among corporate chain activities, retail store managers, and store performance by presenting a conceptual model in which chain activities ?+ retail manager behaviors ?+ product/service sales (see Fig. 1). Synthesizing literature from organizational behavior, sales, services, and retailing research streams, we present and empirically examine a model that highlights key areas of controllable corporate chain activities and store manager conduct that ultimately may drive product and service sales.

Literature Review Extant retail research provides some direction for understanding how chain activities and store manager behavior drive store performance. Lush and Serpent (1990) demonstrate that store manager work behaviors (e. G. , skill sets, motivation) predict not only store manager success but also the success of the retail store. Significantly, this finding moves beyond store manager performance to consider the link between managerial actions and store performance. As Lush and Serpent (1990, up. -86) note, there is “ample conventional wisdom about what makes a store manager successful” but “little [empirical] evidence on whether Job processes or outcomes have any direct or indirect impact on store performance. ” Similarly, Keener, Voyager, and Setters (2002) demonstrate that the way in which a store manager performs his or her Job (e. G. , leadership behaviors) drives objective measures of store performance, such as profits and cost. However, extant research also requires some extensions.

First, objective performance measures related to store performance have been modified in the past decade to include both service and reduce elements. As articles in the popular press (Uric, Kirk, and Quinn 1998; Shallowly and Wise, 2003) and academia (Homburg et al. 2002) recognize, retail store performance depends on not only the profitable sale of physical products but also value-added services. Second, in addition to limited knowledge about the relationship between managerial behavior and the sale of products and services, few researchers consider the importance of retail chain activities in promoting desired managerial behaviors.

Research that comes closest to addressing the importance of chain activities appeared in 1985, when Lucas recommended adding supervisory inconsideration to the mix of variables that might predict managerial performance, thereby introducing the notion that upstream chain activities (I. E. , manager’s perception of the district supervisor’s attempts to promote a positive work environment) might influence a store manager’s behaviors and attitudes. Fig. 1. The influence of corporate chain activities and store manager behaviors on retail store performance. 31 Retail Manager Behaviors. Determinants tot Store Performance Drawing on leadership theory, goal theory, and prior research related to retail, sales, and service management, we identify several primary determinants of store manager performance. Leadership theory suggests three skill sets are important for successful performance: problem solving, solution implementation, and social Judgment (Uniform et al. 2000). The first skill set relates to gathering information, formulating ideas, and constructing solutions appropriate for a given context.

As such, according to previous research in both selling and retailing, problem solving includes sales effort and planning (see Table 1). Sales effort refers to the energy or activity directed award the accomplishment of work (Brown and Peterson 1994), whereas sales planning comprises behaviors directed toward developing and using knowledge about the selling situation to employ available resources effectively (Early, Waxworks, and Press 1987; Susan, Waite, and Kumar 1994).

Sales planning is preferably accomplished as part of a structured and systematic process where time allocation is optimized among a set of necessary activities (Gain and Perpetual 1981). As such, sales planning addresses gathering information and formulating plans and solutions, whereas sales effort pertains to the allocation of personal resources to achieve better performance. Therefore, we draw a parallel between working to achieve integrated problem solutions and the potential store manager work behaviors of effort and planning.

Goal theory also suggests that both effort intensity and effort direction represent primary determinants of goal achievement (Carver and Schuler 1982). Specifically, people can achieve performance goals by increasing their effort and developing effective strategies and plans (Gain and Perpetual 1981; Locke and Lethal 1990). In a complementary sense, sales literature reinforces the suggestion that effort and planning are critical to success (Susan 1986; Susan et al. 994). Although sales literature characterizes working smart as a combination of sales planning and adaptive selling, we focus on the role of sales planning. Adaptive selling certainly is important within a given interaction, yet our interest lies in the skill that a manager possesses in the field of strategic development (planning) and in relation to his or her store’s overall sales of products and services, rather than an ability to adapt within a given exchange (e. . , Rap et al. 2006). The second and third kill sets drawn from leadership theory include the ability to implement viable solutions to contextual problems and the ability to get others to work toward the betterment of the organization (Uniform et al. 2000). On the basis of previous retailing and selling literature (see Table 2), we represent these two skill sets as a manager’s practice of a selling orientation and adoption of a transformational leadership style.

A selling orientation requires a focus on activities that may result in a sale but tend to favor short-term transactional accomplishments rather than the long-term satisfaction of a customer (Saxes and Waite 1982). Favoring a short-term outlook may be preferable in certain contexts (e. G. , simple buying tasks when choosing among limited alternatives; Saxes and Waite 1982). Transformational leadership occurs when a manager fundamentally changes the values, goals, and aspirations of his or her followers (MacKenzie, Foodstuff, and Rich 2001).

In relation to managing customer interactions, a transformational retail manager likely touches on the long-term, mutual benefit tot both the retail store and customers (Bass 1997). Although a selling orientation and transformational leadership style might seem contradictory, previous research (and adhering theory) actually suggests they are complementary and that a successful selling manager should possess both skills and then pass such skills and values down to his or her employees (Bass 1997). As Bass (1997, p. 0, italics added) notes, “successful, effective salesperson and leaders act in the best interests of customers and followers, as well as themselves. ” Therefore, especially in a retailing context, it is most productive to have an appreciation for behaviors that benefit both the customer and the firm, as well as for which specific behavior is required at a given time in a given context. A selling orientation may be required at certain times to create value for both the customer and the firm, whereas at other times, a long-term, relationship- oriented focus is more appropriate (Bass 1997; Guenon 2003).

Therefore, to implement viable solutions to contextual problems and work for the overall betterment of the organization, a complement of both a selling orientation and a transformational leadership style might be required. Store Manager Perceptions of Retail Chain Activities: Determinants of Manager Behaviors The previous section describes store manager behaviors (skills) that may, according to leadership theory and previous detailing and selling studies, directly affect the sales of both physical products and services.

Therefore, we confront the question of how a retail chain might develop and/or maintain these critical behaviors within an individual manager. In developing an answer to this question and to identify the critical retail chain activities that may influence store manager conduct, we employ social exchange theory (SET). Specifically, we suggest two important categories of a retail chain’s controllable activities-supervisory behaviors and managerial goal setting-that may determine the behaviors of a store manager.

Social exchange theory highlights the importance of the relationship between the employee and the organization for predicting the actual behaviors and attitudes that constitute employee performance (Cropland and Mitchell 2005). Therefore, in a retail context, we propose that store managers’ relationships with their direct supervisors embody the retail chain’s controllable activities. Through this relationship, the store manager’s behavioral obligations begin to form. As Cropland and Mitchell (2005, p. 74) state in a review of SET, “Although different views of social exchange have emerged, theorists agree that social exchange involves a series of interactions that generate obligations. Within SET, these interactions are usually seen as interdependent and contingent on the actions of another person. ” Cropland and Mitchell (2005, p. 883) further elaborate on the associated implications for the unique exchange relationship between an immediate supervisor and a subordinate: 132 Table 1 Influence of sales effort and planning on selling performance examples of select research exploring.

Illustrative papers Brown and Peterson (1994) Context Direct salespeople (door-to-door) Residential real estate professionals Factors effecting performance Sales effort Performance outcomes Terminal value of Job satisfaction Financial sales Key findings Sales tort NAS a direct, positive intellect on the value a salesperson receives from work. This effect is not mediated by performance. Working hard positively influences sales; working smart does not. There are no gender differences in working hard, working smart, or sales performance or any relationships among these variables.

Sales effort positively influences financial performance in a U. S. Sales context; adaptive selling positively influences behavioral performance in both U. S. And Chinese contexts. Adaptive selling increases self-rated, manger-rated, and objective measures of performance. Customer orientation increases only self-rated performance. Adaptive selling positively affects sales performance in both “adaptive” and “non-adaptive” selling contexts. Both sales planning and adaptive selling positively affect performance with customers.

Planning has the stronger effect. Information effectiveness positively influences both planning and adaptive behaviors. Effort, quotas, training, and overload all significantly affect performance. Demographic influences become insignificant in the presence of effort and these situational variables. Positive influence of organizational commitment on sales performance is mediated by working hard and, to a lesser extent, working smart. A strong positive relationship exists between working hard and performance.

Sales effort positively relates to both sales performance and salesperson Job satisfaction. Both working hard and working smart positively influence market share; only working t hard positively influences customer service (responsive and reliable service provision from customer perspective). Both working hard and working smart positively influence performance; learning orientation positively influences both working hard and smart, and a performance orientation positively influences only working hard. Cole (2003) Working hard; working smart; gender Fang et al. 2004) Franken and Park (2006) United States and Chinese industrial and retail salespeople Meta-analysis Selling effort and adaptive selling Adaptive selling, customer orientation, and Job satisfaction Adaptive selling Sales planning and adaptive selling Self-reports for achieving both financial and behavioral sales goals Sales performance Caboose et al. (2006) Hunter and Perpetual (2006) Industrial salespeople Industrial salespeople Sales performance Performance with customers and internal role performance James, Lipid’s, and Choc (1994) Industrial salespeople Leone, Randall, and Cote (1994) Retail salespeople Menage (1996) Rap et al. 2006) Industrial salespeople (Turkey) Industrial salespeople Quotas, training, work overload, sales effort, demographic variables Working hard (level of exertion); working smart (well-directed effort); organizational commitment Sales effort Working hard, working smart, knowledge, experience, empowering leader behaviors Working hard; working smart; learning orientation; performance orientation Sales performance Self-reported sales performance Sales performance and Job satisfaction Customer service; customer satisfaction; performance (marker share) Self-reported quantity and quality of reaching sales objectives Susan teal. 994 Table 2 Examples of select research exploring influence of selling orientation and leadership styles on selling performance. Illustrative papers Transformational leadership Betterment (2004) Context Retail salespeople Factors affecting performance Transformational leadership; performance orientation Performance outcomes Change-oriented organizational citizenship behavior Salesperson affective and behavioral responses to manager Key findings Transformational leadership positively influences employee performance beyond expected roles.

This relationship is positively moderated by an employee’s performance orientation. Transformational and transactional leadership styles work in a complementary manner. Transformational effects on affective and behavioral outcomes do not exceed, in general, the effects of transactional leadership style. Transformational leadership (as well as emotional intelligence) could be positively linked to store manager reference. Transformational leadership and consideration have strong and positive influences on a store’s financial performance in small store environments.

In large stores, transformational leadership and transactional leadership influence net sales results. Transformational and transactional leadership indirectly influence salesperson performance (only through role ambiguity). Customer orientation relates positively to sales performance; selling orientation is not significant. Customer orientation positively influences satisfaction with the salesperson, while a selling orientation has a significantly negative influence. Selling and relational orientations are strategic choices that are influenced by context.

Each has a place in selling strategy. Customer and performance orientation positively influence work satisfaction, whereas learning and sales orientations are non-significant. Customer orientation and role conflict positively influence Job performance. Role ambiguity negatively influences Job performance, and selling orientation has no effect. Firms possessing higher levels of competitor orientation, selling orientation, or national brand focus exhibit superior performance relative to customer-oriented firms.

Dubbing’s et al. (1995) linguistics salespeople Transformational and transactional leadership styles Tucked and McFarland (2003) Retail managers Transformational leadership; emotional intelligence Keener et al. (2002) Retail managers (small and large stores) Transformational leadership; consideration; transactional leadership Store manager performance (appraisal scores, sales relative to target sales, supervisor ranking) Store financial performance (net sales and management of costs) MacKenzie et al. 2001) Transformational leadership; transactional leadership; role ambiguity; trust Customer and selling orientation Customer and selling orientation Firm’s selling orientation and relationship orientation Sales, customer, learning, and performance orientations Customer orientation, selling orientation, role conflict, and ambiguity Competitor, customer, and selling orientations and national brand focus Financial sales performance Selling orientation Boles et al. (2001) Goff et al. 1997) Retail salespeople selling both goods and services Retail customer perceptions car salespeople Sales managers (Italy) Self-rated on achieving sales objective Satisfaction with salesperson Guenon (2003) Harris, Owen, and Brown (2005) Real estate salespeople Managerial preference for selling versus relational orientation Work satisfaction Knight, Kim, and Crustiness (2007) Job performance Noble, Shins, and Kumar (2002) Retailer performance 133 134 “[B]cause individuals return the benefits they receive; they are likely to match goodwill and helpfulness toward the party with whom they have a social exchange relationship. That is, an employee’s relationship with an organization influences his or her feelings of obligation toward the organization, so a positive relationship with a erect supervisor should result in the performance of strategically valued behaviors (e. G. Betterment, Brown, and MacKenzie 2 005; Cropland, Prepare, and C The strategic perspective of human resource management reinforces this logic through the claim that supervisor-subordinate relationships should be structured to develop subordinate motivations and behaviors, such that employee actions become instrumental to the implementation of strategy (Betterment 2004; Bowen and Castoff 2004). Therefore, chain activities implemented through the district supervisor should foster store manager behaviors that result in appropriate outcomes.

The remaining question then asks which chain activities formulate the supervisor-manager relationship appropriate to generate behaviors that ultimately lead to enhanced store performance. Previous retail research suggests an answer. Whereas Lucas (1985) defines consideration at a very broad level (I. E. , provision of a positive work climate), Keener et al. (2002) more specifically define it as the degree to which an employee perceives that his or her supervisor acts in a friendly and supportive manner, shows concern, and looks out for his or her well-being.

As a complement to the consideration concept, Keener et al. 2002) find that the extent to which a manager maintains high expectations of an employee and portrays positive emotions also drives performance. Finally, these authors propose, but do not find, that the initiating structure formulated by a manager, or the degree to which a manager defines and structures a subordinates role to attain the organization’s formal goals (e. G. Ensuring that role is well understood, clarifying necessary work, providing feedback, maintaining definite performance standards) influences performance. That is, supervisory support, monitoring, and establishment of clear goals and high expectations primarily influence social exchange. Hypotheses Sales Effort and Sales Planning Both effort and planning appear in investigations of retail and industrial selling contexts (Table 1).

Such considerations should not be surprising, given the sheer number of work hours required of retail managers (Lucas 1985) and the importance of thinking strategically in a retail store context (Lush and Serpent 1990). As Rap et al. (2006) highlight, effective sales planning goes beyond behaviors exhibited during the sales interaction to include planning and predicting suitable ales behaviors and developing an ability to engage in a wide range of behaviors.

In short, the need to strategies while fulfilling the long work hours necessary to manage stores (often 12 h a day or more-see Roads et al. 2002) suggests the overarching importance of the ability to both exert the appropriate level of effort and plan strategically. Effort and planning positively influence performance in an industrial sales context, as Susan et al. (1994) find relative to self-reported measures of individual performance and Rap et al. (2006) demonstrate with regard to the market share a sales preventative can achieve.

Similarly, Hunter and Perpetual (2006) describe the importance of effective planning (e. G. , task personalization, strategic thinking, and anticipation of contingencies) as critical to effective performance. Such findings highlight the importance of planning in relation to resource (I. E. , time) allocation across selling activities in an effective manner (Gain and Perpetual 1981). Such planning can be complemented, again, by a strong work ethic or desire to work hard (Hunter and Perpetual 2006; Susan et al. 1994). Therefore, effective planning enables a