The Relative Contribution of Loyalty Programs and Store Attributes to Store Engagement and Equity

Within an intense competition in the retail sector, achieving a high store equity may have been be a means to gain competitive advantage for retailers. However, their sole reliance on store attributes may not be sufficient to build a relationship with customers, as prior studies have demonstrated the high likelihood of customers opting to shop at stores with loyalty programs. Accordingly, the current study aims at examining the contribution of loyalty program attributes and store attributes to store engagement and store equity in the context of department stores in Malaysia. Survey responses from 484 department store cardholders are gathered, while Partial Least Square (PLS) – Structural Equation Modeling (SEM) are taken to test the hypotheses. The results show that all hypotheses are supported, while the relative contribution of both attributes towards store engagement and store equity provides insightful implications. From a theoretical perspective, integrating social exchange theory and service-dominant (S-D) logic may offer a significant finding in understanding the effect of loyalty program attributes and store attributes on the relationship between a store and cardholders. From a practical perspective, retailers may need to pay more attention in putting more value in their offerings by incorporating experiential and interactive marketingapproaches to stimulate customer relationships to further enhance store equity