The effects of mall renovation on shopping values, satisfaction and spending behaviour

Journal of Retailing and Consumer Services 21 (2014) 610–618

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The effects of mall renovation on shopping values, satisfaction and spending behaviour Jean-Charles Chebat a,c,n, Richard Michon b, Narjes Haj-Salem a, Sandra Oliveira a a

HEC Montreal, 3000, Chemin de la Côte-Sainte-Catherine, Montreal, QC, Canada H3T 2A7 Ted Rogers School of Management, Ryerson University, 350 Victoria Street, Toronto, ON, Canada M5B 2K3 c Technion-Israel Institute of Technology, Israel b

art ic l e i nf o

a b s t r a c t

Article history: Received 7 January 2014 Received in revised form 23 April 2014 Accepted 23 April 2014 Available online 23 May 2014

Managers renovate malls to keep up with newer shopping centres and retail formats that erode traffic. This paper investigates shoppers' psychological processes that trigger changes in spending behaviour in the renovated mall. Renovation has a direct impact on the perception of the mall atmosphere and an indirect one on shoppers' hedonic and utilitarian values, satisfaction, and spending. Renovation affects shoppers' spending through the perception of utilitarian shopping benefits. This study is the first of its kind to explore the effects of mall renovation on shoppers' spending. It focuses on the effect of renovations on shoppers' holistic perception of the mall atmosphere. The hedonic benefit contributes more to shoppers' satisfaction than does the utilitarian value. However, the utilitarian value affects shoppers' spending while the hedonic value does not. & 2014 Elsevier Ltd. All rights reserved.

Keywords: Shopping mall Atmosphere Shopping values Shopping behaviour Mall renovation Spending behaviour

1. Introduction Shopping malls begin to decline “at about age 15 in the absence of substantial addition or renovation” (Flynn, 1987, p. 120). Managers renovate malls to keep up with newer shopping centres and retail formats that erode traffic. Strategic deterrence can explain shopping centre renovations and expansion decisions (Clapp et al., 2011). The law of commercial gravity (Huff, 1963) is a constant reminder that newer and larger shopping centres are likely to displace traffic according to their attraction power (size) and their relative proximity. The International Council of Shopping Centers (ICSC) found that consumers with similar shopping trips and trip durations spend less money per visit in malls surrounded by competition within a 20-mile radius than in malls without such a competition (Lambert and Connolly, 2001). As new indoor malls, entertainment, and lifestyle shopping centres open, retail tenants are also likely to migrate along with shoppers. Rental income in real terms gradually decreases over time and renovation costs keep increasing. A mall is due for renovation when the marginal cost of renovating equals the marginal loss of rental income (Wong and Norman, 1994).

n

Corresponding author. Tel.: þ 1 514 340 6846; fax: þ 1 514 340 6097. E-mail addresses: [email protected] (J.-C. Chebat), [email protected] (R. Michon), [email protected] (N. Haj-Salem), [email protected] (S. Oliveira). http://dx.doi.org/10.1016/j.jretconser.2014.04.010 0969-6989/& 2014 Elsevier Ltd. All rights reserved.

The face lifting of a mall combines numerous changes ranging from resurfaced parking spaces, a brand new facade, redesigned entrances, revamped common areas, spacious corridors, modernised lighting, improved signage, fluid shopper circulation, enhanced key tenant's visibility, and reorganised store layouts (Feldman, 2004). For DTZ (http://www.dtz-ugl.com), a Chicago-based worldwide property manager, mall refurbishing increases the value of the retail space, improves the functionality, and reposition the facility in the market through its development and change of tenant-mix (DZT, 20012). Increased revenues from refurbished malls are derived from both higher shopper traffic and enhanced shopper spending. This paper investigates shoppers' psychological processes that trigger changes in spending behaviour. The theoretical model pinpoints the mediating constructs hypothesised to relate the renewed environment to incremental spending. The model was tested by administering a questionnaire to shoppers visiting a mall before and after the completion of the renovation works. Perceived shopping benefits and satisfaction mediate the relationship between the renovated mall atmosphere and spending behaviour. This study is the first of its kind to explore the effects of mall renovation on shoppers' spending. It focuses on the effect of renovations on shoppers' holistic perception of the mall atmosphere. Hedonic and utilitarian shopping values do not play symmetrical roles. The hedonic benefit contributes more to shoppers' satisfaction than does the utilitarian value. However, the utilitarian value, which has been widely ignored in the literature, affects shoppers' spending while the hedonic value does not.

J.-C. Chebat et al. / Journal of Retailing and Consumer Services 21 (2014) 610–618

H1 Utilitarian Value

H3a

H2 Renovation

H4a H5

Mall Atmosphere

Satisfaction

H3b

Spending

H4b Hedonic Value

Fig. 1. Theoretical model.

The conceptual framework outlines that (a) the renovated mall mediates the holistic perception of ambient factors making up the mall atmosphere, (b) the perceived mall atmosphere influences hedonic and utilitarian shopping values, (c) shopping values mediate shopper satisfaction, and (d) satisfaction, in turn, impacts shoppers' spending (Fig. 1). The model is tested in situ, using a quasi-experimental Partial Least Square model (PLS), with a before (n ¼262) and after (n ¼283) sample.

2. Conceptual framework 2.1. Effects of mall renovation on spending The empirical findings regarding the effects of renovations on economic performances point in opposite directions. On the one hand, Gomez et al. (2004) found that renovated stores “show higher changes in sales performance.” LeHew and Fairhurst (2000) also report convergent findings: “Renovating a centre benefits tenants as well as mall owners. Sales volume and market share improve.” Renovation was recommended as one key solution to improve shopping malls financial situation (Carlson, 1991). This strategy is based on the general knowledge mall managers have, as reported in the trade press. On the other hand, the International Council of Shopping Centres (ICSC) reports that mall refurbishment completed in the prior 12 months has no effect on the number of visits or the amount of spending per trip. Duration of shopping trips in renovated malls is slightly longer than in those that have not been renovated. Lambert and Connolly (2001) conclude that shoppers' response is not “overwhelmingly favourable to renovation and expansion activities.” More importantly, they suggest that other factors such as tenant mix and the presence or absence of some retailers may play a bigger role. Effective mall renovation requires more than cosmetic changes. “Attracting the right tenant mix is just part of this turnaround strategy” (Feldman, 2004) to create a new shopping ambiance. H1. Mall renovation has no direct effects on shoppers' spending. Its influence is mediated by the perception of the mall atmosphere, shopping values and shopper satisfaction. 2.2. Renovation affects the mall atmosphere A major purpose of renovation is to improve the ambiance of the shopping venues. Though this relation is intuitively obvious and vitally important to retailers, no academic research has so far dealt with it. In contrast, the trade literature underscores articles where consultants, mall and retail managers demonstrate a high level of enthusiasm for specific renovations that they assume will enhance retail atmosphere. For example, renovation enhances “a

611

comfortable atmosphere”, makes “it inviting for shoppers to stay longer.” (Liddane, 2013), creates “a more exciting and inviting atmosphere for shoppers” (van den Berg, 2003), and gives malls “a magical ambience at night that it previously lacked” (Chain Store Age, 1992). Mall renovation makes “the shopping centres more attractive to the general public by creating a more trendy atmosphere” (Bamrung, 2003), and increases “the atmosphere of festival marketplace” (Knapschaeffer, 1990). Moreover, renovation improves “the circulation of the mall” (Bodamer, 2010). The environmental psychology paradigm (Mehrabian and Russel, 1974) best explains the effect of the mall atmosphere on shoppers' response. Environmental psychologists suggest that shoppers are likely to react in two contrasting forms of behaviour: approach and avoidance. Approach is a desire to stay, explore and affiliate, and avoidance is the opposite. Shoppers in a state of approach behaviour are more likely than others to extend their shopping trip and expose themselves to additional buying opportunities. In a pleasing ambiance, shoppers are also in a better mood. Therefore, they are subject to arousal and more likely to favourably process ambient cues. Obermiller and Bitner (1984) observed that shoppers who viewed retail products in an emotionally pleasing environment evaluated products more positively than consumers who viewed the same products in a less pleasant atmosphere. The overall renovated mall design is expected to generate excitement (Wakefield and Baker, 1998). Shoppers perceive the new mall environment in a holistic process rather than piecemeal (Mattila and Wirtz, 2001; Michon et al., 2005; Gilboa and VilnaiYavetz, 2013). Atmospheric factors should be regarded as a “basket” of environmental cues that are perceived as a whole (Wakefield and Baker, 1998).

H2. A successful mall renovation favourably mediates the holistic shopping ambiance.

2.3. Mall atmosphere affects shopping values Shoppers' response to the mall environment will manifest itself through hedonic and utilitarian shopping values or benefits (Babin et al., 1994). The hedonic shopping value accounts for the emotions associated with shopping; the pleasure of shopping, escape from daily routine, being immersed in exciting new products, and spending time in an enjoyable way. The utilitarian value is goaldirected, task-oriented, and successfully completed. McGoldrick and Pieros (1998) note that consumers with strong shopping motives experience more pleasure and arousal. Malls enhance hedonic shopping by making shopping a relaxing, self-gratifying, entertaining and an emotional activity (Westbrook and Black, 1985; Dawson, Bloch Ridgway, 1990; Babin et al., 1994; Kang and Kim, 1999; Rintamäki et al., 2006.; Millan and Howard, 2007; Teller and Reutterer, 2008). Design, personal space, décor, lighting, ambient music, and scents generate emotional responses and positively influence shoppers' desire to stay in the mall (Dennis, 2005, p. 46; Donovan and Rossiter, 1982; Wakefield and Baker, 1998). Successful mall refurbishing is expected to help shoppers achieve their shopping objectives. The utilitarian shopping value is driven by a sense of accomplishment or a goal to obtain sought-after goods during the shopping trip (Olsen and Skallerud, 2011). Mall store layout and reshuffled tenants improve merchandising. Product and brand availability has an impact on the utilitarian value (Cottet et al., 2006). Easier mall access and effective signage facilitate wayfinding (Dennis et al., 2010). The reduction of the search time, fatigue and psychological costs improves the utilitarian shopping value which impact on shoppers' perceived mall equity and loyalty (Chebat et al., 2009).

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H3a. An improved mall atmosphere increases the hedonic shopping value. H3b. An Improved mall atmosphere increases the utilitarian shopping value. 2.4. Effect of shopping values on shoppers' satisfaction The retail literature emphasises a strong link between shopping values and shoppers' satisfaction. Some studies show that both hedonic and utilitarian shopping values affect satisfaction (e.g., Eroglu et al., 2005a). Other researchers observe that the hedonic shopping value influences satisfaction to a greater extent than the utilitarian value (Cottet et al., 2006). Jones et al. (2006) note that satisfaction is more likely to be influenced “by the non-productrelated, hedonic aspects of shopping than traditional utilitarian orientations.” Similarly, Chang and Fang (2012) posit that, in department stores, the “hedonic shopping value has a greater effect on satisfaction and word-of-mouth than utilitarian shopping value.” Conversely, Babin et al. (2007) found that the utilitarian shopping value affects satisfaction more than the hedonic counterpart in the case of gift shopping. The authors reason that “gift shopping may be more like work than other shopping trips” as already pointed out by Babin and Attaway (2000). Mägi (2003) writes, “the economic shopping orientation was the motivational factor with the largest overall impact on customer share.” The extent literature points in two directions: H4a. The hedonic value increases shoppers' satisfaction visiting the renovated shopping mall. H4b. The utilitarian value increases shoppers' satisfaction visiting the renovated shopping mall. 2.5. Effects of satisfaction on shoppers' spending The effect of satisfaction on shoppers' spending may seem like a truism. A number of studies contradict common sense. While the predecessors of satisfaction have been studied extensively, the effects of satisfaction on spending have not received the attention they deserve in spite of their obvious importance. Anderson and Sullivan's (1993) seminal study looked at the antecedents to and consequences of customer satisfaction. Their sample consisted of some 22,000 consumers patronising more than a hundred stores and services in Sweden. They confirmed the basic tenet of the Customer Satisfaction-Sales Performance Paradigm (CSSP) that satisfaction enhances spending. Other studies tend to confirm the commercial and financial effects of satisfaction. Lee and Hwan (2005) conclude their research on Taiwanese customers in the financial services, saying that “satisfaction is an antecedent of profitability.” A similar U.K. study (Yeung and Ennew, 2001) “supports the belief that customer satisfaction can and does have a measurable impact on financial performance.” Some authors propose nuanced findings related to the effects of satisfaction on sales. In a service setting, Kamakura et al. (2002) concludes that satisfaction is a necessary but not sufficient condition for financial success: “it is important that the branch manager not only be efficient in achieving superior satisfaction (…) but also be efficient in translating such attitudes and intentions into relevant behaviours.” Similarly, for Mittal et al. (2005), “the association between customer satisfaction and long-term financial performance is positive and relatively stronger for firms that successfully achieve a dual emphasis, successfully achieving both customer satisfaction and efficiency simultaneously.” Managers tend to consider as granted the effects of satisfaction on financial performance (Mägi, 2003). They should not because most

studies focus on purchase intentions rather than actual purchases (e.g., Jones et al., 2000; Taylor and Baker 1994). Significant portions of customers who claim to be highly satisfied with a specific store do not consider this store as their destination of choice (Mägi, 1995). In the same vein, Mägi (2003) found that the economic shopping orientation was the motivational factor with the largest overall impact on customers' “share-of-visits” and “share-of-wallets.” Similarly, Keiningham et al. (2008) showed that, unexpectedly, “customers' overall level of satisfaction was not tied to changes in sales.” Bernhardt et al. (2000) point out that most CSSP-related studies rely on cross-sectional analysis for statistical inference, not on firm-specific data as did a few studies (e.g. Bernhardt et al., 2000; Rucci et al., 1998; Anderson and Mittal, 2000). Gomez et al. (2004) pertinently stresses, “[I]t is especially desirable to use firm-specific data so the linkages between satisfaction and performance are examined in the context of a firm's strategy.” As a “store of stores” (Underhill, 2004), the shopping mall provides firm-specific data before and after renovation, as recommended by Gomez et al. (2004). However, the statistical nuances pointed out by Gomez et al. (2004) related to the asymmetry and non-linearity of the relation cannot be tested here since we have a two-stage process of improvement. The commonly accepted hypothesis that satisfaction positively impacts purchases is tested: H5. Satisfied shoppers in the renovated mall are more likely to spend more. 3. Methodology The evaluation of the effects of renovation on mall shoppers was tested with a before-and-after method. This methodology used in previous retailing studies (e.g. Downs and Haynes, 1984) can “measure the impact of renovations and tenant additions” (Wakefield and Baker, 1998). As Downs and Haynes (1984) suggest, quasiexperimental design “provides a high level of external validity.” The contrast between before and after mall renovation is similar to what was done by Chebat and colleagues in other atmospheric studies, contrasting the absence or presence of music (Morrin and Chebat, 2005; Eroglu et al., 2005a), and the absence or presence of scents (e.g., Chebat and Michon, 2003; Chebat et al., 2009). In this current research project, special attention is paid to exogenous factors such as socio-demographics and seasonality to isolate the specific effects of the renovation. 3.1. Sampling and data collection The data were collected in a major North American regional shopping mall in 2000. According to the mall owner, about seven million people visit the mall every year to window shop or purchase merchandise and services. This mall includes 150 shops, restaurants, services and cinemas. After 36 years, property owners were forced to admit that the mall had lost some of its lustre. Adding pressure, a new 200-store plus lifestyle shopping centre was about to be built within a few kilometres in a highly central location. The renovation project modified the architecture of the building, parking spaces, exterior and interior signage, lighting, and wall decorations. Based on the mall directory, the refurbishment led to a significant tenant rollover, attracting new fastfashion and cheap chic international chains. Using the mall intercept technique, 565 self-administered questionnaires consisting of 21 items, were collected by trained M.Sc. marketing students. There were 545 usable questionnaires in the combined dataset. The before (n¼ 262) and after renovation sample (n ¼ 283) was flagged with a dummy variable. The before and after data collection took place in April and September. Each mall intercept lasted a full week administering questionnaires in

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Table 1 Socio-demographic profiles. Before renovation

After renovation

Total

Pearson Chi-square

df

Sig.

Gender Female Male

61% 39%

56% 44%

58% 42%

1.785

1

0.181

Age 18–24 yrs 25–34 yrs 35–44 yrs 45–54 yrs 55–65 yrs 65 yrsþ

39% 15% 11% 13% 12% 10%

42% 17% 9% 12% 13% 6%

40% 16% 10% 13% 12% 8%

4.724

5

0.450

Marital status Married Single Other

40% 45% 15%

34% 49% 17%

37% 47% 16%

1.611

2

0.447

74%

77%

76%

1.018

3

0.797

9% 12% 4%

9% 10% 4%

9% 11% 4%

3% 34% 28% 33% 1%

3% 33% 33% 32%

3% 34% 31% 32% 1%

4.307

4

0.366

40% 30% 22% 3% 5%

43% 32% 14% 5% 7%

41% 31% 18% 4% 6%

5.62

4

0.229

262

283

545

Number of children None under 18 yrs One Two Threeþ Education level Primary Secondary Post-secondary University Not specified Main occupation Working Studying Retired Looking for work At home N Usable quest

proportion of traffic by day of week and time of day. The two survey weeks were considered by property managers as typical of the mall activity. Regional twelve-month productivity seasonal indices for malls are the same for the months of April and September (International Council of Shopping Centers, 2013). The before and after cohorts has similar socio-demographic profiles (i.e. gender, age, marital status, number of children under 18 years old, education and occupation). None of the chi-square statistics in Table 1 is significant despite the size of the cohorts. In other words, the renovated mall did not attract different shopper segments.

3.2. Construct measures All measurement scales are drawn from the academic literature for their relevance and their psychometric validity. Table 2 describes all constructs and measurement items. The mall atmosphere scale is derived from Fisher (1974) who identified factors affecting environmental quality and perceived crowdedness. Hedonic and utilitarian shopping values are borrowed from Babin et al. (1994). Items measuring shopper satisfaction are taken from Maxham and Netemeyer (2002). Following Bagozzi and Yi (1989), the “before and after” renovation condition is represented as a dummy (0/1) variable, as in a quasi-experimental setting. Because there are only two conditions, this procedure is more parsimonious than a multigroup model. As hypothesised (H1), the mall renovation has no direct effect on shopper spending. Average spending before and after renovation were $65.13 (sd ¼102.19) and $71.35 (sd ¼97.92), respectively.

However, it is hypothesised the mall renovation significantly affects mediating constructs that influence shopper spending. The distribution of shoppers' spending (the dependent variable) being strongly leptokurtic, the variable was log-transformed [ln (x þ1)] to account for shoppers with zero purchases. Twentyfour cases with extreme spending values were deleted from the analysis. Table 1 outlines that all demographics variables (e.g. age, marital status, children at home, education level and occupation) are invariant in both before and after samples. However, gender and age groups described in Table 1 are used as covariates since they are known to moderate the effects of hedonic and utilitarian shopping values, and shopper overall satisfaction (e.g., Carpenter and Balija, 2010; Devadas and Manohar, 2012; Pan and Zinkhan, 2006). Age and gender are considered as proxies for the family life cycle. In addition, the hedonic shopping value is more likely to be prevalent among females, and younger and older shoppers (Bloch et al., 1994; Jackson et al., 2011). On top of constructs and measurement items, Table 2 also outlines outer factor loadings, cross-loadings, composite reliability and average variance extracted. Outer loadings were computed from a confirmatory factor analysis using SmartPLS (Ringle et al., 2005). The rationale for using PLS is discussed in the next section. Composite reliability (Raykov, 1997; Werts et al., 1974) is preferred to Cronbach's alpha (1951) that is believed to underestimate scale reliability. Fornell and Larcker (1981) suggest convergent validity if the average variance extracted (AVE) is at least 0.50, showing that the explained variance is greater than the measurement error. The loading of each indicator is expected to be greater than all of its cross-loading (Chin, 2001).

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Table 2 Measurement scales with factor loadings. Rhoa

Atmosphere (Fisher, 1974) Not lively-lively Dull-bright Drab-colorful Depressing-cheerful Uninteresting-interesting

AVEb

Atmosphere Hedonic value

Utilitarian value

Satisfaction

0.952 0.768

Boring-stimulating Hedonic value (Babin et al., 1994) This shopping trip was truly a joy. This shopping trip truly felt like an escape. I enjoyed being immersed in exciting new products. Compared with other things I could have done, the time spent shopping was truly enjoyable.

0.825 0.54

Utilitarian value (Babin et al., 1994) While shopping, I found just the item(s) I was looking for. I couldn't buy what I really needed (reversed). I accomplished just what I wanted to on this shopping trip.

0.759 0.523

Satisfaction (Maxham et al., 2002) I would recommend this Mall to my friends. This Mall is a good place to shop. I am satisfied with this Mall.

0.956 0.878

0.832 0.886 0.893 0.873 0.872 0.903

0.288 0.354 0.382 0.382 0.409 0.418

0.194 0.211 0.221 0.240 0.254 0.213

0.340 0.421 0.487 0.473 0.478 0.471

0.366 0.227 0.303 0.337

0.783 0.675 0.740 0.741

0.324  0.020 0.205 0.189

0.323 0.239 0.276 0.260

0.220 0.126 0.196

0.235 0.061 0.232

0.895 0.537 0.693

0.256 0.075 0.223

0.457 0.461 0.513

0.340 0.325 0.390

0.208 0.259 0.298

0.906 0.945 0.959

Factor loadings in bold face are outer loadings while those in regular font are cross-loadings. a b

Raykov0 s (1997) composite reliability rho (ρ). Average variance extracted (Fornell-Larcker, 1981).

Table 4 Total effects.

Table 3 Construct correlation and discriminant validity. Atmosphere Hedonic value Atmosphere Hedonic value Utilitarian value Satisfaction Spending

Utilitarian value

0.876a 0.427

0.736a

0.255

0.261

0.723a

0.510 0.028

0.377 0.067

0.275 0.335

Satisfaction Spending

0.937a 0.120

1

a Square root of average variance extracted (Fornell and Larcker, 1981). Spending is measured by a single indicator.

Renovation

.255 (5.933)

.189 (4.119)

Mall Atmosphere

Satisfaction .427 (10.450)

0.138 0.059 0.035 0.026 0.010

0.043 0.019 0.013 0.009 0.005

3.208 3.039 2.783 2.810 2.215

Atmosphere-Hedonic value Atmosphere-Utilitarian value Atmosphere-Satisfaction Atmosphere-Spending

0.427 0.255 0.188 0.075

0.041 0.043 0.030 0.025

10.450 5.933 6.250 3.067

0.328  0.020

0.043 0.044

7.566 0.460

Utilitarian value-Satisfaction Utilitarian value-Spending

0.189 0.330

0.046 0.043

4.119 7.693

Satisfaction-Spending

0.028

0.050

0.553

Age-Spending Gender-Spending

0.094 0.021

0.039 0.042

2.398 0.496

Spending .094 (2.398)

.328 (7.566)

Hedonic Value

Coefficient Standard deviation T statistics

Renovation-Atmosphere Renovation-Hedonic value Renovation-Utilitarian value Renovation-Satisfaction Renovation-Spending

Hedonic value-Satisfaction Hedonic value-Spending

.330 (7.693)

Utilitarian Value .138 (3.208)

Total effects

Age Covariate

Paths in italic represent indirect effects, extracted from the PLS output.

Fig. 2. PLS final model.

Discriminant validity is shown in Table 3 based on the methodology proposed by Fornell and Larcker (1981). There is discriminant validity when each construct AVE is greater than its shared variance. The square root of the average variance extracted should be greater than the absolute value of the standardized correlations with other constructs.

3.3. Model The conceptual model was developed through a partial least square model focusing on one dependent variable, shoppers' spending. The model serves two purposes. First, it determines if the mall renovation is associated with shopper's spending. Second,

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615

Table 5 Testing for mediation and indirect effects. Explained variable (Y)

Explanatory variable (X)

Mediators

Covariates

Spending

Renovation

Atmosphere Hedonic value Utilitarian value Satisfaction

Age Gender

Direct effect of X on Y:

Effect ¼0.2739, t ¼1.4383, p¼ 0.1511

Indirect effects Indirect effect of X on Y:

Renovation-Atmosphere-Utilitarian value-Spending Effect ¼0.0210, Bootstrap SE ¼ 0.0131, LLCI ¼0.0048, ULCI ¼ 0.0638

Model summary:

R¼ 0.3535, R-sq ¼0.1250, F¼ 8.4062, df1 ¼7, df2 ¼ 412, p ¼ 0.0000

Estimated with Hayes' (2013) PROCESS.

it identifies the processes through which shoppers respond to the renovated atmosphere. While the covariance-based structural equation model (CBSEM) is regarded as state-of-the-art for confirmatory analysis, partial least square (PLS-SEM) is mainly used for theory development and predictions. Rather than trying to minimise the errors in the covariance matrix, the PLS algorithm maximises the explained variance of the dependent variable (Hair et al., 2011), in this case, shoppers' spending. SmartPLS 2.0 (Ringle et al., 2005) is run in two stages; first, a measurement model and, then, a structural model (Henseler et al., 2009). The model is based on the centroid weighting algorithm because it is well adapted to cases where the manifest variables in a block are strongly correlated (Vinzi et al., 2010). A nonparametric bootstrap procedure is used to estimate the statistical significance of factor loadings and path coefficients (Chin, 2001; Davison et al., 2003). Bootstrapping allows PLS to accommodate smaller sample size (Goodhue et al., 2006)

4. Research findings 4.1. Direct effects Results from the PLS sample bootstrap are presented in Fig. 2, for direct effects, and in Table 4, for total effects. Mall renovation positively influences the perception of the mall atmosphere (0.138, t¼ 3.208), in support of H2. In turn, the mall atmosphere has a significant impact on both utilitarian (0.255, t ¼5.933) and hedonic (0.427, t¼ 10.450) shopping values. This finding verifies . Both utilitarian (0.189, t¼ 4.119) and hedonic (0.328, t ¼7.566) shopping values affect shopper satisfaction, as posited by . Shopper satisfaction has no significant bearing on spending (0.028, t ¼0.553), thus rejecting H5. Of the two covariates that may influence shoppers' spending, only age (0.094, t ¼2.398) appears to be significant. While shoppers' satisfaction fails to impact spending, the model alternatively explores the direct effects of shopping values on shoppers' spending. The hedonic shopping value affects shoppers' satisfaction but has no influence on shoppers' spending. On the other hand, the utilitarian shopping value (0.330, t¼7.693) has a significant impact on shoppers' spending. 4.2. Indirect and mediation effects Mall renovation has significant indirect effects (Table 4) on the potential mediators: hedonic (0.059, t ¼3.039) and utilitarian (0.035, t ¼2.783) shopping values and shoppers' satisfaction (0.026, t¼ 2.810). Renovations also have a significant impact on

the dependent variable, shopper spending (0.010, t ¼2.215). The perception of the mall atmosphere indirectly influences shopper satisfaction (0.188, t¼ 6.250) and shopper spending (0.075, t¼3.067). The significant effect of the mall renovation (t¼2.215) on spending is mediated by the perception of the mall atmosphere and the utilitarian shopping value. Indirect and interaction effects were tested using Hayes' (2013) PROCESS. The latter is a computational tool for path analysis-based moderation and mediation analysis as well as their combination as a “conditional process model” (Hayes, 2013). PROCESS generates direct and indirect effects in mediation and mediated moderation models, conditional effects in moderation models, and conditional indirect effects in moderated mediation models with a single or multiple mediators. PLS bootstrapped latent means constructs were entered in Hayes' (2013) PROCESS to validate indirect and interaction effects. Mediation testing takes the form of a general linear model where shopper spending is the dependent variable (Y) and mall renovation in the explanatory variable (X). Mall atmosphere, shopping values and shopper satisfaction are mediating variables, whilst age and gender are covariate. The overall model summary (Table 5) highlights a significant regression (f¼8.406, df1 ¼7, df2 ¼412, p¼0.000), with a coefficient of determination of.125. The GLM shows that the direct effect of the mall renovation on shoppers' spending is not significant (effect¼0.275, t¼ 1.438, p¼0.151). However, Hayes' model confirms that the indirect effect of the mall renovation on shoppers' spending is mediated by the mall atmosphere and the utilitarian shopping value (effect¼0.021, lower confidence interval¼ 0.005, upper confidence interval¼ 0.064, thusa0). The path linking renovation (before and after), the mall atmosphere, the utilitarian value and shoppers' spending is significant and convergent with the PLS model.

5. Discussion The tested model illustrates that the mall renovation has no direct effect on shoppers' spending. The physical transformation of the shopping centre will only be successful if shoppers perceived a more pleasant and congruent shopping atmosphere. As reminded by the environmental psychology theory, a favourable shopping environment will stimulate shoppers to process more information and explore further. Hedonic and utilitarian shopping values summarise the affective benefits from the shopping experience. Shoppers are more likely to be satisfied from their shopping trip and spend more money. Research findings underscore that shoppers' hedonic values, satisfaction and spending are not necessarily associated. Shopper

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spending is dependent on the success of the shopping trip, as expressed in the utilitarian shopping value. The discussion below highlights the mediating mechanism of the mall renovation on shopper spending. 5.1. Mediation effects Shopping values mediate the relation between the mall atmosphere and shopper satisfaction. This effect was equally observed in the case of Korean female shoppers (Chang et al., 2004). Shopping values were found to mediate the relationship between crowding, a central element of retail atmospherics, and satisfaction (Eroglu et al., 2005a). A similar mediation effect was shown between ambient factors and e-shoppers' satisfaction (Warrington, 2002). From a statistical perspective, the fact that renovation has no direct effects on spending does not preclude the possibility of mediation. As discussed by Zhao et al. (2010) “[T]here need not be a significant zero-order effect of X on Y, rxy, to establish mediation.” The absence of a significant relation between renovation and shopper spending combined with the significant product [renovation ) atmosphere  utilitarian values ) spending] means that the utilitarian value constitutes an “indirect only” mediation (Zhao et al., 2010). Zhao et al. (2010) also point out that in the presence of such mediation; other mediators are “unlikely.” In other words, the mediation of the utilitarian shopping value likely explains the process through which renovation affects sales. 5.2. Impact of shopping values Research should take into consideration the utilitarian shopping value as a mediator of the effects of retail atmospheric cues on shoppers' response. Utilitarian components may be less glamourous than hedonic ones but are more cost efficient. Store and mall atmosphere have generally been understood to affect emotional responses or the hedonic shopping value (Dennis et al., 2002). Retail and mall atmospherics also stimulate the utilitarian shopping value. Shoppers are likely to be attracted to shopping venues where their resources (time, money, search and psychological costs) are minimised. Hedonic and utilitarian shopping values do not play symmetrical roles. The hedonic value contributes more to shoppers' satisfaction, and the utilitarian value affects shoppers' spending. Task-oriented shopping contradicts the well-established hedonic shopping concept that may make sense in some super malls or some flagship stores. In more modest and common regional malls, such as the one studied here, task orientation takes precedence over the affective shopping experience. Renovation is one of the key strategies available to mall managers to inject a new life in the mall by redoing some cosmetic work, refreshing various amenities, reshuffling stores and recruiting new tenants. The decision to renovate a mall is the result of the depreciation of rental income, the level and rate of change of renovation costs, discount rates and varying market conditions (Wong and Norman, 1994). The effects of renovation on shoppers' spending are real, but fully mediated by utilitarian shopping value. Research findings illustrate that, in this specific regional mall, renovation was generating higher personal spending. They are not convergent with those of Pan and Zinkhan's (2006) who found that the effects of store atmosphere on retail patronage are “relatively small.” Had the current analysis been limited to the direct effects of renovation on spending, no significant effects would have been found (e.g. Zhao et al., 2010); similar to what was reported by the ICSC (Lambert and Connolly, 2001). Renovation affects sales through the mediation of the utilitarian shopping value. Analogous analyses should be extended to other renovated

shopping malls. The review of the retail trade literature outlines that the effect of renovation on the hedonic dimension of shopping is taken for granted by mall managers, while the utilitarian aspects tend to be ancillary. Paradoxically, shopper satisfaction is not part of the mediation process between the mall renovation and shopper spending. Both shopping values increase satisfaction of shoppers in the renovated mall. However, satisfaction does not affect spending. Such findings confirm previous studies (e.g., Keiningham et al., 2008) and disconfirm others (e.g., Anderson and Sullivan, 1993). Bernhardt et al. (2000) explain that that firm-specific data are needed to study the relationship between satisfaction and sales. Higher satisfaction scores could mislead mall managers in believing that shopper spending will increase. It appears that the utilitarian shopping value score is a better predictor, pinpointing at important managerial implications, as discussed below.

6. Managerial implications When planning for renovations, the atmospheric components of the mall should be selected mostly for helping shoppers to accomplish their goals. Experiential shopping has been an ongoing leitmotiv for property owners and retail managers trying to entertain shoppers and create excitement. However, shoppers' hedonic response and satisfaction do not seem to be sufficient conditions to induce additional spending. Higher spending is associated with the utilitarian shopping value. While renovating malls, managers should focus their resources on elements that will support shopping goals. Aesthetic mall design is certainly desirable. However, mall must also be functional to facilitate shoppers' task orientation and trigger spending. Functional mall refurbishing should target easier access and parking, signage and maps to facilitate wayfinding, more open spaces to reduce the negative effect of crowding, clean and appealing common areas and food courts so that shoppers stay longer, and, above all, enhanced store layout that favours traffic and exploration. Mall renovation is not limited to the physical arrangement of common spaces. The overhaul will attract new tenants on an expansion path that, in turn, will contribute to the rejuvenation of the mall. A well-managed store layout across the mall is a transaction multiplier for complementary goods or impulse purchases.

7. Future research and limitations Even though there are many studies looking at the impact of retail atmospherics on shopping behaviour, very few of them investigate their relevance on the utilitarian value (Turley and Milliman, 2000). Most malls are regarded as places where shoppers may accomplish necessary tasks in a practical and well-organized way. Much emphasis on “experiential shopping” has been found in both the trade and the academic retailing literature. The current study calls for more attention on the task orientation aspects in shopping malls. It seems to be the first to relate effects of mall renovations on retail spending. It focuses on the effect of renovations on shoppers' holistic perception of the mall atmosphere. Additional research is needed to understand fully the specific effects of major refurbishing investments. Future research should weight the effect of each specific environmental component on shoppers' perceptions and responses. Mall refurbishing is a major investment that does not happen every day and takes time to complete. Measuring the effects of renovation, while controlling for exogenous factors, is not easily

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done within the framework of traditional experimental plans. The post-renovation survey was administered soon after the mall refurbishment. The impact of renovations may not have fully reached its full potential among patrons. It is likely that patrons might not be fully accustomed to the renovated mall. A postrenovation survey administered a year later might have generated different results. The quasi experiment was conducted in a regional mall in 2000. Despite its age, the dataset outlines that a stimuli (mall renovation) affects shoppers' perceptions of the mall atmosphere and shopping values, and ultimately prompts additional spending, in accordance with the environmental psychology paradigm. Contrary to regional malls, super regional, thematic and lifestyle malls should attract higher proportions of shoppers in search of entertainment and craving for excitement. Alternatively, community mall shoppers may be more sensitive to convenience and crowding. Future research should expand the study to different types of shopping mall environments.

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