Should physical stores abandon sales promotions and favor campaigns? - A quantitative study analyzing how pricing tactics and buy-back programs affect in-store conversion

Abstract

The purpose of this study is to get a deeper understanding of the impact on pricing tactics, as well as buy-back programs, on conversion in physical stores. In addition, the study aims to investigate how the size of the store and the presence of buy-back programs moderate the relationship between pricing tactics and conversion. Conversion in this context refers to both customer conversion and conversion rate. Regression analysis was used to analyze the data from a Swedish retail fashion company from 2023. The results show that campaigns and buyback programs directly affect customer conversion, whereas sales promotions increase store visitors without significantly impacting customer conversion. Buy-back programs only moderate the relationship between sales promotions and customer conversion. Conversely, store size impacts both the relationship between sales promotions/campaigns and customer conversion. Lastly, looking at conversion rate, only campaigns demonstrate an impact, while neither sales promotions nor buy-back programs, including their moderating effect, or store size show a significant effect. Findings underscore that campaigns positively impact conversion. Implementing buy-back programs can enhance customer conversion by providing a resale value incentive, however, it does not influence conversion rate. Furthermore, the findings indicate that sales increase with the presence of a buy-back program when a company uses sales promotions, which on the contrary cannot be said about campaigns. Finally, the findings suggest that the larger the store the more customer conversion, but this is not significant measured in conversion rate. While previous research focus on online shopping this study contributes to the research on physical stores and how pricing tactics influence conversion.