Although retailers invest millions of dollars in redesigning,
refreshing, and remodeling their stores, it is unclear that such large
investments are worthwhile. Prior research has indicated that remodeling
has only a short-term effect. However, a previously unexplored area is
its effect on those who visit the store for the first time after it is
remodeled (new customers) versus those who had visited before the
remodeling (existing customers). This study contrasts the effect of
store remodeling on new and existing customers in two field experiments
with stores that underwent a major remodeling. Treatment and control
stores are used in both experiments. The authors measure sales before
and after the remodeling for new and existing customers; in one store,
they also measure customers’ psychological responses. In both cases,
sales increased after the remodeling effort. However, sales for new
customers are significantly higher than sales for existing customers
after the remodel, and this difference persists for a year. Higher sales
to new customers are primarily due to more new customers being drawn to
the remodeled store, their higher spend per visit, and their subsequent
increased visit frequency. [ABSTRACT FROM AUTHOR]