Costello Research Retail

“Doing well by doing good”? There’s a framework for that

Jennifer Anzaldi — Wed, 02 Jul 2025 15:38:03 +0000

“Doing well by doing good”? There’s a framework for that Jennifer Anzaldi Wed, 07/02/2025 - 11:38

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Today’s customers don’t just buy products—they buy into what a company stands for. It is no longer just low prices or flashy marketing that target the latest trends. Stakeholders are asking harder questions: Does this company treat its workers fairly? Are they harming the environment?

In a recent study published in the Journal of Brand Management, Russell Abratt, a marketing professor at the Costello College of Business at �鶹��Ƶ, tackles a key strategic challenge: How companies can move beyond shallow social and environmental messaging to meaningfully shift consumer perceptions. Joining Abratt on this research team are co-authors Emmanuel Silva Quaye of University of Witwatersrand and Nicola Kleyn of University of Pretoria.

Russell Abratt

When a brand is described as being true to themselves, holding values of fairness, a concern for society, and an obligation to goodness, it becomes what they call a conscientious corporate brand. These are brands who are trusted to do the right thing consistently and authentically.

But trust alone is not enough. Companies want to know: Does being conscientious also deliver better business outcomes?

Building on their 2023 work, which introduced a framework for developing conscientious corporate brands, the research team now offers empirical evidence that this framework not only enhances brand trust but also leads to the response companies are hoping for—responsible branding can drive tangible value.

“Firms in order to succeed these days really need to go beyond profits,” says Abratt. “You’ve got to be ethical in whatever you do. You’ve got to be socially aware. And you’ve also got to be very, very conscientious about what you are doing.”

To further investigate Abratt’s 2023 framework and understand what changes stakeholder perceptions, the researchers conducted two experiments with South African participants. Each participant was shown a scenario involving a fictional construction company: the control group highlighted traditional business goals such as efficiency and profitability, and the experimental group emphasized ethical leadership, social impact, and environmental sustainability. The results were striking.

“We saw very clearly the differences between the control group and the experimental group,” Abratt explains. Participants viewed the purpose-driven, socially engaged version of the company as significantly more conscientious, responsible, and authentic than the version focused purely on business efficiency.

Their research identified four elements in a chronological sequence that contribute to conscientious corporate branding: organizational purpose, brand authenticity, corporate social responsibility (CSR), and ethical organizational culture. These are not separate strategies; they reinforce each other.

The first element of this sequence is organizational purpose. A company must begin by defining why it exists beyond just profits. Next is authenticity. “Authenticity leads to trust,” says Abratt. “The more authentic that an organization is perceived to be, the more positive perceptions the stakeholders have.” The paper finds that authenticity acts as a bridge that connects an organization’s purpose to stakeholders’ perceptions of conscientious corporate branding.

Next is the third element: corporate social responsibility. This must be integrated, not performative. “Developing a corporate social responsibility strategy should be part of the organization’s overall strategy,” says Abratt. “It should not be seen as greenwashing, as added on and fake.”

Lastly, an ethical organizational culture is created by top leadership through example and prioritizing ethical values across the organization.

According to Abratt, “In order for a firm to say this is our purpose beyond profits, they’ve got to have a top leadership that says these are our values. This is what we stand for. Then that needs to be typicalized throughout the organization.”

So what does this mean for business leaders? It means that building a conscientious brand is no longer just a marketing strategy—it’s a business imperative. But the real challenge lies in making sure those sustainable actions resonate with consumers to ultimately result in success. Can companies do well by doing good?

Looking ahead, Abratt and his colleagues hope to expand their research to other industries and other countries or regions to test whether their results are generalizable to other contexts.

“Brands that have a purpose beyond profit are the ones that are going to be seen by stakeholders in a more positive light. And if they are seen in a more positive light, those stakeholders, especially customers, are likely to support that particular organization,” Abratt concludes.

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Would you rather buy from a cuddly chatbot, or the “Lipstick King”?

Jennifer Anzaldi — Tue, 04 Mar 2025 18:03:48 +0000

Would you rather buy from a cuddly chatbot, or the “Lipstick King”? Jennifer Anzaldi Tue, 03/04/2025 - 13:03

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Si Xie

Historically, entertainment and advertising have worked as a tag team, taking turns soliciting attention from audiences. But our social-media age is blending the two into new, hybrid forms.

Witness livestream shopping, a seamless amalgam of e-commerce and entertainment. In place of one-way messaging delivered by polished pitchpeople, this model employs relatable influencers presenting products for online sale—and chatting with consumers—in real-time sessions that often last several hours.

Famously popular in China, livestream shopping is picking up steam in the United States. In June 2024, as an example, U.S. TikTok netted its first million-dollar livestream, courtesy of Texas-based brand Canvas Beauty. By 2026, live shopping may be responsible for as much as five percent of all e-commerce sales in the U.S., according to industry projections.

For global brands, this means a possible revenue explosion. But for information-systems scholars like Si Xie, assistant professor at Costello College of Business, the global rise of livestream shopping represents an unprecedented research opportunity.

Si Xie

“One of the most important elements of livestream shopping is the interaction,” Xie says. “Livestreams bring all potential buyers into the same virtual room, together with the influencer. People can see which products have been put in the online shopping cart, and which have been purchased.”

Her recently published paper in Production & Operations Management finds that the longer an individual product is showcased in a livestream featuring several different brands, the more revenue it will generate. Yet as product showcase duration goes up, overall revenue from the livestream goes down.

To reach their conclusions, the research team—including co-authors Siddhartha Sharma of Indiana University and Amit Mehra of University of Texas at Dallas—analyzed data from nearly 75,000 livestreams conducted in China during 2021.

For Xie, the findings point to a fundamental conflict between the incentives of livestreamers and the brands they promote. It is in the best interest of third-party influencers to move fairly rapidly between different types of products, but brands will want more airtime devoted to each one.

“People like variety,” Xie explains. “If I watch a livestream and all I see are shirts in different fabrics, I might feel there are not too many choices I can make. However, if you show me a shirt and then a pair of pants, I can make an outfit. There’s a higher probability of my making more purchases, and that’s in line with the third-party livestreamers’ incentives.”

One way to correct these misaligned incentives would be for brands to use the power of the purse to influence the influencers. In China, even the suggestion of such corrupting relationships has caused public scandal. In 2023, for example, top livestreamer Li Jiaqi (nicknamed “The Lipstick King” for his ability to sell beauty products) lost one million followers on social media after lashing out at an online commenter who complained about the high price of an eyebrow pencil made by Chinese cosmetics company Florasis. Li, Florasis’s most prominent brand ambassador, was excoriated for ostensibly putting his relationship with the brand above empathy for financially struggling consumers.

“People were saying, ‘you are trying to be defensive of the product because you get so much interest from selling that pencil’”, Xie says. “Therefore, Li’s credibility was really impaired.”

If Xie’s paper describes how human imperfections can jeopardize livestream shopping, could AI be the answer? Indeed, AI-powered animated chatbots — both paired with human influencers, and serving customers solo during off-peak sales hours — have become commonplace on China’s livestreams. For her PhD dissertation, Xie probed data from more than 70,000 livestreams in China and found that introducing an AI assistant boosted livestream sales by about 18%. But the effect steadily declined over time — and not because the novelty wore off. The rapidly improving algorithmic responses had the unintended consequence of shorter watch durations, which may have reduced impulse buying. Xie’s suggested remedy? “The owner of the gen-AI tools could modify the interaction between the virtual livestreamer and the audience to encourage more engagement, perhaps by adjusting the learning speed to ensure that the audience remains engaged for a longer period."

Xie also suggests that brands and channels replace humanoid avatars with cute, cuddly “mascots” that users just can’t bring themselves to click away from.

Xie says she’s working on future papers that tease insights out of livestream data. “One good thing about this new technology is that it promotes the user to buy using methods we can observe. Livestreamers sell general items like grocery items and clothing, as well as expensive stuff like cars and houses, and you can really see how people behave.”

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No easy answers for retailers’ returns dilemma

Jennifer Anzaldi — Tue, 29 Nov 2022 14:48:38 +0000

No easy answers for retailers’ returns dilemma Jennifer Anzaldi Tue, 11/29/2022 - 09:48

Mehmet Altug, an associate professor of operations management, has been researching retail returns policies for a decade. The issue has recently come to prominence, as the lenient policies of online retailers have led to skyrocketing return rates (now exceeding 20 percent in the U.S.). Altug’s various academic papers delve into the difficult trade-offs retailers face when setting returns policies. While there are no easy answers, Altug’s research identifies factors that can help retailers achieve more strategic flexibility.

Mehmet Altug

Who’s smarter—online shoppers or their counterparts in physical stores? On the one hand, e-commerce consumers have a huge advantage in comparison shopping. They can cross-reference products, learn about competing brands and scout for deals in minutes from their living room couch. However, basic physical features of a product—its size, texture, fit, etc.—aren’t represented well on digital devices. That’s why purchasing items such as clothing online can be a stab in the dark.

Retailers have used lenient return policies to counteract e-commerce’s sensory-deprivation problem. Such policies effectively create an antidote for buyer’s remorse, so that consumers can confidently click “Buy Now” for an item they’ve never seen or used. But the industry’s permissiveness regarding returns may be backfiring.

According to the National Retail Foundation (NRF), the average rate of return for online purchases in 2021 was 20.8%, up from 18.1% the year before. The total value of returned items for 2021, according to retailers’ estimates, was more than $761 billion.

Mehmet Altug, an associate professor of operations management at �鶹��Ƶ's School of Business who has been researching pricing and retail operations—and consumer returns in particular—for over a decade, says, “When I first started doing research on this, I used to say up front ‘pricing is the main decision, returns are just something to deal with.’ But now, it’s becoming a primary problem for retailers.”

The main reason why return management does not have a well-defined solution is that it can be seen as a "double-edged sword." While flexible consumer return policies increase our valuation and willingness-to-pay for the product (a positive effect), they also lead to more returned units, which are ultimately sold by retailers at a loss (negative effect).

Therefore, we see a wide range of return policies in the industry. Recently, more and more brands have been tightening up their return policies. For example, Banana Republic, J. Crew, Old Navy and Gap have shortened their grace period to one month; in the U.K., Zara recently started charging for items returned through third-party drop-off points. But it remains to be seen whether online customers, with their penchant for comparison shopping, will accept this austerity drive, or flock to competitors with more permissive policies.

As Altug’s published research shows, the strategic buying behaviors of online customers further complicate retailers’ returns dilemma. His 2016 paper in Manufacturing & Service Operations Management (co-authored by Tolga Aydinliyim of Baruch College) details how offering lenient refunds can entice buyers to purchase items earlier, instead of waiting for them to go on sale. Forward-thinking consumers, however, will anticipate that liberal return policies will lead to more items being returned and marked down for resale. This expectation would increase wait-and-see behavior, as consumers monitor for products to become available at clearance prices. In short, lenient return policies can (again) cut both ways in the presence of strategic customers, either raising or lowering profitability and depending largely on the salvage prices resold items can command through off-price outlets such as TJ Maxx.

These outlets are where department stores turn to offload their unsold inventory, including returned items. And like department stores, they range from low-end (e.g., TJ Maxx and Marshalls) to upscale (e.g. affiliated discount branches such as Saks on Fifth and Nordstrom Rack). Altug’s paper argues that the refund offered for a product is closely related to the resale value of the item, and the partial refund offered should not generally exceed that. The best case for retailers would be a no-returns policy on expensive items with low resale values, since these items would be most subject to the wait-and-see effect among strategic online consumers.

However, retailers are rightfully cautious about the customer defections that may result from restrictive returns policies. Altug’s research finds several alternatives they could explore to preserve profitability in the face of the returns dilemma. For example, if the retailer can enjoy profitable clearance sales (i.e. resale value is greater than the cost of the product) or if the lenient return policies stimulate additional demand, then the retailer may offer full refunds. Similarly, to sustain a lenient return policy, the retailers can lower transaction costs for the consumer by providing return labels in packages. Moreover, in the presence of competition, Altug finds that the retailers’ ability to clear inventory at a higher price (maybe through a reputable clearance partner) will also help them offer higher refunds, stock and sell more at a higher price and make more profits compared to their competitors who do not have the same higher resale value advantage.

The 2016 paper assumes that consumers are making choices in good faith. But free and easy returns also invite opportunists whose intent is to use online retailers as a de facto rental service. Though this class of bad actors is relatively small–responsible for about 11 percent of returns nationwide, according to NRF estimates–it can do significant damage within the low-margin retail industry.

Altug’s 2021 paper in Management Science (co-authored by Tolga Aydinliyim and Aditya Jain of Baruch College) tests the respective profitability of two approaches retailers employ to manage opportunistic returns. First, some retailers use data analytics to identify renters based on their buying and return behaviour and target them through more restrictive returns policies. While mostly effective, this solution carries a risk of false positives, which could unfairly target valued customers. Making inferences about consumer intent from purchase and return information alone can be a dicey prospect. Second, online retailers can deploy price/refund pairing as a sorting mechanism, charging less for an item (e.g., a three-percent discount)–if the buyer agrees to waive free returns. That way, renters self-select to pay up front for their intended temporary use of the product and the honest majority are rewarded, at least initially, with a lower price.

Again, resale price surfaced as a pivotal factor in Altug’s findings alongside renters’ valuation. The self-selection approach works just as well or better than data-driven targeting in a market with low-rental-value potential or when the retailer sells returned units at a low resale price even in a medium-rental-revenue-potential market such as electronics or fashion products.

While there are no easy answers for retailers, Altug’s research maps out the main elements they should consider when setting their returns policy. “There are several issues that need to be considered in this context and still not very well-defined solutions that could address all of them,” Altug says. “One thing is for sure, you can’t just give maximum flexibility and forget it. Retailers need to find the right balance and that is not a trivial task.”

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In This Story

Mehmet Altug