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Research suggests that innovation plays a key role in creating a competitive edge and business survival in highly competitive industries like retail. Despite the importance of innovation in retail establishments, very limited efforts have been made so far to study how innovation influences consumer behavior in retail establishments. This paper aims to identify the impact of relationship benefits (i.e. confidence, social and special treatment benefits) on consumer’s loyalty with the retail store and examine the moderating effect of retailer innovation in these relationships.

To conduct this study, a sample comprised of 400 consumers of four retail sectors (i.e. household, electronics, textile and food) was chosen. The data were analyzed through partial least squares structural equation modeling (PLS-SEM) technique.

The findings of this research suggest a significant positive influence of confidence and special treatment benefits on consumer loyalty and that retail innovation moderates the link between relationship benefits and consumer loyalty.

This research contributes to the existing literature in the domain of retail customer loyalty by empirically testing the under-studied phenomenon of retail innovation with the help of contingency theory.