Enhancing Employee Well-Being Through Scene Innovation in Retail Enterprises: A Case Study on the Chinese Enterprise Pang Donglai

Abstract

In retail enterprises, employee well-being is recognized as a key factor influencing service quality and operational sustainability. While prior research has extensively investigated enterprise-centric approaches to improving employee well-being, little scholarly attention has been devoted to understanding the effects of customer participation and service scene innovation on employee well-being. Employing a case study methodology, this research investigates a Chinese exemplary retail enterprise “Pang Donglai”, exploring how retail enterprises can leverage service scene innovation to improve employee well-being from the perspective of scene innovation. The findings reveal that service scene innovation in retail enterprises can be categorized into three types: empowerment-oriented scene innovation, autonomy-oriented shopping scene innovation, and thematic display scene innovation. These innovations facilitate empathetic interactions between employees and customers, effectively enhancing employee well-being and creating a virtuous cycle of value co-creation among the enterprise, employees, and customers. Therefore, retail enterprises can continuously improve the working situation of employees, the display of products, and the shopping environment of customers, in order to enhance employee well-being and thus improve their voluntary behaviour and its sustainability. This study provides empirical insights into how retail enterprises can enhance employee well-being through service scene innovation, thereby contributing to the improvement of business performance.

1. Introduction

The pursuit of well-being has been a fundamental human endeavor. The scholarly examination of well-being-related concepts in workplace context gained momentum after Warr’s seminal work [1], establishing workplace happiness and employee well-being as enduring themes in organizational research. Enhancing employee well-being yields dual benefits: maintaining employees’ physical and mental health [2] while improving their work efficiency and creativity, which can positively contribute to an enterprise’s sustainable growth [3]. Within the retail sector, employees represent a vital form of human capital and a key strategic asset. Since they serve as the primary interface for service delivery, their psychological well-being and job performance critically shape service quality, ultimately affecting consumer purchase behavior and satisfaction levels. Consequently, improving employee well-being has become an essential pathway for retail enterprises to maintain a sustainable competitive edge. This is especially true in the current environment in which, due to the emergence of new technologies [4], the problems related to job uncertainty and precariousness in the retail and services sectors have exponentially grown.

Existing research on enhancing employee well-being primarily focuses on high-performance work systems, leadership styles, organizational interaction dynamics, and the application of digital technologies.

Research centered on high-performance work systems has revealed that in specific situations, when enterprises develop such systems (e.g., by establishing training and compensation incentive programs), they not only enhance employee productivity but also cultivate employees’ ability to achieve well-being, thereby improving overall employee well-being [5]. Employees’ perceptions of well-being have been shown in leadership style studies to be influenced by different leadership styles. For example, Servant Leadership [6] and Transformational Leadership [7] have been found to enhance employee well-being. Research conducted from the perspective of organizational interaction dynamics has revealed a positive correlation between the fairness of organization–employee interaction and employee well-being [8]. Existing research examining digital technology applications’ impact on employee well-being has found that new digital technologies (e.g., artificial intelligence) reduce repetitive tasks for employees, thereby enhancing their well-being [9].

While existing research has endeavored to explore approaches for enhancing employee well-being from multiple perspectives, there remain two significant research gaps. First, prior research commonly adopts an employer–employee interaction perspective, focusing on how organizations can shape employee well-being, while largely neglecting the role of employee–customer interactions in influencing employee well-being. In real-world retail enterprises, employees frequently interact with customers. During these interactions, customer attitudes and feedback can significantly influence employees’ psychological states and behavioral patterns [10], thereby affecting employee well-being. Second, the influence of service scene innovation in retail enterprises on employee well-being has been overlooked. With the widespread adoption of digital technologies, enterprises are increasingly capable of precisely designing and analyzing consumption scenes, leading to growing research interest in the impact of scene innovation on the operation of enterprises. While some studies have examined how scene innovation enhances immersive experiences for customers [11], few have investigated its effects on employee well-being in retail enterprises. Prior research in tourism has demonstrated that a well-designed scene can influence the behaviors and interactions of individuals who are situated in a specific scene [12]. Building on this insight, this study seeks to investigate how service scene innovation in retail settings influences employee well-being.

This study examines, from the perspective of employee–customer interaction, how retail enterprises can enhance employee well-being through scene innovation. We investigate this topic using Pang Donglai, an exemplary Chinese retail enterprise, as a case study. We identified three different types of service scene innovation in retail enterprises and elaborated on their logic of shaping empathetic interactions between employees and customers to enhance employee happiness. Thus this study filled the existing research gap and enriched the research perspective on employee well-being. Meanwhile, our findings offer empirical insights for retail enterprises seeking to improve employee well-being via scene innovation, thereby enhancing business performance.

2. Literature Review and Theoretical Foundation

2.1. Relevant Research on Scene Innovation

The concept of “scene” can be traced back to Goffman’s dramaturgical theory, where he defined “scene” as the specific context or framework for social interaction, encompassing three key aspects: time, space, and actors [13]. Building upon this foundation, the connotation of “scene” has gradually broadened to refer to specific situations in daily life and work, along with the collection of needs and emotional elements they engender [14]. Early research predominantly employed scene theory to analyze the configurational characteristics of specific spaces. As scholarly inquiry deepened, researchers recognized that scenes can be deliberately cultivated. Through intentional scene design, it becomes possible to effectively stimulate actors’ needs and creative capacities [15], while enhancing interpersonal dynamics among actors within these constructed scenes [16]. Therefore, the concept of scene innovation has emerged, defined as a value creation initiative that reconfigures and recombines constituent elements (e.g., temporal dimensions, spatial arrangements, behavioral relationships, and affective experiences) to empower actors in accomplishing specific tasks [17].

With the advancement of digital technologies, the identification of user needs and the deconstruction and analysis of living scenes have progressively achieved unprecedented granularity. Consequently, scene innovation has evolved into a critical pathway for enterprises to construct sustainable competitive advantages. Within tourism management research, scholars have demonstrated that scene innovation enriches the signifiers and meanings of destinations, thereby enhancing tourist experiences and subsequently influencing social relationships and interaction processes [12]. In business pattern studies, researchers reveal how scene innovation facilitates the integration of scene elements with core business pattern components, enabling transformative business pattern evolution [18]. On the one hand, scene innovation emphasizes catering to consumers’ personalized needs and behavioral preferences in specific times and spaces, thereby enhancing the experiential value of products and services [19]. On the other hand, scene innovation also emphasizes influencing consumers’ needs and behaviors through the reconstruction of scenario elements [20].

While existing research has extensively explored the connotation, characteristics, and functions of scene innovation, yielding valuable conclusions, several significant limitations remain. First, existing studies predominantly focus on scene innovation within tourism and manufacturing enterprises, exhibiting a notable lack of attention to service scene innovation in the retail sector. As a service industry directly interfacing with consumers, the service scene in retail enterprises critically impacts both employee work performance and customer experience, making it essential to gaining a competitive advantage. Therefore, it is imperative to conduct in-depth research on service scene innovation specifically within retail enterprises. Second, although some studies have examined the impact of scene innovation on consumer experience [21], they seldom delve deeply into its effects on enterprise employees, particularly concerning the crucial dimension of employee well-being. Employees are the core resource of an enterprise. Employee well-being encompasses multiple dimensions, including physical health, mental health, emotional stability, social relationships, economic security, and work–life balance. These factors collectively influence employees’ work attitudes, motivation, and capabilities. Consequently, employee well-being not only affects individual performance but also exerts a profound impact on overall organizational performance and sustainable development [22]. Thus, it is particularly necessary to thoroughly investigate the influence of retail enterprise scenario innovation on employee well-being.

2.2. Relevant Research on Employee Well-Being

Work well-being is defined as a multidimensional psychological construct encompassing positive emotions, work engagement, and job satisfaction. It reflects the relatively enduring emotional, cognitive, and psychophysical health state that individuals experience in the workplace [23]. It is important to note that, in this study, the concept of work well-being is primarily grounded in eudaimonic well-being. As a concept closely related to work well-being, employee well-being refers to employees’ evaluation of the overall quality of their occupation and work experiences. It encompasses not only employees’ perceived satisfaction with work and life aspects but also their emotional experiences and states of fulfillment across both work and non-work domains [24]. Current academic research on employee well-being primarily focuses on its influencing factors and effects.

Regarding research on the influencing factors of employee well-being, existing studies primarily focus on high-performance work systems, leadership styles, organizational interaction dynamics, and artificial intelligence (AI) adoption. High-performance work systems constitute a set of interrelated and synergistic human resource management practices, encompassing recruitment and selection, extensive employee involvement, work design, and incentive-based compensation and performance management [25]. High-performance work systems not only enhance employee work output but also boost employee well-being by cultivating employees’ capacity to attain well-being [5]. Regarding leadership styles, scholars emphasize analyzing how employees’ psychological perceptions and work attitudes under different leadership styles (e.g., authentic leadership [26] and servant leadership [6]) influence their perceptions of well-being. Concerning organizational interaction dynamics, some scholars concentrate on employee–organization interactions. Empirical research has revealed a positive correlation between interactional justice and employee well-being [8]. Regarding the impact of AI technology on employee well-being, scholars generally recognize that technological applications may enhance employee well-being by alleviating repetitive tasks [27], but may also trigger career anxiety due to job displacement [28].

Regarding the effects of employee well-being, exiting research primarily discusses its impact from both individual and organizational levels. At the individual level, employee well-being influences individual attitudes and behaviors, as well as individual performance [29]. Further, when employee well-being is high, abundant personal energy leads to greater resource gains for the individual [30]. This enables employees to approach tasks with greater enthusiasm and vigor, thereby leading to improved outcomes [31]. At the organizational level, scholars generally agree that employee well-being is crucial for organizational success. Higher levels of employee well-being are associated with stronger identification with the organization and greater loyalty towards it [32]. Some scholars also argue that employee well-being reflects their affection for the organization, determines the exertion of their creative work potential, and influences organizational development [33].

How to enhance employee well-being is one of retail context-specific long-standing issues. The employment and retention of front-line service staff has always been a problem faced by retailers. Especially after the pandemic, the retail industry has faced tremendous pressure, and consumer behavior, habits and preferences have also undergone tremendous changes [34]. Previous studies have revealed the impact of care management [4], corporate social responsibility [35] and managers’ emotional support [36] on employee well-being. However, the majority of studies adopt an employer–employee interaction perspective, focusing primarily on how employers shape employee well-being. Relatively few studies have examined how employee–customer interactions shape employee well-being. Indeed, a few scholars have gradually realized the importance of employee–customer interaction, pointing out negative interactions may lead to many customers leaving the store, and many employees quitting their job [4]. Customer participation places higher demands on employees’ work capabilities and can even impact their psychological stress levels [37], thereby influencing their well-being. Furthermore, against the backdrop of customers’ escalating demands for service entitlements and experiential value, employees, as the direct providers of service value, inevitably see the quality of their emotional labor and their occupational well-being affected by customer behavior and the nature of their interactions. In other words, the quality of the customer-employee interactive dynamics is a significant factor influencing employee well-being in retail-centric service enterprises.

Based on existing research gaps, this paper takes Pang Donglai, a Chinese retail enterprise, as a case study and adopts the employee–customer interaction perspective to analyze how retail enterprises can leverage scene innovation to enhance employee well-being. The aim is to provide insights and references for similar enterprises seeking to improve employee well-being, and consequently boost business performance, through such innovation.

2.3. Self-Determination Theory

Self-Determination Theory (SDT) was proposed by American psychologists Deci and Ryan in the 1980s. This theory explains “why and how humans generate specific behaviors”. According to SDT, autonomy, competence, and relatedness are three fundamental psychological needs of humans, playing crucial roles in influencing individual motivation and behavior [38]. Specifically, autonomy refers to the need for individuals to experience their actions as voluntary and self-determined; -competence aligns with individuals’ desire to feel effective and successful in their roles; -relatedness describes people’s need to feel significant and connected with others [39]. When the external environment satisfies these three needs, individuals experience heightened satisfaction and well-being, leading to positive behaviors. Self-determination theory has been widely applied in organizational behavior research, demonstrating strong explanatory power for employee job satisfaction, well-being, organizational commitment and work engagement [38,40,41]. For instance, Ni’s study of hospital nurses revealed that when hospitals support nurses in fulfilling three basic needs, they are more likely to provide quality care to patients [42]. Kesenheimer et al. noted that changes in work patterns (such as shifting from in-person to remote work) that better fulfill basic needs positively impact employee well-being [43].

This paper explores the relationship between service scenes innovation in retail sector and employee well-being. As service scene constitutes a vital component of the work environment, SDT offers a suitable framework for examining how transforming these scenarios can enhance employee well-being.

3. Research Design

3.1. Research Methodology

The research questions of this paper belong to “How” and “Why” questions, making it well-suited for the case study method. Compared to multi-case studies, a single-case study is advantageous for detailing and presenting the complex process of event evolution. By uncovering the actors, key events, and the critical elements, relationships, and structures within the dynamic process, it explores causal mechanism [44]. Moreover, the single-case study approach is suitable for representative, typical, or revelatory cases, whose findings offer illuminating insights into similar events [45]. Therefore, this study adopts a single-case research method, aiming to conduct an in-depth analysis of a typical case to explore the pathway and process through which retail enterprises leverage scene innovation to enhance employee well-being.

3.2. Case Selection

Based on the “theoretical sampling” principle of case study methodology, this research selects the Chinese retail enterprise Pang Donglai as the case study subject. Pang Donglai is the fastest-growing Chinese retail enterprise that has established its core competitiveness through employee well-being, customer reputation, and exceptional service, and has been a highly discussed topic in China in recent years. Through its scene innovation practices and exceptional performance, Pang Donglai has emerged as an exemplary case that bridges theoretical and practical value in the retail industry.

Case Typicality. The “China Retail White Paper” designates Pang Donglai as an “exemplary for domestic service innovation”, recognizing its growth trajectory and performance as exemplary within China’s retail sector. The retail industry is a classic example of a labor-intensive sector with high customer interaction. The intense workloads, lacking autonomy and insufficient emotional support are common challenges that contribute to high turnover rates and low well-being among retail workers. Through a series of service innovation initiatives—such as improving work environments, granting employees “unlimited returns and exchanges” authority, and implementing “10-Day Emotional Leave”—Pang Donglai safeguards basic employee rights while enhancing initiative and autonomy, leading to a high level of employee well-being. Such innovative approaches have significantly elevated Pang Donglai’s service quality, propelling its performance far beyond industry peers. Against the backdrop of economic downturn and overall pressure on the retail industry, where only a quarter of large supermarkets nationwide achieved growth, Pang Donglai’s net profit surged to 800 million yuan in 2024, demonstrating strong profitability.

Case Inspirational Value. While other retailers continue to prioritize profit above all else, widely employing control-oriented management tactics (e.g., standardized processes and penalties) to enhance employee service quality and boost profits by cutting costs, Pang Donglai has charted a distinctly different course.

Pang Donglai anchors its operations in the corporate belief of “Freedom and Love”, aiming to “disseminate advanced culture and cultivate well-rounded character” under the principle of “Punishing Evil and Promoting Good”. By reconstructing the traditional retail service scene, it has established an enterprise–employee–customer tripartite win-win ecosystem. In employee management, it encourages individuals to leverage innate talents, express creativity, and derive meaning from work. Furthermore, extensive open communal spaces position Pang Donglai outlets as “perennially bustling, top-tier tourist destinations” in consumer perception.

Although some of Pang Donglai’s specific practices are unique, the logic behind its service-scene-driven innovation and the guiding principles for innovation across different service scenes are broadly applicable. Indeed, Pang Donglai’s business pattern has sparked widespread emulation: enterprises such as “Yonghui” and “Bubugao” have introduced Pang’s management methods and service values, resulting in a significant increase in customer traffic at pilot stores. Its concept of a high-yield well-being enterprise is reshaping the perception of commercial value.

3.3. Data Collection

To address the research questions of this study, data was gathered from both the enterprise and consumers. To ensure the reliability and validity of the research, and following the recommendations of Eisenhardt [46] and Yin [47], multiple sources were utilized for data collection. This approach enables triangulation across different data sources, thereby enhancing the authenticity and accuracy of the data.

Due to Pang Donglai’s management policies, the research team was unable to conduct one-on-one interviews with its managers or employees. However, our team members conducted three site visits to Pang Donglai supermarkets to observe and experience the entire shopping and after-sales service process firsthand. Additionally, a group of customers with prior shopping experience at Pang Donglai were invited to participate in semi-structured interviews, generating rich primary data. The study also incorporated diverse secondary data from multiple sources, including enterprise disclosures, academic papers, online consumer reviews, and content from social media platforms (e.g., REDnote, Weibo, TikTok). The specific sources and types of data collected are detailed in

Table 1. Data source and qualitative coding.

Data Type	Data Collection Method	Volume	Data Code
Primary Data	Semi-structured interviews with 3 employees of Pang Donglai (avg. 15 min/person)	11,000 words	F0
	Field notes from 3 research visits to Pang Donglai (Henan Province)	15,000 words	F1
	Field notes from field survey at Bubugao Supermarket (guided by Pang Donglai’s management pattern)	5000 words	F2
	Semi-structured interviews with 7 consumers experienced with Pang Donglai (avg. 16 min/person)	26,000 words	F3
Secondary Data	Employees comments/discussions from WeChat, Video Channel, Weibo, REDnote, TikTok; Video content transcribed into text	30,000 words	S0
	Official website materials, public speeches by managers, enterprise disclosures	40,000 words	S1
	Published academic papers, official media reports	77 articles	S2
	Customer comments/discussions from WeChat, Video Channel, Weibo, REDnote, TikTok; Video content transcribed into text	40,000 words	S3

.

3.4. Data Analysis Method

This study employs the structured data analysis approach proposed by Gioia et al. [48], involving first-order and second-order coding for case analysis. First-order concepts analysis focuses on preserving survey participants’ original terminology. Second-order themes analysis integrates the researchers’ theoretical insights to refine concepts, themes, and dimensions. This approach explicitly demonstrates connections between raw data and abstracted constructs, progressively yielding aggregated dimensions to ensure scientific rigor. During coding, two-thirds of the raw data were randomly selected for analysis. The research team was divided into two groups to perform independent parallel coding. Upon completion, both groups collaboratively compared and analyzed coding results. Discrepancies were resolved through deliberative discussions, with only consensus-based codes retained.

Specifically, during the extraction of first-order concepts, we remained faithful to the interviewees’ original meaning, performing only intuitive summarization. For example, based on the interviewee’s original statement “Pang Donglai supermarket provides ‘Do Not Disturb’ sign boards; when I hang one up, I can enjoy a quiet shopping experience…”, we extracted the first-order concept “Free Shopping Environment”. Following this approach, we ultimately extracted 15 first-order concepts, such as “Open Public Space” and “Free Shopping Environment”. During the subsequent extraction of second-order themes, we conducted a further abstract synthesis of first-order concepts exhibiting similar meanings. For instance, the three concepts “Empowering Skills”, “Empowering Permissions”, and “Empowering Mindset” all describe how Pang Donglai empowers its employees through workplace scenario design. Consequently, these three first-order concepts were consolidated and synthesized into the second-order theme “Empowerment-Oriented Workplace Scenario Innovation”. Using this methodology, we ultimately extracted 5 second-order themes. Finally, we integrated and synthesized second-order themes reflecting the same underlying phenomenon to derive the final aggregate dimensions. This process resulted in three aggregate dimensions: Service Scene Innovation, Employee–Customer Empathetic Interaction, and Employee Well-being. The data structure obtained through this coding process is presented in Figure 1.

To ensure the reliability of the study, we conducted a theoretical saturation test using the remaining one-third of the raw interview data. The analysis revealed that no new themes or constructs emerged during the coding of this remaining raw data, indicating that theoretical saturation was considered achieved.

4. Research Results

4.1. Service Scene Innovation in Retail Enterprises

According to Goffman, the scene encompasses three key aspects: time, space, and actors [13]. In addition, the study of service in retail sector indicates that the service process includes three parts: service subject, service object, and service environment.

Therefore, we define service scene innovation in retail enterprises as innovations targeting the environments where employees, customers, and products interact during service delivery. Specifically, it comprises three components: empowerment-oriented scene innovation (relating to the service subject), autonomy-oriented shopping scene innovation (relating to the service object), and thematic display scene innovation (relating to the service object) (

Table 2. Exemplary Evidence Citations of Service Scene Innovation.

Aggregate Dimensions	Second-Order Themes	First-Order Concepts	Exemplary Evidence Citation
Service Scene Innovation	Empowerment-Oriented Working Scene Innovation	Knowledge Empowerment	To ensure every employee to thoroughly understand the corporate culture, regulations, and master essential job skills for delivering quality customer service, Pang Donglai implements a rigorous three-phase process for new employee recruitment and training. (S1)
		Authority Empowerment	Pang Donglai has consistently upheld its “no-questions-asked return policy” for 20 years, enforcing it with 100% compliance. (S0) At the shopping site, employees have the right to handle all after-sales problems in a timely manner. (F0)
		Psychological Empowerment	The company implements unique welfare initiatives for staff, including a”10-day emotional leave” and a “distress compensation award” demonstrating exceptional organizational trust. (S2)
	Autonomy-oriented Shopping Scene Innovation	Open Public Spaces	Pang Donglai offers a range of thoughtful amenities, including care stations, along with bicycle parking areas equipped with air pumps Inside, customers find complimentary strollers, pet boarding areas and emergency alert buttons. (F1) I’d never seen a shopping mall willingly dedicate its central atrium solely to customer rest areas, without any promotional stalls. This truly embodies their “customer-first” philosophy. (F3)
		Free Shopping Environment	Customers may hang the store-provided “Do Not Disturb” shopping signs to enjoy uninterrupted, assistant-free shopping. (F0) I haven’t felt the joy of shopping in a supermarket for a long time, which may be the proof of Pang Donglai’s ‘freedom’ concept. (S3)
	Thematic Display Scene Innovation	Thematic Products Display	Pang Donglai has established dedicated display zones for best-selling products, popular items, and viral internet-famous merchandise, catering specifically to younger consumers’ preferences. (F2) The central area features gift-wrapping stations that intuitively trigger customers’ gift-giving needs while providing complete packaging solutions-consumers simply select their preferred preset options. (S0)
		Abundant Product Information	Beyond providing basic product details and promotional information. Pang Donglai implements traceability OR codes on fresh produce like fruits and seafood, enabling customers to directly scan and verify product origins. (F1) Pang Donglai features thoughtful signage throughout—from watermelon selection tips to suggestions on cooking ingredients and has also given the fruit-cutting platters a serial number in accordance with the sweetness of the fruits, ensure that customers can reap the best taste. (S3)

).

4.1.1. Empowerment-Oriented Scene Innovation

Empowerment-oriented scene innovation refers to an organizational approach where enterprises restructure resources and processes to activate employee initiative and creativity, establishing a dynamic support system through three dimensions: knowledge empowerment, authority empowerment, and psychological empowerment.

Knowledge Empowerment entails transforming fragmented service experiences into replicable knowledge assets, coupled with tiered training mechanisms for skill development. Pang Donglai has implemented a systematic employee training program (S0), covering foundational product knowledge, service mindset cultivation, and communication techniques. Before boarding, employees complete pre-job courses like Customer Communication and Case Simulations, supplemented by hands-on mentoring from senior staff (F0, S1). This phased cultivation equips employees with robust operational competence, facilitating agile customer need fulfillment (S1, S3).

Authority Empowerment involves delegating decision-making power within defined parameters, backed by material support (e.g., monetary resources), to stimulate creative problem-solving. Pang Donglai establishes granular standards for returns/exchanges while maintaining flexible decision frameworks (S2). For instance, its tiered response protocols—such as “full refund + 200 RMB transportation compensation for foreign objects in processed food” or “rapid minor compensation + legal intervention for major incidents”—streamline service chains and foster employee adaptability (F1).

Psychological Empowerment addresses employees’ emotional needs through institutional safeguards and cultural shaping. Initiatives like the “10-Day Emotional Leave” and Distress Compensation Award demonstrate organizational trust. Notably, during the public backlash over the “noodle-cooking incident”, the enterprise opted for role reassignment and retraining over punitive measures, balancing policy compliance with humanistic care (S1). These measures collectively shift employee mindsets from risk aversion to value proactivity (S2).

From the lens of self-determination theory, the empowerment-oriented scene innovation can better fulfill the employees’ need of competence. Knowledge empowerment equips employees with the professional expertise required for their roles, while authority empowerment grants them greater control over their tasks and psychological empowerment alleviates employees’ mental stress. This leads to increased engagement and proactive in subsequent service delivery.

4.1.2. Autonomy-Oriented Shopping Scene Innovation

Autonomy-oriented shopping scene innovation focuses on creating a shopping environment that prioritizes customers’ independent choices and free experience, achieving a balance between customers’ decision-making freedom and employees’ flexible service. Pang Donglai has transformed traditional purchase-oriented space design by establishing open public spaces and unrestricted shopping environments. In public space design, Pang Donglai provides a series of accessible services including “thoughtful conveniences for passersby”, “giant screens broadcasting real-time news”, and “complimentary rest seating and drinking water”. These initiatives normalize customers’ coming and going, endowing public spaces with greater social value and humanistic significance (F1, F2). Regarding the shopping environment, Pang Donglai offers “Do Not Disturb” signs for customers to use, transferring the choice of service initiation to shoppers. As a result, when customers enter shopping areas with clear purchase intentions, they are no longer subjected to passive sales approaches, and employees are freed from providing rigid, mechanical services (F1, S3). In primary research, over 70% of consumers reported experiencing no pressure to make purchases while shopping at Pang Donglai. Instead, they felt a sense of physical and mental relaxation. Meanwhile, two-thirds of employees indicated that this liberal shopping environment not only alleviated their work-related stress but also prevented the discomfort that could arise from aggressively promoting products to customers.

Although the autonomy-oriented shopping scenes are primarily designed for customers, service is a two-way interaction between employees and customers. Autonomy-oriented shopping scene innovation enables employees to autonomously decide whether to offer assistance based on customer cues (e.g., whether they carry a “Do Not Disturb” sign). Thus, these also fulfill employees’ need for autonomy.

4.1.3. Thematic Display Scene Innovation

Thematic display scene innovation is defined as organizing and arranging related products around a specific theme in retail spaces, while providing abundant product information covering diverse usage scenarios. This innovation aims to deliver more personalized shopping experiences for consumers. Pang Donglai places great emphasis on thematic product grouping and display. For example, during Mother’s Day, they group gift products suitable for parents together and provide gift combinations for different age groups and price ranges (S3). Another example is their “hot pot” themed display where all related ingredients are grouped together for convenient customer selection. Pang Donglai focuses on comprehensive and objective product information presentation, committed to providing customers with detailed and accurate product knowledge (F1). For product labeling, they not only include basic information like price and specifications, but also provide detailed ingredient lists, storage methods, usage instructions, supplier names, and even supervision hotline numbers (F2).

Thematic display scene innovation provides diversified channels for employees and customers to engage in service. The delivery of the service is no longer limited to a single product, but also extends to emotional levels, such as around culture, hobbies, friendship, etc. Thus, thematic display scene innovation can meet employees’ need of relatedness.

Based on the above analysis, the following proposition is proposed:

Proposition 1. 

Service scene innovation in the retail industry comprises three dimensions: empowerment-oriented scene innovation, autonomy-oriented shopping scene innovation, and thematic display scene innovation. These three types of scene innovation can respectively satisfy employees’ needs for competence, autonomy and relatedness.

4.2. Employee–Customer Empathetic Interaction Embedded in Scene Innovation

4.2.1. Employee–Customer Empathetic Interaction

Existing research has demonstrated that when employees’ three fundamental needs are met, they exhibit greater commitment and creativity in their work [38,41]. In the research context of this paper, the three service scenes innovations not only enhanced the customer shopping experience but also provided employees with an environment that supports the fulfillment of their needs. This enables employees to demonstrate greater initiative and creativity when serving customers. Consequently, a new form of interaction between employees and customers has emerged—what is termed here as employee–customer empathetic interaction.

Empathetic employee–customer interaction refers to a highly engaged and positive form of interaction between employees and customers, manifested through efficient exchanges during service and emotional value co-creation. This interaction is not limited to simple Q&A during transactions but encompasses the entire process from customers entering the store, browsing products, making inquiries, purchasing products, to after-sales service.

In empathetic interaction, customers can freely raise questions and needs to employees, while employees can provide more personalized and efficient service. At the same time, positive emotions are transmitted between employees and customers: the sincerity and enthusiasm demonstrated by employees give customers a better shopping experience; while customers’ respect, recognition and positive feedback enhance employees’ sense of achievement.

Moreover, in empathetic interactions, customers show higher trust in employees and goodwill toward the company, as well as greater tolerance for service failures. According to the research findings, in the primary data, more than 85% of customers expressed a willingness to proactively understand and forgive employees. In the secondary data, a significant number of customers also actively show understanding toward employees: “Sometimes not all the sugarcane I buy is sweet, but it’s acceptable and I don’t request after-sales service. Pang Donglai (the enterprise and its employees) treats us people in Xuchang so well that we hardly ever complain unless it’s really unreasonable” (S3) (

Table 3. Exemplary Evidence Citations of Empathetic Employee–Customer Interaction.

Aggregate Dimensions	Second-Order Themes	First-Order Concepts	Exemplary Evidence Citation
Employee-customer Empathetic Interaction	Efficient Interaction	Effective Communication	when I couldn’t find my preferred biscuits, an employee immediately had me complete their out-of-stock registry… The next day, they called and asked how many packs I wanted… Only when collecting the goods did I learn Pang Donglai had discontinued stocking this item—they’d specially sourced it just for my order and sold it at cost without any profit. (S3) The staff understands me so well that I can harvest answers straight away before I can even articulate the question. (F3)
		Accurate Feedback	Pang Donglai maintains an out-of-stock registry, If a customer requests an item not currently sold in-store, the company dispatches staff to procure it externally and resells it to the customer without any markup. (S2). “A mere casual comment about ‘somewhat sour fruit’ on Weibo triggered proactive resolution within 24 h”. (S3)
	Emotional Value Co-creation	Mutual Respect	Pang Donglai has treated us Xuchang residents so well that unless it’s unreasonable, we hardly ever request after-sales service. With so many out-of-town visitors lately, we try to avoid causing extra trouble for the staff. (S3)
		Authentic Dialogue	Their staff assist elders and children on escalators—this is exactly the kind of service we ordinary people need… It feels so heartwarming, like a cozy embrace. (F3) The employees answer everything openly: giving directions, fulfilling requests. providing accurate responses, even discussing salaries—all handled with complete transparency. (S3)

).

4.2.2. Empowerment-Oriented Working Scene Innovation and Employee–Customer Empathetic Interaction

Empowerment-oriented working scene innovation fosters employee–customer empathetic interaction. Through knowledge, authority, and psychological empowerment, retail enterprises enhance employees’ flexibility and creativity during service delivery. Empowered employees not only demonstrate greater enthusiasm and initiative in their work, but also develop the capability, resources, and motivation to understand customer perspectives, thereby delivering personalized service.

Customers reciprocate this empowerment through increased trust and understanding when receiving professional and warm service. They become less likely to make unreasonable demands and more inclined to resolve issues through communication with employees. This dynamic illustrates how empowerment-oriented scene innovation facilitates empathetic interaction.

In the primary data, all employees indicated that the empowerment granted by the company enables them to resolve customer issues promptly and effectively, thereby ensuring customer satisfaction and achieving the goal of mutual understanding and support. Customers similarly reported perceiving that employees consider situations from the customer’s perspective, which made them feel highly reassured and comfortable. As one customer remarked: “Pang Donglai’s staff are unique in advising customers to make rational purchases. They genuinely consider customers’ interests, worrying they might buy too much or unsuitable items… Unlike stores like Sam’s Club with self-packing, Pang Donglai assigns two dedicated staff at each self-checkout terminal to handle sorting and packaging, creating an exceptionally comfortable experience”. (S3)

Based on the analysis, the following proposition is proposed:

Proposition 2. 

When retail enterprises implement empowerment-oriented working scene innovation, they shape employees’ work capabilities, working conditions, and work motivation, thereby enhancing flexibility, creativity, and initiative during service delivery. As customers experience these services, they become genuinely moved, developing greater trust in both employees and the enterprise, which facilitates empathetic interaction between employees and customers.

4.2.3. Autonomy-Oriented Shopping Scene Innovation and Employee–Customer Empathetic Interaction

Autonomy-oriented shopping scene innovation facilitates employee–customer empathetic interaction. By creating open public spaces and unrestricted shopping environments, retail enterprises alleviate customers’ potential pressure of “feeling obliged to purchase when entering stores” and the sense of being disturbed by staff during product selection. Meanwhile, the flexible service approach reduces employees’ stress about “having to serve every entering customer” after providing basic necessary services. Staff can offer further assistance based on customers’ actual needs. In such autonomy-oriented shopping environments, customers’ freedom is respected as they transition from passive service recipients to active decision-makers. Employees also increasingly feel genuinely valued, becoming active participants in customers’ shopping trips. In this relaxed and free environment, interactions between employees and customers become more efficient and positive, fostering greater mutual recognition. As one consumer commented: “Over-attentive service sometimes makes offline shopping uncomfortable, but at Pang Donglai, customers can use the store-provided ‘Do Not Disturb’ signs for assistant-free shopping. This liberating and comfortable atmosphere makes both parties feel more at ease” (F3).

Based on this, the following proposition is proposed:

Proposition 3. 

When retail enterprises implement autonomy-oriented shopping scene innovation, they create a free and relaxed shopping environment for customers and service environment for employees. In this setting, customers’ freedom is respected, employees’ sense of self-worth is enhanced, and mutual recognition between both parties is improved, thereby facilitating empathetic employee–customer interaction.

4.2.4. Thematic Display Scene Innovation and Empathetic Employee–Customer Interaction

Thematic merchandise displays not only facilitate customer product selection but also provide rich conversation topics for employee–customer interactions. By organizing products around specific themes, merchandise transforms from impersonal objects into meaningful storytelling vehicles that bridge employees and customers. Simultaneously, employees evolve from “product promoters” to “storytellers”, conveying not just product information but also scenario-based narratives. This emotional investment fosters deeper connections between employees and customers, thereby facilitating empathetic interaction. For instance, in senior health display zones, employees frequently exchange health maintenance tips and supplement efficacy experiences with elderly customers, while hot pot theme areas spark discussions about dipping sauce recipes and personal cooking experiences with various ingredients (F1).

Based on this, the following proposition is proposed:

Proposition 4. 

When retail enterprises implement thematic display scene innovation, they endow products with enhanced cultural and emotional significance while enabling employees and customers to engage in more profound theme-based interactions, ultimately facilitating employee–customer empathetic interaction.

4.3. Employee–Customer Empathetic Interaction and Employee Well-Being

4.3.1. Employee Well-Being

Employee well-being refers to a positive psychological state that employees achieve through self-actualization and social connection and belonging at work. This well-being not only has an impact on employees’ job satisfaction and quality of life but also directly influences the enterprise’s operational efficiency and customer satisfaction. As Pang Donglai’s Chairman Yu Donglai stated: “Only when employees are doing well can the enterprise build cohesion; only when employees are willing to work can they create and enjoy a better life… Between enterprise and employees, between employees and customers—it’s all about genuine reciprocity” (S1) (

Table 4. Exemplary Evidence Citations of Employee Well-being.

Aggregate Dimensions	Second-Order Themes	First-Order Concepts	Exemplary Evidence Citation
Employee Well-being	Self-realization	High Sense of Achievement	I find therapy in maintaining perfectly organized product displays, gain fulfillment from customers’ smiles and recognition, and feel genuine joy in completing every task. (S3)
		High Satisfaction	Seeing the radiant confidence of a Pang Donglai cleaner with nearly 20 years’ service, I found her smile more infectious than Shanghai Disney cast members. (F3) The affirmation from customers always moves me deeply and makes me more responsible for my work. (S3)
	Social Connection and Belonging	Positive Social Relationships	At Pang Donglai, employee-customer interactions radiate familial warmth. Staff address customers as ‘Auntie’ and ‘Uncle’, creating kinship-like dialogues throughout the store. (F1) A female customer once encouraged me: “You’re such a good person—you’d excel even if not working as a Pang Donglai attendant”. (S3)
		Strong Organizational Belonging	Pang Donglai provides not just living wages, but joyful work environments and uplifting life attitudes. (S3) Working at Pang Donglai makes me proud. (F2)

).

4.3.2. Empathetic Employee–Customer Interaction and Employee Well-Being

Employee–customer empathetic interactions enhance employee well-being through dual pathways. Firstly, during efficient service exchanges, employees not only develop deeper understanding of customer needs but also perceive the value and meaning of their work through fulfilling diverse requests. Simultaneously, positive customer feedback makes employees feel that their autonomy is respected and enhances their sense of competence at work. Secondly, in the process of co-creating emotional value, customers feel understood while employees experience being genuinely needed, establishing highly trusting relationships. This further helps employees meet their needs relatedness. Rather than depleting emotional resources during service delivery, employees maintain equilibrium, thereby gaining social connection and belonging. As a Pang Donglai employee shared: “Customers’ blessings and recognition deeply move me, making me feel supported and valued, which strengthens my work commitment” (S0). This aligns with observations that Pang Donglai staff consistently interact with customers through warm, familial exchanges, sharing affection with each patron (S2).

Based on this, the following proposition is proposed:

Proposition 5. 

In employee–customer empathetic interactions, efficient service exchanges earn employee’s positive customer feedback, fostering their sense of achievement and satisfaction while realizing self-worth. Furthermore, the co-creation of emotional value between employees and customers enhances their relationship, reduces psychological distance, and provides employees with social connection and belonging, ultimately elevating employee well-being.

5. Conclusions

5.1. Research Findings

Based on the theory of scene innovation, this study explores the case of Chinese retail enterprise Pang Donglai, revealing the pathways through which retail enterprises leverage service scene innovation to enhance employee well-being, as illustrated in Figure 2.

First, service scene innovation in retail enterprises can be categorized into empowerment-oriented scene innovation, autonomy-oriented shopping scene innovation, and thematic display scene innovation. Based on self-determination theory, service scene innovation essentially creates a “supportive environment” that fulfills three types of employee needs: autonomy, competence and relatedness. Empowerment-oriented scene innovation refers to restructuring corporate resources and processes to activate employee autonomy and creativity, building a dynamic support system for employee capabilities through three dimensions: knowledge empowerment, authority empowerment, and psychological empowerment. The goal is to stimulate employees’ flexibility, creativity, and initiative during service delivery. Autonomy-oriented shopping scene innovation involves reshaping public and product spaces in the shopping environment to prioritize customer exploration and free experience, balancing customer freedom with flexible employee service. Thematic display scene innovation entails grouping and presenting related products around a specific theme while providing abundant product information based on diverse usage scenarios.

Second, Service scene innovation not only enhances employees’ engagement and creativity in service delivery but also elevates the customer shopping experience. This fosters a new dynamic in employee–customer interactions, namely the employee–customer empathetic interaction proposed in this paper. service scene innovation in retail enterprises fosters empathetic interaction between employees and customers. Empowerment-oriented scene innovation enhances employees’ flexibility, creativity, and initiative by shaping their capabilities, working conditions, and motivation. Customers, moved by sincere and attentive service, develop greater trust in employees and the company, facilitating empathetic interaction. Autonomy-oriented shopping scene innovation creates a relaxed shopping and service environment, ensuring customer freedom and meeting personalized needs. This leads to customer affirmation of employees’ work, boosting employees’ sense of self-worth and emotional engagement, thereby promoting empathetic interaction. Thematic merchandise display innovation enriches products with cultural and emotional meaning, shifting employee–customer interactions from functional exchanges to deeper emotional exchanges centered on a theme.

Third, service scene innovation enhances employee well-being through employee–customer empathetic interaction. The three types of innovation create conditions for empathetic interaction from the perspectives of employees, customers, and products. In such interactions, effective engagement earns employees positive feedback, fostering a sense of achievement and fulfillment. Emotional value co-creation between employees and customers strengthens relationships, reduces psychological distance, and enhances social connection and belonging, ultimately improving employee well-being.

5.2. Academic and Practical Contributions

By analyzing the case of Pang Donglai, this study uncovers the mechanism through which retail enterprises use scene innovation to enhance employee well-being, offering the following theoretical contributions:

First, it extends scene innovation theory to the retail sector. Existing research on scene innovation focuses on urban spatial development [15], corporate impact [3], and technological applications [9], with little attention to retail service scenes. This study identifies three types of retail service scene innovation, deepening the theory’s applicability.

Second, it enriches research on employee well-being. Prior studies primarily examine well-being from an employer–employee interaction perspective (e.g., high-performance work systems [5], leadership styles [6,7], organizational relationships [8], and new technology adoption [9]). This study reveals that retail enterprises can boost employee well-being through service scene innovation, mediated by empathetic employee–customer interaction.

Third, it highlights the impact of employee–customer interaction on employee well-being, expanding relevant research on the outcomes of employee–customer interaction. The interaction between employees and customers is a key topic of research in service marketing fields. While prior research shows that positive interactions improve customer satisfaction, employee service proactivity, and innovation [49], and negative interactions trigger employee withdrawal [50], this study demonstrates that empathetic interaction enhances employee well-being, adding a new psychological dimension to the discourse.

5.3. Practical Implications

Focusing on Pang Donglai, an exemplary Chinese retail enterprise, this study reveals the relationship between service scene innovation, employee–customer empathetic interaction, and employee well-being. It offers the following insights for service-oriented retail enterprises:

First, our research has found that carefully designed service scenes not only influence customers’ purchasing decisions but also contribute to employees’ sense of well-being, prompting retailers to focus on service scene design. Service scene design is a systematic endeavor encompassing employees’ work scene, customers’ shopping scene, and product display scene. In terms of work scene, retailers should empower employees through knowledge, authority, and psychological support to enhance their initiative and creativity in service delivery. In terms of customer shopping scene, retailers should prioritize shopping freedom and open public spaces to ensure customers’ central role. Regarding product display scene, retailers should focus on organizing product displays around a specific theme and provide as much product information as possible (e.g., production, storage, usage, and styling information) to expand the scope of employee services.

Second, our research found that promoting empathetic interactions between employees and customers can enhance employee well-being, which suggests that retailers should pay attention to interactions between employees and customers. In fact, existing research has shown that customer deviance can reduce employee job satisfaction, leading to employee turnover [36]. Retail businesses cannot rely solely on direct measures such as improving compensation to foster employee well-being; they must also focus on how to promote empathetic interactions between employees and customers. For example, they can enhance employees’ service capabilities through empowerment-oriented workplace innovations; ensure customers’ shopping freedom through autonomy-oriented shopping scene innovations; and enrich the content of interactions between employees and customers through theme-based product display innovations. These approaches can help facilitate empathetic interactions between employees and customers.