By assembling and analyzing new panel data, we investigate the impact of innovative human resource management (HRM) practices on performance for a retail firm. Monthly financial and performance data for 2001-2003, for all (47) units, are combined with information for crucial aspects of HRM environments obtained from employee surveys and multiple case visits. Our rich data include measures of the operating environment, important dimensions of core inputs and output is measured as value added. Augmented production functions, including specifications with both establishment and manager fixed effects, are estimated. We find that when employees have opportunities to participate, receive appropriate information and pertinent rewards, productivity is enhanced. Thus even in settings where employees do simple tasks and employees are relatively low-skilled our findings provide more solid support than many earlier studies for retailing and service firms that novel HRM practices can improve business performance.