Adding store to web: migration and synergy effects in multi-channel retailing

Abstract

Purpose – The purpose of this paper is to investigate the topic of multi-channel retailing. Specifically, the research intends to determine if and to what extent the opening of physical stores by a former web-only retailer reduces or extends overall retail sales, and whether such effects tend to change over time. Empirical analysis focuses on data elaboration from a retailer who has passed from the initial mono-channel model (pure online), to a multi-channel one with the opening of stores. Design/methodology/approach – Through the analysis of an internal data set of a leading consumer electronics retailer applying Probit and Logit estimation techniques, the authors extract information about actual customers’ purchases (or rather retail sales) in three newly opened stores and about online purchases (through an e-commerce web site managed by the same retailer with the same store brand) by people living in the new store service areas before and after the openings. Findings – The paper shows that, for the single customer, the probability of purchasing online is reduced by the store opening in the short term, but tends to increase in the long term. Besides, results indicate that long-term synergy between the two channels depends mainly on indirect influence due to the mere presence of the store brand in the area rather than on the direct experience of shopping in the store. Research limitations/implications – The study highlights that channel portfolio enlargement from mono- to multi-channel retailing tends to activate a sort of life cycle; while in the early phase of store addition web sales tend to be cannibalized because the two channels are perceived as “substitutes” for each other, in the long run migration turns into a synergy effect; different channels tend to interact with and reinforce each other as customer touch points of the same retailer, in an omni-channel perspective. Originality/value – The paper herein presents various original elements concerning types of available data (actual sales rather than consumers’ intentions/perceptions and individual level data rather than aggregate level ones), estimation technique used (binary choice model) and research hypotheses (distinguishing between “direct” and “indirect” synergy effects in multi-channel retailing).

Consumer cross-channel behaviour: is it always planned?

“…What is a quick and simple solution to your dilemma has labelled you as a cross-channel shopper; one of the most challenging kind of consumers for retailers (Chou et al, 2016). Such apparent exploitation of retailers by switching between online and physical store channels has become commonplace (Fornari et al, 2016;Kalyanam and Tsay, 2013;Konuş, Verhoef, and Neslin, 2008), with such cross-channel behaviour typically perceived as intentional (Flavián, Gurrea, and Orús, 2019;Santos and Gonçalves, 2019;Schneider and Zielke, 2020). Although, as this example illustrates, cross channel switching may not always be an intentional behaviour, with some consumers forced to switch channels due to factors outside their control.…”

A new approach to retailing for successful competition in the new smart scenario

“…In fact, the introduction of these new technologies at physical points of sale may solve several emerging problems in traditional retailing such as a crowded retail environment, limited opening hours, temporary non-availability of a sales assistant, and the slow speed of reply and monetary transactions (payments). For these reasons, the number of consumers shopping online (e-shopping), through mobile technology (m-shopping) or through multiple technologies (omni-channel shopping) is rapidly increasing, which in turn intensifies competition with the traditional offline channel (Dennis et al, 2016;Fornari et al, 2016;Picot-Coupey et al, 2016). Therefore, from the consumer point of view, benefits emerging from the introduction of technology-based innovations at the point of sale include access to a wider offer, reduction of queues and waiting time, access to customised services, more efficient delivery, rewards for loyal consumers, reinforcement of trust with sellers, and more satisfying shopping experiences.…”

Multichannel search patterns and webrooming behaviours in the service industries: the case of motor insurance

“…In multichannel retailing, diverse channels are managed so as to offer shoppers a seamless experience across all channels. In omnichannel retailing, neither the customer nor the retailer distinguishes between channels any longer could also push webrooming (Fornari et al 2016). The better service quality offered by physical stores also acts as an antecedent to webrooming behaviours (Chiu et al 2011).…”