Retail store entry and online consumer search: the role of cognitive versus physical search costs

Abstract

Purpose Relatively little research explicitly considers how a firm’s channel decisions affect consumer tradeoffs between the cognitive costs of online search and the physical costs of visiting a retail store. This study aims to argue that opening a new retail store affects both cognitive and physical search costs, but that the magnitude of these effects depends on the location of the consumer relative to the new store. In addition, individual differences in consumers’ cognitive costs that should moderate these effects. Design/methodology/approach This study takes the opening of multiple retailer stores on the same day as the nature experiment. Combining with data from other sources, this study tests the hypotheses using conditional logit for the correction of incidental problem in the traditional fix-effect logit model. Endogeneity issue is tested with the control function approach. Findings This study finds that opening a new store leads to a 136% increase in the odds of online visiting by consumers who live in the broader metropolitan area of the new store, while it leads to a 43% decrease in the odds of online visiting by consumers who live in the nearby shopping region. However, the effect of store entry on increasing website search is weaker for consumers who are more loyal, and the effect of store entry on decreasing website search is weaker for consumers who are more efficient in searching online. Originality/value This study adds to prior research by identifying when, and for which consumers, opening a physical store has complimentary versus substitutive effects on online search behavior.

PC vs App vs Mweb: price discounts’ effect on customer purchases across digital channels in China

“…With the rapid development of digital marketing, digital channels (e.g. online and mobile channels) have been adopted by customers in their daily purchase journeys (Gao and Li, 2022; Mukherjee and Chatterjee, 2021). For example, the number of digital shoppers in China reached 782.41 million in 2020 (Ma, 2021).…”