ONE SIZE FITS ALL?UNDERSTANDING SHOPPER RESPONSES TOWARDS INTEGRATION ACTIVITIES IN OMNICHANNEL RETAILING

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ONE SIZE FITS ALL?

UNDERSTANDING SHOPPER RESPONSES TOWARDS INTEGRATION ACTIVITIES IN OMNICHANNEL RETAILING

Angelica Blom ONE SIZE FITS ALL?

ISBN 978-91-7731-113-3

DOCTORAL DISSERTATION IN BUSINESS ADMINISTRATION STOCKHOLM SCHOOL OF ECONOMICS, SWEDEN 2019

ANGELICA BLOM is a researcher at the Center for Retailing.

online or offline stores, smartphone applications, social media platforms and mass communication. Shoppers typically expect to shop seamlessly across interactions, leading retailers to develop omnichannel strategies focused on in- tegrating such interactions. This thesis investigates shopper responses, linked to sales- and brand-related outcomes, towards these integration attempts, seeking to determine if these responses are dependent on four distinct aspects in the shopping situation: type of purchase made by the shopper, how well-planned the purchase is, the shopper’s smartphone shopping expertise and the location of the shopper.

The shopping behavior literature suggests that shoppers respond differently towards marketing, depending on their shopping situation. However, a common belief in both omnichannel research and practice is that integration across interactions is preferable in all situations. This thesis contributes to research and practice by examining if and when shopper responses towards retailers’ integration activities can be dependent upon the shopping situation.

The empirical results from five articles consisting of eight experimental studies indicate that a one-size-fits-all integration strategy is not universally applicable. The overall patterns demonstrate that retailers will gain more by focusing on integration activities targeted towards shoppers who purchase utilitarian products, make planned purchases, have less experience in using their smartphone while shopping, and are located outside the store. The findings can be used as a guide for retailers in the design of their integration activities.

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Angelica Blom

ONE SIZE FITS ALL?

UNDERSTANDING SHOPPER RESPONSES TOWARDS INTEGRATION ACTIVITIES IN OMNICHANNEL RETAILING

Angelica Blom ONE SIZE FITS ALL?

ISBN 978-91-7731-113-3

DOCTORAL DISSERTATION IN BUSINESS ADMINISTRATION STOCKHOLM SCHOOL OF ECONOMICS, SWEDEN 2019

ANGELICA BLOM is a researcher at the Center for Retailing.

ONE SIZE FITS ALL?

Contemporary shopper journeys often entail myriad interactions, including online or offline stores, smartphone applications, social media platforms and mass communication. Shoppers typically expect to shop seamlessly across interactions, leading retailers to develop omnichannel strategies focused on in- tegrating such interactions. This thesis investigates shopper responses, linked to sales- and brand-related outcomes, towards these integration attempts, seeking to determine if these responses are dependent on four distinct aspects in the shopping situation: type of purchase made by the shopper, how well-planned the purchase is, the shopper’s smartphone shopping expertise and the location of the shopper.

The shopping behavior literature suggests that shoppers respond differently towards marketing, depending on their shopping situation. However, a common belief in both omnichannel research and practice is that integration across interactions is preferable in all situations. This thesis contributes to research and practice by examining if and when shopper responses towards retailers’ integration activities can be dependent upon the shopping situation.

The empirical results from five articles consisting of eight experimental studies indicate that a one-size-fits-all integration strategy is not universally applicable. The overall patterns demonstrate that retailers will gain more by focusing on integration activities targeted towards shoppers who purchase utilitarian products, make planned purchases, have less experience in using their smartphone while shopping, and are located outside the store. The findings can be used as a guide for retailers in the design of their integration activities.

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One Size Fits All?

Understanding Shopper Responses Towards Integration Activities in Omnichannel Retailing

Angelica Blom

Akademisk avhandling

som för avläggande av ekonomie doktorsexamen vid Handelshögskolan i Stockholm

framläggs för offentlig granskning fredagen den 22 februari 2019, kl 10.15,

sal Ruben, Handelshögskolan, Saltmätargatan13-17, Stockholm

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ONE SIZE FITS ALL?

Understanding Shopper Responses Towards Integration Activities in

Omnichannel Retailing

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ONE SIZE FITS ALL?

Understanding Shopper Responses Towards Integration Activities in

Omnichannel Retailing

Angelica Blom

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Dissertation for the Degree of Doctor of Philosophy, Ph.D., in Business Administration

Stockholm School of Economics, 2019

One Size Fits All?: Understanding Shopper Responses Towards Integration Activities in Omnichannel Retailing

Nicklas Gustafsson, 2013 Printed by:

BrandFactory, Gothenburg, 2019 Keywords:

Omnichannel retailing, shopper journey, integration strategy, shopper responses, shopper behavior, seamless shopping

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To

Rasmus and Olivia

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Foreword

This volume is the result of a research project carried out at the Department of Marketing and Strategy at the Stockholm School of Economics (SSE).

This volume is submitted as a doctoral thesis at SSE. In keeping with the policies of SSE, the author has been entirely free to conduct and present her research in the manner of her choosing as an expression of her own ideas.

SSE is grateful for the financial support provided by the Hakon Swenson Stiftelsen, which has made it possible to carry out the project.

Göran Lindqvist Hans Kjellberg

Director of Research Professor and Head of the Stockholm School of Economics Department of Marketing and Strategy

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Acknowledgements

This thesis would never have been completed without the guidance of and encouragement from several actors, all of whom deserve a special thanks.

For your support, I will be forever grateful.

First, I want to thank my three superheroes, Sara Rosengren, Fredrik Lange, and Anna Jonsson. I’m sincerely grateful and privileged that all three of you wanted to be part of my supervisory committee. To Sara Rosengren:

thank you for believing in me and encouraging me, always, as well as for always finding time for me, and for giving me invaluable advice whenever I needed it. Thank you for always being so supportive along the way. You are truly an academic inspiration and a great mind. To Fredrik Lange: if it was not for you, this journey would probably never have been started; I’m truly thankful that you inspired me to apply for the Ph.D. program. Thank you for your great guidance throughout this journey and for always making time for me and my projects. Thank you for always making my questions—even the less clever ones—feel like million-dollar inquiries, worthy of your time and thoughts. You are sincerely a brilliant scholar. To Anna Jonsson: for so generously offering your support, time, and valuable insights along the way, for helping me see the bigger picture, and for always cheering me on: you are a great intellectual, and a source of wisdom and happiness. To Sara, Fredrik and Anna: I’m truly honored to have had the opportunity to work with three such inspirational scholars.

To all my colleagues, present and former, at the Center for Retailing and the Center for Consumer Marketing: Erik Alenius, Hanna Berg, Ann Cedersved, Per-Jonas Eliaeson, Maja Fors, Rebecca Gruvhammar, Mikael Hernant, Cecilia Höft, Svetlana Kolesova, Lina Lehn, Karina T. Liljedal, Annika Lindström, Erik Modig, Sofie Sagfossen, Reema Singh, Karl Strelis, Torkel Strömsten, Carolina Stubb, Stefan Szugalski, Martin Söndergaard,

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Erik Wikberg and Nina Åkestam-Grahnström. I’m so lucky to have had the opportunity to share my working days with you. A special thanks to Claes- Robert Julander and Richard Wahlund for your wise insights, to Magnus Söderlund for always making time to answer my questions, and to Jonas Colliander and Wiley Wakeman for reading and commenting on my texts.

To Jens Nordfält, Anne L. Roggeveen and Dhruv Grewal, I am grateful for your insightfulness and wisdom that you shared with me along the way.

To all of my co-authors, Fredrik Lange, Ronald L. Hess Jr., Sara Rosengren, Micael Dahlen and John Karsberg: working with you has been a privilege, and I have learned so much throughout our joint projects. I also want to thank everyone who has helped me in collecting data throughout this thesis project. To the Hakon Swenson Stiftelsen, for supporting this thesis project financially, for that I am genuinely thankful. To Daniel Tolstoy, thank you for being a great opponent on my mock defense, and for all your valuable insights and comments.

A special thanks goes to John Karsberg, who shared the bigger part of this process with me, for making this journey an even more pleasant one. I’m so glad that we decided to work on a joint project together. A special thanks is also extended to Joel Ringbo and Carl-Philip Ahlbom for being the greatest roomies I could ever have wished for. John, Joel and Carl-Philip, thank you for your invaluable support along the way and for being such great friends.

To the love of my life, my husband Rasmus: there are not enough words to describe how lucky I am to share my life with you. Thank you for cooking ninety percent of all weeknight dinners, for every load of laundry you have washed, for being our family’s Chief of VAB and for being the bedtime story-general, as well as for the countless hours you spent on the playground after kindergarten indulging our daughter’s love of “gunga,”

while I spent most of my time writing this thesis. Most importantly, thank you for believing in me, being my biggest supporter and for being the best dad our daughter ever could had whished for. The light of my life, my daughter Olivia, thank you for always reminding me what’s most important in life. To my family, my everything: I love you to the moon and back.

Bromma, December, 2018 Angelica Blom

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Imagine you are looking for an outfit to wear at a special occasion. You first search on the web and get access to a worldwide assortment. The number of alternatives is over- whelming. You then remember that you saw an outfit on one of your favorite retailer’s Instagram account last week. You repost that outfit on your social media platforms and ask your followers to vote yes or no if you should buy the item. Most of your friends vote no. The next day you walk by a fashion retailer’s store window and something catches your eye. One of the outfits displayed in the store window looks really interesting, you enter the store and test the outfit. You send pictures to your closest friends to ask for ad- vice. They give you thumps up for the outfit. Using your smartphone, you check if the outfit can be bought at some other retailer for a better price. In the store you see that the retailer is promoting shopping in their online store; if the purchase is made this week through their smartphone application you will get 10% off. You search for the right size in the app, find it, order it, and choose to have it delivered the next day to your local gro- cery store.

This shopper journey illustrates the contemporary shopping behavior in the evolving retail landscape where technology enables flexible shopping. Shoppers can interact any- where with a retailer, both inside and outside the store, and the number of interactions made are often numerous. Shoppers often interact with retailers through online stores, social media, store window displays, other brand communication, a physical store, and/or a smartphone application. Retailers’ integration activities potentially allow the retailer to offer a consistent retail offering independent of mode of interaction and seamlessness across these interactions. However, how will shoppers respond towards these attempts to inte- grate, and will these shopper responses be dependent on the place of the interaction and/or contingent on the shopping situation such as; purchase type, the degree of planning a shopper makes before a purchase, the shopper’s expertise and the location of a shopper?

These questions will be explored in the thesis.

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Chapter 1

Introduction

The way shoppers interact with retailers has changed considerably over the last decade due to new technology and new formats, including social media, smartphone applications, and online stores. Due to this change, retailers are attempting to integrate activities across these interactions. This thesis exam- ines how shoppers respond towards retailers’ integration activities and, more specifically, if shopper responses can be contingent upon the shopping situation.

Retailers have traditionally depicted the shopper journey as a one-way journey where shoppers first recognize a need, search for information, and then evaluate the possible alternatives, all before making a choice and buy- ing a product in a store (Faulds et al., 2018; Lemon & Verhoef, 2016; Levy et al., 2019). Typically, shoppers interacted with the retailer through only one channel, such as a physical offline store or an online website store (Verhoef et al., 2015). This step-by-step shopper journey described as a dis- crete one-way journey with a distinct beginning and an end has however changed (Faulds et al., 2018; Harris et al., 2018; Kahn et al., 2018; Lemon &

Verhoef, 2016; Lee et al., 2018). Technological development facilitates shopping flexibility (McKenzie et al., 2018) and, as illustrated in the prologue, shoppers don’t interact with a retail brand only through a store visit, they also potentially use several different retail channels (i.e. interactions where transactions can be made including offline and online stores or the smartphone application store) and touchpoints (i.e. informational interactions such as social media, reviewer sites, shopper communities, and/or

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mass communication) throughout their shopper journey (Anderl et al., 2016; Barwitz & Maas, 2018; Harris et al., 2018; Kahn et al., 2018; Verhoef et al., 2015). These interactions can take place both inside and outside a store (Bloch and & Kamran-Disfani, 2018; Hagberg et al., 2016; Shankar 2014). Furthermore, shoppers often switch between these channels and touchpoints or use them interchangeably (Lemon & Verhoef, 2016; Rigby, 2011, Rosengren et al., 2018; Verhoef et al., 2015).

These changes in shopping behavior have led both retailers and researchers to conclude that contemporary shoppers expect that they can start their journey in one channel or touchpoint and then continue the journey via a different channel and/or touchpoint without any disruptions (Huré et al., 2017; Juaneda-Ayensa et al., 2016; Rigby, 2011; Zhang et al., 2018). More specifically, it is argued that shoppers expect 1) movement across channel and touchpoint to be seamless (Juaneda-Ayensa et al., 2016;

Rigby, 2011; Verhoef et al., 2015), and 2) their shopper journey to be as effortless and efficient as possible (Murfiled et al., 2017).

Because of these changes in shopper behaviors and expectations, both scholars and professionals in the field recommend retailers to integrate channels and touchpoints and implement what is referred to as an omnichannel retailing strategy (Lemon & Verhoef 2016; Rosengren et al, 2018;

Verhoef et al., 2015). Omnichannel retailing is defined as “the synergetic management of the numerous available channels and customer touchpoints, in such a way that the customer experience across channels and the performance over channels is optimized” (Verheof et al., 2015, p. 176). Fo- cus in omnichannel retailing is thus on optimizing both the retailer’s perfor- mance and the shopper experience with the retail brand. Thus, the changing shopper behavior challenges retailers to go beyond the traditional performance focus where direct sales in retail channels have been the central outcome (Brynjolfsson et al., 2013; Flauld et al., 2018) to add a brand focus across both channels and touchpoints (Rosengren et al., 2018; Verhoef et al., 2015).

In omnichannel retailing, integration across channels and touchpoint interactions has been described as fundamental in order to facilitate the seamless shopper journey expected by shoppers in the emerging retail landscape (Cao & Li, 2015; Frasquet & Miquel, 2017; Kleinlercher et al., 2018;

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CHAPTER 1 3

Lemon & Verhoef, 2016; Li et al., 2017; Picot-Coupey et al., 2016; Rigby, 2011; Saghiri et al., 2017; Zhang et al., 2018). Integration can be described as creating unity across channel and touchpoint interactions; the shopper should be able to shop seamlessly across interactions, and the retail brand image should be consistent across these interactions (Frasquet & Miquel, 2017; Huré et al., 2017; Kleinlercher et al., 2018). Integration activities that can create unity across channel and touchpoint interactions commonly mentioned in research include: retail mix (Bendoley et al., 2005; Frasquet &

Miquel, 2017; Li et al., 2017; Oh & Teo, 2010; Saghiri et al., 2017;

Schramm-Klein et al., 2011; Van Baal, 2014; Zhang et al., 2018), distribution functions (Bendoley et al., 2005; Frasquet & Miquel, 2017; Herhausen et al., 2015; Li et al., 2017; Oh & Teo, 2010; Saghiri et al., 2017; Schramm- Klein et al., 2011; Zhang et al., 2018), customer information (Frasquet &

Miquel, 2017; Li et al., 2017; Oh & Teo, 2010; Saghiri et al., 2017;

Schramm-Klein et al., 2011; Zhang et al., 2018;), customer service (Bendo- ley et al., 2005; Frasquet & Miquel, 2017; Li et al., 2017; Oh & Teo, 2010;

Saghiri et al., 2017; Zhang et al., 2018;), and brand image (Frasquet & Mi- quel, 2017; Van Baal, 2014).

Integration can be executed differently among retailers, and the terms used to describe a management strategy focusing on integration can also differ. Researchers use the terms multichannel (e.g. Emrich et al., 2015;

Frasquet & Miquel, 2017; Melis et al., 2015), cross channel (e.g. Bendoley et al., 2005; Cao & Li, 2015; Li et al., 2017) or omnichannel retailing (e.g.

Saghiri et al., 2017; Verhoef et al., 2015; Zhang et al., 2018) to describe integration across interactions, with each of these terms describing different integration strategies. Furthermore, it has been established that these different integration strategies sometimes are used to convey different perspectives or levels of integrations, but sometimes are used as synonyms (Beck &

Rygl, 2015; Huré et al., 2017; Picot-Coupey et al., 2016). These three integration strategies will be discussed further in chapter 2. The term omnichannel retailing is used here since it recognizes the changing shopper behavior and the way contemporary shoppers interact with retailers through several channels and touchpoint both inside and outside the store.

Moreover, it also recognizes the importance of having a sales and brand focus (Saghiri et al., 2015; Verhoef et al., 2015).

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In this thesis I take a shopper perspective by examining how shoppers respond towards integration activities in terms of managing interactions across channels and touchpoints, and interactions inside and outside the store. For retailers, shopper responses (i.e. promotion redemption, shopper in-store movements, store entry, satisfaction, and retail brand attitude) can lead to both sales and brand related outcomes. My objective is that this thesis will further the understanding of shopper behavior in omnichannel retailing. This is done by exploring the following questions; How will shoppers respond towards integration activities, and will these responses be dependent upon where the interaction takes place? Furthermore, will these responses be contingent upon the shopping situation such as the type of purchase made, degree of planning made before a purchase, shopper expertise and the location of the shopper?

1.1 The Research Problem

Changing shopper behavior has recently increased the interest in omnichannel retailing across varied disciplines. Omnichannel retailing have been studied in various research disciplines such as marketing and supply chain (Cao & Li, 2015; Frasquet & Miquel, 2017; Gallino & Moreno, 2012;

Ganesh, 2004; Ishfaq et al., 2016; Li et al., 2017; Petina & Hasty, 2009;

Schramm-Klein et al., 2011; Zhang et al., 2018), management and organization (Cao, 2014; Lewis et al., 2014; Luo et al., 2016; Picot-Coupey et al., 2016; Wiener et al., 2018), and retail (Emrich et al., 2015; Herhausen et al., 2015; Melis et al., 2015). Focus has been on examining issues linked to distribution (Gallino & Moreno, 2012; Ishfaq et al., 2016), and business and strategy (Cao, 2014; Lewis et al., 2014; Müller-Lankenau et al., 2016; Picot- Coupey et al., 2016; Von Briel, 2018; Wiener et al., 2018). Furthermore, effects on performance (i.e. sales growth and profit) from integration has also been examined (Cao & Li, 2015; Oh et al., 2012; Petina & Hasty, 2009; Yan et al., 2010).

Additionally, in relation to the main shopper focus of this thesis, recent research has addressed the following issue which are of special interest;

showrooming and webrooming shopping behavior (Bell et al., 2013; Gao &

Su, 2017; Rapp et al., 2015; Rippé et al., 2017; Yurova et al., 2017),

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CHAPTER 1 5

smartphone use (Fuentes & Svingstedt, 2017; Fuentes et al., 2017; Grewal et al., 2018; Wang et al., 2015), omnichannel shopper’s characteristics (Jueanda-Ayensa et al., 2016; Murfield et al., 2017; Melis et al., 2015) and retailers’ integration activities and its effect on shopper responses (e.g. Ben- doley et al., 2005; Bertrandie & Zielke, 2017; Emrich et al., 2015; Herhau- sen et al., 2015; Melis et al., 2015; Oh & Teo, 2010; Schramm-Klein et al., 2011; Seck and Phillipe, 2013; Zhang et al., 2018). These specific research streams establish that shoppers use channels and touchpoints simultane- ously, through smartphone use (e.g. Fuentes & Svingstedt, 2017; Grewal et al., 2018; Rippé et al., 2017; Yurova et al., 2017), and interchangeably, where showrooming behavior foremost has been in focus (e.g. Bell et al., 2013; Gao & Su, 2017; Rapp et al., 2015). Moreover, the omnichannel shopper is time conscious (Murfield et al., 2017) and prefers to shop at retailers that can provide an efficient shopper journey (Jueanda-Ayensa et al., 2016).

The growing body of omnichannel research has also focused on shopper responses towards integration activities, where recent research demon- strates that retailers’ integration activities generally result in positive shopper responses, thus affecting outcomes linked to both sales and brand positively (e.g. Bertrandie & Zielke, 2017; Emrich et al., 2015; Gallino et al., 2017; Herhausen et al., 2015; Zhang et al., 2018). Hence, the common no- tion in omnichannel research and practice is that the shopper is expecting integration across channel and touchpoint interactions. Retailer’s integration activities are thus expected to lead to positive shopper responses such as an improved shopping experience, increased shopping value, satisfaction and loyalty (Faulds et al., 2018; Huré et al., 2017; Kleinlercher et al., 2018;

Lemon and Verhoef, 2016; Verheof et al., 2015; Zhang et al., 2018). How- ever, actors both in research and practice seem to overlook if and when integration might not be universally effective. This is surprising since previous research has demonstrated that shopper responses towards marketing are contingent upon the shopping situation (e.g. Büttner et al., 2015; Büttner et al., 2013; Kushwaha & Shankar, 2013; Kaltcheva & Weitz, 2006; Yalch &

Spangenberg, 1990). It has been established that the shopping situation can be formed by, for example, the type of purchase the shopper is making (e.g.

Bloch & Kamran-Disfani, 2018; Kushwaha & Shankar, 2013), by the degree

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of purchase planning (e.g. Bell et al., 2011; Cobb-Hoyer, 1986; Engel et al., 1995), by the shopper’s degree of expertise (e.g. Herhausen et al., 2015;

Lindström et al., 2016) and by the shopper and her/his location (e.g. Bues et al., 2017). Thus, the shopping situation can yield different types of shopper journeys (Lee et al., 2018) which in turn may affect how shoppers will respond towards retailers´ integration activities. Thus, integration activities may lead to strengthened or attenuated shopper responses (Verhoef et al., 2015). The implementation of an omnichannel retailing strategy might not be as straightforward as one might think. Thus, a one-size-fits-all integration strategy might not always be applicable.

Even though integration activities can lead to strengthened or attenuated shopper responses only a few researchers, to the best of the author’s knowledge, have examined the variation in the magnitude of shopper responses to integration activities (Bues et al., 2017; Emrich et al., 2015; Her- hausen et al., 2015; Melis et al., 2015; Shen et al., 2018). More specifically, these studies demonstrate that shopper responses towards integration activities are contingent upon type of retailer (Emrich et al., 2015), the shopper’s location (Bues et al., 2017) and shopper expertise linked to IT (Shen et al., 2018), and online shopping (Herhausen et al., 2015; Melis et al., 2015). This suggests that the magnitude of shopper responses towards retailers’ integration activities can vary. Integration investments can therefore lead to di- verse outcomes for retailers depending on the shopping situation.

Furthermore, little is still known regarding how shoppers will respond towards integration activities depending on where the interaction takes place. Contemporary shoppers can interact with a retailer both inside and outside the store while shopping (Bloch & Kamran-Disfani, 2018; Hagberg et al., 2016; Shankar, 2014). Only a limited number of articles have however focused on this aspect (e.g., Bues et al., 2017). This has however been pin- pointed in research as an important aspect to examine further in order to manage interactions inside and outside the store more effectively (Bloch &

Kamran-Disfani, 2018, Hagberg et al., 2016; Shankar, 2014). More research is needed to further the understanding of shopper responses towards integration activities, both with regards to under which conditions shopper responses will be strengthened or attenuated, and if these responses will differ depending on where an interaction takes place.

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CHAPTER 1 7

1.2 Purpose of the Thesis

The purpose of this thesis is to better understand shopper responses towards retailers’ integration activities in omnichannel retailing. More specifically, this thesis investigates if shopper responses are contingent upon the shopping situation in terms of type of purchase, degree of planning, degree of shopper expertise, and shopper location. By empirically investigating shopper responses linked to sales and brand related outcomes this thesis contributes to both research and practice in the area of omnichannel retailing.

1.3 Outline of the Thesis

This thesis is compiled of five articles with a total of eight experimental studies. Before introducing the articles and how they collectively contribute to the overall aim with the thesis in chapter 4, a literature review is outlined in chapter 2 focusing on shopper responses towards retailers’ integration activities. Chapter 3 will then present and discuss the conceptual framework of the thesis. The motivation for outlining a conceptual framework is two- folded; first it offers an overview of how the shopper journey is affected by the new and emerging retail landscape, where multiple channels and touchpoints has become a vital part of that journey (e.g. Hagberg et al., 2016;

Harris et al., 2018; Kahn et al., 2018; Lee et al., 2018). Secondly, it illustrates how the findings from this thesis contribute to an understanding of complex shopper journeys that retailers need to manage. In chapter 5 this thesis contribution to both research and practice will be discussed. The limitations of this thesis and suggestions for further research are also discussed in this chapter. The five articles are presented in full length in chapter 6-10.

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Chapter 2

Literature Review: Shopper Responses towards Integration Activities

In this chapter I will discuss how changing shopper behaviors influence retailers to focus on integration of channel and touchpoint interactions.

The literature focusing on shopper responses towards integration activities will be outlined in order to get an overview of the current knowledge in the field.

2.1 The Contemporary Shopper Journey

A shopper journey can and will most often entail several interactions with the retailer (Harris et al, 2018; Kahn et al., 2018), both inside and outside a store (Hagberg et al., 2016). The increased number of interactions during a shopper journey has forced retailers to rethink the retail channel concept, adding touchpoint interactions as vital aspects of the shopper journey, such as social media and mass communication (Ailawadi & Farris, 2017; Baxen- dale et al., 2015; Saghiri et al., 2017; Shen et al., 2018; Verhoef et al., 2015;

Von Briel, 2018).

Channels and touchpoints, both important in the shopper journey, differ in the type of interaction, who controls the interaction, and where the interaction takes place. Firstly, channel interactions can be described as transactional, that is interactions that enables shoppers to make a purchase.

Meanwhile touchpoint interactions can be described as interactions that

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provide shoppers with information during their shopper journey. Secondly, in comparison with channel interactions which are mainly controlled by the retailer, touchpoint interactions do not necessarily need to be in the hands of the retailer. These interactions can also be in the hands of a) other companies, such as a reviewer site that shoppers seek information from during their shopper journey, or distribution companies that deliver the products ordered online; and b) other shoppers (e.g. through communities or social media), such as when shoppers ask peers for shopping advice (Lemon &

Verhoef, 2016; Verhoef et al., 2015). Thirdly, these interactions can also be made inside a store, such as interactions with offline store channels, or outside the store, such as interactions made with the retail brand through touchpoints like social media or mass communication (e.g. Bloch &

Kamran-Disfani, 2018).

Hence, shoppers do not just interact with one retailer, one retail brand, or one retail store during their shopper journey; they interact with several channels and touchpoints (Barwitz & Maas, 2018; Harris et al., 2018; Kahn et al., 2018). These interactions can be controlled by different actors (e.g.

Verhoef et al., 2015) and be made inside and/or outside the store (e.g.

Hagberg et al., 2016). All these interactions have become fundamental in describing the contemporary shopper journey (Rigby, 2011; Rosengren et al., 2018; Verhoef et al., 2015) and makes both channels and touchpoints interactions two important aspects of this journey (Kahn et al., 2018; Li et al., 2017; Saghiri et al., 2017; Shen et al., 2018; Verhoef et al., 2015). More- over, it is argued in research that shoppers expect seamlessness across all these interactions (Juaneda-Ayensa et al., 2016; Rigby, 2011; Verhoef et al., 2015).

A contemporary shopper journey should therefore be described as a seamless journey across both channels and touchpoints (Faulds et al., 2018;

Kahn et al., 2018; Lee et al., 2018; Lemon & Verhoef, 2016). The contemporary shopper journey is formed by this seamless process, where information from past and future experiences are mixed. Furthermore, current experiences with the external environment and interactions with different channels and touchpoints during the pre-purchase, the purchase, and the post-purchase stage are essential in forming the contemporary shopper journey (Lemon & Verhoef, 2016; Rosengren et al, 2018). The contempo-

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CHAPTER 2 11

rary shopper journey is therefore often complex and difficult to control and predict (Barwitz & Maas, 2018; Harris et al., 2018; Huré et al., 2017; Lemon

& Verhoef, 2016; Verhoef et al., 2015).

Shopping situations are variable, and will therefore generate different types of shopper journeys (Lee et al., 2018). The type of purchase a shopper is making (e.g. a utilitarian or a hedonic) can affect which information the shopper is attentive towards during their journey (e.g. Kushwaha &

Shankar, 2013). Additionally, a well-planned purchase can potentially entail an additional number of interactions with a retailer compared to an un- planned purchase and can increase the shopper’s level of involvement (e.g.

Engel et al., 1995). The shopper´s degree of expertise can affect which information the shopper makes decisions based on (e.g. Mandel and Johnson, 2002). Furthermore, shopper journeys can be generated through only one interaction inside an offline store or by several interactions both inside and outside a store. Therefore, shopper journeys will vary widely (Barwitz &

Maas, 2018; Harris et al., 2018; Lemon & Verhoef, 2016). Nevertheless, it is typically argued that shoppers expect the shopper journey to be seamless (Juaneda-Ayensa et al., 2016; Rigby, 2011; Verhoef et al., 2015), and efficient (Murfiled et al., 2017).

Integration across interactions is vital to create seamless and efficient shopper journeys, and thus manage these contemporary shopper journeys more effectively (Frasquet & Miquel, 2017; Kahn et al., 2018; Lemon &

Verhoef, 2016; Li et al., 2017; Picot-Coupey et al., 2016; Saghiri et al., 2017;

Zhang et al., 2018).

2.2 Integration in Omnichannel Retailing

Integration in an organization is defined by Lawrence and Lorsch’s (1967, p.4) as: “the process of achieving unity of effort among the various subsys- tems in the accomplishment of the organization’s task”. According to Law- rence and Lorsch (1967), the task is linked to design, production, and distribution activities. Applying this in an omnichannel retail setting, integration is about achieving unity across channel and touchpoint interactions in order to optimize both sales and brand-related outcomes across these interactions (cf. Verhoef et al., 2015).

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There is a great variation regarding which integration activities that have been in focus in previous research. Focus have primarily been put on the retail mix such as price, assortment, and promotion (Frasquet & Mi- quel, 2017; Lee & Kim, 2010; Oh & Teo, 2010; Saghiri et al., 2017;

Schramm-Klein et al., 2011; Van Baal, 2014); distribution; purchase and returns (Bendoley et al., 2005; Frasquet & Miquel, 2017; Herhausen et al., 2015; Lee & Kim, 2010; Li et al., 2017; Oh & Teo, 2010; Saghiri et al., 2017;

Schramm-Klein et al., 2011); cross-channel shopping information; customer loyalty; stock information; promoting interactions in other channels and touchpoints, such as store location and opening hours (Bendoley et al., 2005; Frasquet & Miquel, 2017; Herhausen et al., 2015; Lee & Kim, 2010;

Li et al., 2017; Oh & Teo, 2010; Saghiri et al., 2017); and brand image (Frasquet & Miquel, 2017; Lee & Kim, 2010; Oh & Teo, 2010; Saghiri et al., 2017; Van Baal, 2014). Brand image can be linked to aspects such as store atmosphere and quality of the assortment and service level (see Anselmsson et al., 2017 for a more through description of the dimensions of retail image). This great variation may influence why the term of integration refers to many different ideas within the research community. Integration has been referred to as multichannel integration (Frasquet & Miquel, 2017), cross channel integration (Bendoley et al., 2005; Cao, 2014; Cao & Li, 2015;

Lee & Kim, 2010; Li et al., 2017; Schramm-Klein et al., 2011), channel integration (Lewis et al., 2014; Luo et al., 2016; Melis et al., 2015; Shen et al., 2018; Yan et al., 2010; Zhang et al., 2018), online-offline channel integration (Gallino & Moreno, 2012; Herhausen et al., 2015; Kleinlercher et al., 2018), strategic integration (Müller-Lankenau et al., 2006), multichannel coordination (Pentina & Hasty, 2009), channel congruity (Wang et al., 2009), harmonization across channels (Van Baal, 2014; Wiener et al., 2018), synchronization (Picot-Coupey et al., 2016), and organizational integration (Oh & Teo, 2010; Saghiri et al., 2017; von Briel, 2018).

Another reason for the extensive use of the term integration in retail research could be that the term can be used to portray different levels of integration, such as multi, cross, and omnichannel retailing (Figure 1).

Although it is not always clear whether these concepts differ in practice or in theory, or if they are used interchangeably, two parameters that can help explain the differences are a) the number and type of activities that are in-

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CHAPTER 2 13

tegrated and b) the number of channels and touchpoints that these activities are integrated across (Beck & Rygl, 2015; Cao & Li, 2015; Huré et al., 2017; Picot-Coupey et al., 2016). In short, this means that multichannel retail- ing refers to an almost non-existent integration across channels. That is, the retailer’s channels are used separately, and the number of activities integrat- ed across these is minimal. In cross channel retailing the level of integration is intensified through integration of those activities that can offer the shopper a seamless journey across channels. In omnichannel retailing activities that can offer the shopper a seamless shopper journey and create a consistent brand image should be integrated across both channels and the touchpoints. The level of integration in omnichannel retailing can be described as the highest level of integration (Beck & Rygl, 2015; Cao & Li, 2015; Huré et al., 2017; Picot- Coupey et al., 2016).

Figure 1. Integration level across multi, cross, and omnichannel retailing

Figure adapted from Huré et al., (2017) and Picot-Coupey et al., (2016). The main differences across these three integration strategies summarized in the figure are based on Beck & Rygl, 2015; Cao & Li, 2015; Huré et al., 2017; Picot-Coupey et al., 2016

Integration level

Multichannel Retailing - No Integration

- Manage interactions in separate channels - Focus: Sales related

outcomes

Cross Channel Retailing - Moderate Integration - Manage interactions across

channels

- Focus: Sales related outcome

Omnichannel Retailing - Full Integration

- Manage interactions across channels and touchpoints and in interactions inside and outside a store - Focus: Sales and Brand

related outcomes

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In addition to researchers using the term integration to refer to different levels, they may also vary in their perspective of integration. Integration can, for example, be viewed from a retailer or a shopper perspective (Beck

& Rygl, 2015; Cao & Li, 2015; Frasquet & Miquel, 2017; Huré et al., 2017;

Saghiri et al., 2017). The retailer perspective of integration, described as creating unity across channel and touchpoint interactions (Cao & Li, 2015;

Frasquet & Miquel, 2017; Huré et al., 2017; Saghiri et al., 2017) can lead to benefits of lowered costs through creating synergies (Cao & Li, 2015).

Meanwhile, integration from a shopper perspective can be described as the opportunity to shop seamlessly across channel and touchpoint interactions (Beck & Rygl, 2015; Cao & Li, 2015; Huré et al., 2017; Saghiri et al., 2017).

Thus, retailers may integrate activities that create synergies (the retailer perspective) and/or create seamlessness and consistency (the shopper perspective) in channel and touchpoint interactions. These two perspectives can be linked to Frasquet and Miquels’ (2017) description of integration as both physical and informational. Physical integration is achieved when activi- ties that create cross channel movements are integrated; a retailer’s integration activities should enable shoppers to switch between channels whenever they please during the different stages of the shopper journey.

Cross channel movements can be accomplished when stock information is shared across channels, when transactions and returns cross channels are possible, when the retailer promotes its channels and touchpoints in other interactions, when customer service is consistent across interactions, and when the retailer uses the same retail brand across interactions, letting shoppers know which channels and touchpoints they can switch between.

Informational integration on the other hand is achieved when activities that create information consistency across channels and touchpoints are integrated, such as the retail mix. Retailers should coordinate the retail mix in such a way that brand unity is generated. Coordination of the retail mix in channel and touchpoint interaction could in the end lead to synergetic benefits for the retailer (Frasquet & Miquel, 2017).

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CHAPTER 2 15

2.3 Shopper Responses Towards Integration Activities

The concept of integration is multidimensional, making it a relatively com- plicated topic for researchers to fully address in a single research article.

Thus, the operationalization of integration varies across research articles.

Researchers have focused on shopper perception of integration (Bendoley et al., 2005; Frasquet & Miquel, 2017; Lee & Kim, 2010; Schramm-Klein &

Morschett, 2005; Schramm-Klein et al., 2011; Zhang et al., 2018), integration of distribution activities (Gallino & Moreno, 2012; Gallino et al., 2017;

Herhausen et al., 2015; Li et al., 2017), retail mix activities (Bertrandie &

Zielke, 2017, Emrich et al., 2015; Melis et al., 2015; Van Baal, 2014) and integration of activities which enables cross channel shopping (Bues et al., 2017; Chatterjee, 2007; Oh & Teo, 2010; Seck & Phillippe, 2013; Shen et al., 2018) when examining how shoppers respond towards integration (Ta- ble 1).

Multiple studies show that integration activities translate into positive effects on sales-related outcomes. More specifically, research has shown positive effects on shoppers’ willingness to pay (Herhausen et al., 2015), shopping intention across channels and touchpoints (Gallino &Moreno, 2012; Schramm-Klein & Morschett, 2005; Schramm-Klein et al., 2011;

Shen et al., 2018; Zhang et al., 2018), and purchase intention (Bues et al., 2017; Herhausen et al., 2015). In addition, retailers’ integration activities can affect what type of merchandise the shopper puts in her/his shopping bas- ket (Gallino et al., 2017).

Similar to sales-related outcomes, integration activities have also been demonstrated to effect brand-related outcomes positively. More specifically, research has shown that shoppers perceive greater shopper value (Oh &

Teo, 2010), become more satisfied (Chattarjee, 2007; Frasquet & Miquel, 2017; Seck & Phillipe, 2013), and become more loyal towards the retailer (Bendoley et al., 2005; Frasquet & Miquel, 2017; Melis et al., 2015; Lee &

Kim, 2010; Li et al., 2017; Schramm-Klein & Morschett, 2005; Schramm- Klein et al., 2011; Van Baal, 2014) when offered integration activities.

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These positive shopping responses to integration may be due to shoppers perceiving lower risk and uncertainty (Bendoley et al., 2005; Chattarjee, 2007; Gallino & Moreno, 2012; Herhausen et al., 2015; Li et al., 2017), increased service (Frasquet & Miquel, 2017; Gallino et al., 2017; Herhausen et al., 2015; Li et al., 2017; Melis et al., 2015; Oh & Teo, 2010; Seck & Phillipe, 2013;), increased trust (Schramm-Klein et al., 2011; Zhang et al., 2018), and consistency (Seck and Phillipe, 2013; Van Baal, 2014). In contrast, it has also been demonstrated that integration activities do not always have positive shopper responses. For example, full integration of the assortment across channels does not always need to be the most appreciated integration activity by shoppers (Bertrandie & Zielke, 2017; Emrich et al., 2015).

Asymmetrical assortment integration, where a wider assortment is offered in one or in a certain number of channels but not in all channels used by the retailer, can lead to less choice confusion (Bertrandie & Zielke, 2017) and higher patronage intentions when shopping for general merchandise (Emrich et al., 2015) compared to full integration; when the retailer offers the same assortment in all channels. Moreover, price and assortment integration activities across channel and touchpoint interactions may result in cannibalization (Van Baal, 2014).

Shopper responses to integration activities can also be contingent on the shopper’s expertise (Herhausen et al., 2015; Melis et al., 2015; Shen et al., 2018). More specifically, shopper responses towards integration activities are attenuated when the shopper has more expertise regarding IT usage (Shen et al, 2018), online grocery shopping (Melis et al., 2015), and online shopping (Herhausen et al., 2015). Moreover, shopper responses towards integration activities can be contingent on the shoppers’ different locations in the store (Bues et al., 2017), and the shopping benefits being communi- cated through the integration activity (Kleinlercher et al., 2018) affecting purchase intention (Bues et al., 2017) and which channel they wish to shop from (Kleinlercher et al., 2018). Thus, research suggests that shopper responses could be contingent upon different aspects in the shopping situation. However, only a limited number of researchers have so far examined shopper responses towards integration activities and if they are contingent upon the shopping situation (Table 1).

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Table 1. Summary of research articles examining shopper responses towards retailers’ integration activities SourcePurpose of Integrations Activities FocusShopper Re- sponsesShopper Responses Contingent onChannels & TouchpointsMethod Bendoley et al., 2005Managing interactions across channels and touchpoints Shopper perception of integration Brand related outcome-Offline store & Online storeSurvey Lee & Kim, 2010Managing interactions across channels and touchpoints Shopper perception of integrationBrand related outcome-Offline store & Online storeSurvey Zhang et al., 2018Managing interactions across channels and touchpoints Shopper perception of integrationSales & Brand related outcome

-Offline store & Online storeSurvey Schramm-Klein & Morschett, 2005Managing interactions across channels and touchpoints Shopper perception of integrationSales & Brand related outcome

-Offline store, Online store & CatalogueSurvey Schramm-Klein et al., 2011Managing interactions across channels and touchpoints Shopper perception of integrationSales & Brand related outcome

-Offline store, Online store & CatalogueSurvey Frasquet & Miquel, 2017Managing interactions across channels and touchpoints Shopper perception of integrationBrand related outcome-Offline store & Online storeSurvey Gallino & Moreno, 2012Managing interactions across channels and touchpoints Distribution strategySales related outcome-Offline store & Online storePretest &posttest design Gallino et al., 2017Managing interactions across channels and touchpoints Distribution strategySales related outcome-Offline store & Online storePretest &posttest design Herhausen et al., 2015Managing interactions across channels and touchpoints Distribution & cross- channel shopping information

Sales related outcomeInternet Shopping ExpertiseOffline store & Online storeExperiment Li et al., 2017Managing interactions across channels and touchpoints Distribution & cross- channel shopping information

Brand related outcome-Offline store & Online storeSurvey Oh & Teo, 2010Managing interactions across channels and touchpoints Perception of cross- channel shopping information, retail mix, distribution, image Brand related outcome-Offline store & Online storeSurvey

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SourcePurpose of Integrations Activities FocusShopper Re- sponsesShopper Responses Contingent onChannels & TouchpointsMethod Shen et al., 2018Managing interactions across channels and touchpoints Perception of cross- channel shopping information Brand related outcomeIT ExpertiseOffline store, Online store, telephone, smartphone, social media

Survey Chatterjee, 2007Managing interactions across channels and touchpoints Cross-channel shopping information

Sales & Brand related outcome

-Offline store & Online storeConsumer s Sales data Secondary Executive s Seck & Phillipe, 2013Managing interactions across channels and touchpoints Cross-channel shopping information

Brand related outcome-Offline store & Online storeSurvey Bues et al., 2017Managing interaction inside the storeCross-channel shopping information

Sales related outcomeIn store locationOffline store & SmartphoneExperimen Kleinlercher et al., 2018Managing interactions across channels and touchpointsCross-channel shopping information

Sales related outcomeShopping benefitsOffline store & Online storeSurvey Van Baal 2014Managing interactions across channels and touchpoints Retail mix, brand imageSales & Brand related outcome

-Offline store, Online store & CatalogueSurvey Melis et al., 2015Managing interactions across channels and touchpoints Retail mixSales related outcomeOnline Grocery Shopping ExpertiseOffline store & Online storeSales data Bertrandie & Ziel- ke, 2017Managing interactions across channels and touchpoints Retail mixSales & Brand related outcome -Offline store & Online storeExperimen Emrich et al., 2015Managing interactions across channels and touchpoints Retail mixBrand related outcomeType of RetailerOffline store & Online storeExperimen

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CHAPTER 2 19

2.4 Intended Contribution to the Literature

Little is still known regarding under which conditions integration activities may lead to strengthened or attenuated shopper responses. This thesis intends to fill this gap by examining if shopper responses are contingent on the shopping situation, including type of purchase, degree of planning, degree of expertise, and shopper location.

Furthermore, the majority of the research with a focus on shopper responses to integration activities reviewed in this chapter, except from one article by Bues et al. (2017), has focused on examining shopper responses towards integration activities, with the purpose of managing shoppers across the online and offline channel (Table 1). Little is known regarding shopper responses to integration activities and their dependency on where the interaction takes place. Thus, there is still little guidance for retailer hon how to manage interactions inside and outside the store. Consequently, this is important to investigate further in order to manage contemporary shopper journeys more effectively, where shoppers now interact with retailers both inside and outside a store (Bloch & Kamran-Disfani, 2018; Hagberg et al., 2016; Shankar, 2014).

The majority of research on shopper responses towards integration activities has focused on either sales or brand-related outcomes (Table 1).

Both these outcomes are however important in omnichannel retailing and should be considered jointly (Rosengren et al, 2018; Verhoef et al., 2015).

Both these outcomes, when examining shopper responses, will be in focus in this thesis. Additionally, by taking an experimental-based approach, this thesis intends to contribute to the established literature, which, up to this point, mainly has used survey-based methods to examine shopper responses towards integration activities (e.g. Li et al., 2017; Kleinlercher et al., 2018;

Zhang et al., 2018). This experimental-based approach introduces the pos- sibility to establish causality (Kardes, 1996; Söderlund, 2018).

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ONE SIZE FITS ALL?UNDERSTANDING SHOPPER RESPONSES TOWARDS INTEGRATION ACTIVITIES IN OMNICHANNEL RETAILING

ONE SIZE FITS ALL?

ONE SIZE FITS ALL?

One Size Fits All?

Understanding Shopper Responses Towards Integration Activities in Omnichannel Retailing

Angelica Blom

Akademisk avhandling

ONE SIZE FITS ALL?

Understanding Shopper Responses Towards Integration Activities in

Omnichannel Retailing

ONE SIZE FITS ALL?

Understanding Shopper Responses Towards Integration Activities in

Omnichannel Retailing

Angelica Blom

Foreword

Acknowledgements

Contents

Prologue

Chapter 1

Introduction

1.1 The Research Problem

1.2 Purpose of the Thesis

1.3 Outline of the Thesis

Chapter 2

Literature Review: Shopper Responses towards Integration Activities

2.1 The Contemporary Shopper Journey

2.2 Integration in Omnichannel Retailing

2.3 Shopper Responses Towards Integration Activities

2.4 Intended Contribution to the Literature