Retail stores are in dramatic decline, undercut by e-commerce giants like Amazon and the convenience of online shopping.1 The COVID-19 pandemic has only accelerated this shift, with e-commerce now accounting for more than 1 in 5 retail purchases — a significant jump from online sales in 2019.2
Is there a future for physical stores and experiential retail when e-commerce has become so convenient and is gaining in popularity? If physical stores do offer customer value, is this more important for some kinds of brands than others? Amid the heightened uncertainty about the future of in-person retail channels, I investigated what brand attributes affect customer preferences for shopping online versus in stores.
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When Do Customers Prefer Brick-and-Mortar Retailers?
We know that consumers are uncomfortable buying big-ticket items online without first seeing and interacting with them in stores — an attitude surprisingly prevalent among younger consumers.3 Studies also show that customers visit stores to answer questions about the fit and quality of some products (sweaters and eyeglasses, for example), but once they have answered these questions, people will migrate online for convenience.4 What research hadn’t addressed is how brand characteristics, beyond fit, quality, and price, affect which sales channels consumers choose and whether (and why) customers would continually visit physical stores once they knew about a product’s quality.
With those questions in mind, I looked at three ways in which customers experience brand value: brand performance (functionality and quality), purchase experience, and brand culture. The third of these value dimensions, brand culture, arises from a brand’s traditions and history and signifies ideals that are more abstract than product functionality or quality.
1. A. Bhattarai, “‘Retail Apocalypse’ Now: Analysts Say 75,000 More U.S. Stores Could Be Doomed,” The Washington Post, April 10, 2019, www.washingtonpost.com.
2. F. Ali, “A Decade in Review: Ecommerce Sales vs. Retail Sales 2007‑2020,” Digital Commerce 360, Jan. 29, 2021, www.digitalcommerce360.com.
3. S. Wharton, “Webrooming vs. Showrooming,” PDF file (Manchester, England: PushON, 2018), www.pushon.co.uk; and S. Skrovan, “Why Many Shoppers Go to Stores Before Buying Online,” retail Dive, April 26, 2017, www.retaildive.com.
4. J.Z. Zhang, C.-W. Chang, and S.A. Neslin, “How Physical Stores Enhance Customer Value: The Importance of Product Inspection Depth,” Journal of Marketing, April 7, 2021. doi: 10.1177/00222429211012106.
5. J.E. Schroeder, “The Cultural Codes of Branding,” Marketing Theory 9, no. 1 (March 2009): 123-126.
6. J. Stilson, “Why Younger Consumers Are Hitting Retail Locations Rather Than Shopping Digitally,” Adweek, Sept. 30, 2019, www.adweek.com.
7. J.M. Ackerman, C.C. Nocera, and J.A. Bargh, “Incidental Haptic Sensations Influence Social Judgments and Decisions,” Science 328, no. 5986 (June 25, 2010): 1712-1715; A. Krishna, “An Integrative Review of Sensory Marketing: Engaging the Senses to Affect Perception, Judgment, and Behavior,” Journal of Consumer Psychology 22, no. 3 (July 2012): 332-351; and J. Peck, V.A. Barger, and A. Webb, “In Search of a Surrogate for Touch: The Effect of Haptic Imagery on Perceived Ownership,” Journal of Consumer Psychology 23, no. 2 (April 2013): 189-196.
8. J.E. Escalas, “Narrative Processing: Building Consumer Connections to Brands,” Journal of Consumer Psychology 14, nos. 1-2 (2004): 168-180.