The Brand Advantage That Will Lure Shoppers Back to Stores

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.

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.5

Brand culture is typically associated with venerable luxury brands — for example, Breguet, a luxury European watchmaker with a history that stretches back to 1775, has a strong brand culture. But then so does watchmaker Shinola, founded in 2010. In a short time, this Detroit-based company has come to stand for pride and resilience, which it associates with American manufacturing culture. This kind of branding resonates deeply with younger consumers, who, research shows, crave meaning and experiences when shopping.6

I suspected that the brands customers experience as having a strong brand culture would also be ones for which they preferred in-store shopping. Culture may be best communicated in a traditional retail store: In this richer sensory environment, consumers can see products up close and engage with staff members, who are representatives of the culture. I expected that such interactions would deepen customers’ ties to brands and build loyalty.

To test this hypothesis, I conducted large-scale longitudinal market surveys (both before and during the pandemic) of more than 2,000 consumers across several product categories. I asked respondents to consider their three most recent purchases and rate the quality of the brand’s performance, their purchasing experience, and the strength of the brand’s culture. For each brand, I then asked them to indicate how important each value dimension was to them by allocating 100 points across the three, with the most points going to the most important value dimension. And finally, I asked them how happy they would be if online were the only purchasing channel available to them for that brand for the next two years.

Culture Matters Most

Analysis of the survey results showed that consumers prefer physical stores for engaging with culturally rich brands and that stores matter less to consumers purchasing culturally lean brands. This view remained consistent in surveys fielded both before and during the pandemic. I also discovered that the richer the brand culture — and the more strongly a person identifies with a brand — the more likely they are to prefer visiting stores.

This research counters a widely held assumption that consumers prefer to shop first at a store to learn about a brand and then migrate online. On the contrary, people told me that with culturally rich brands, they would like to return to a store from time to time. I also found, contrary to prevailing wisdom, that younger consumers are more likely than older consumers to prefer an in-store experience when shopping for culturally rich brands. And these findings also do not support the long-held theory that people are wary of buying big-ticket items online and that this is the main reason they visit shops.

Most people expressed displeasure with the idea that they could shop only online — even for goods they were currently purchasing online. For example, 74% of consumers surveyed have bought fine wines online, yet they expressed unhappiness about e-commerce being the only option in the future. Similarly, even though respondents said they made 57% of watch purchases and 49% of jewelry purchases online over the past two years, they still would prefer to have the option of going to shops occasionally. Respondents were less dismayed with the prospect of buying items of lesser cultural value — including some types of clothing and lower-priced wines — only online.

In interviews, people explained that although they are comfortable purchasing brands with a high cultural value online due to convenience and variety, they get more pleasure from experiencing them in a physical store and don’t want that option to be eliminated. A customer who has purchased many watches and pieces of jewelry online over the years said, “In a world without stores, it would depreciate the value of these watch brands and make them more commoditized, less inspirational, and less unique.”

For culturally rich products, 56% of knowledgeable consumers — that is, those who are highly familiar with a category — prefer in-store browsing. This finding runs counter to the accepted wisdom that customers who know products well prefer online shopping because they require less information. People told me that they enjoy talking with staff members. And the more knowledgeable consumers are, the more pleasure they get from being at a store and learning from conversations. These interactions tie them even closer to the brand. I found this to be true only with culturally rich categories. For culturally lean categories, the effect was the opposite: The more consumers know, the higher the chance that they will prefer buying online.

Physical Stores Better Convey Brand Culture

It stands to reason that physical stores are better than online stores at portraying brand nuances to customers and improving their opinion of the brand. Being physically present in a store is a much more immersive sensory experience than engaging through a digital interface. As a result, customers spend more time in the store than they might engaging with a brand online, and leave with a better understanding of the brand and a stronger connection to it.7

To test this, I asked a random group of 185 respondents from my sample, all of whom had made both online and offline purchases in my selected categories, to rate on a scale of 1 to 7 how much brand culture and meaning can be conveyed in each channel. Their responses overwhelmingly indicated that brand culture is far better conveyed offline than online — the average rating was 6.2 for offline versus 3.7 for online for the same category. Further, I measured how consumers identify with brands they buy, which is an indication of their brand loyalty.8 The results showed that with culturally rich brands, an in-store experience leads to a stronger connection.

Interviews with people surveyed helped explain why. One respondent told me that he had been shopping online for a particular brand of watch but felt that he hadn’t fully understood the brand until he visited a store in New York and learned more about its products. “The manager explained how the current watch design pays homage to the deck chronometers on ships from the 18th century, and he showed me documents that highlighted the brand’s historical contribution to maritime timekeeping,” he said. “He also introduced me to other, dressier lines that I never paid attention to before. The hour that I spent in the store gave me a much better understanding of the brand, and as a result, I bought two more watches from this brand later on.”

Another respondent said he often bought wine online because of convenience and price. But after visiting a local wine store and talking with the staff, he became more engaged. “I’ve visited my local wine store and was surprised by the staff’s wealth of knowledge. Not only did this wine specialist introduce me to regions and varietals that I would’ve never tried, he told me background stories about some of my favorite Burgundy producers and regions and what made these wines special. This kind of education broadened my horizon and made my wine hobby far more enjoyable. It also supports my local economy. So nowadays, instead of buying wines online from a warehouse in California and then having them shipped here, I prefer to go visit this wine store and talk to the people there.”

Summed up, the research suggests that culturally rich brands have a big opportunity: They can leverage physical stores to develop a more engaged and loyal customer following.

Manage Multiple Value Dimensions

These findings have implications for how brands should invest in and manage their retail channels, and how physical stores can remain relevant by delivering brand culture and meaning to consumers. First, brands must understand how consumers perceive their three value dimensions. If consumers perceive the brand value to be primarily based on performance and functionality, then abandoning the storefront and increasing the brand’s e-commerce capabilities may be a sound strategy. Likewise, culturally rich brands should beware of committing to e-commerce too heavily and decreasing investments in stores. Not only will this approach fail to capitalize on a strong brand culture, which takes a long time to build, but interacting with consumers only in an online setting could distance and erode consumers’ relationships with the brand and risk commoditizing it.

Culturally rich brands should invest in in-store design to create experiences that are consistent with the brand culture. They should ensure that employees are well versed not only in the brand’s heritage and image but also in the broader cultural and historical context in which the brand operates. Brands should appreciate that younger consumers and knowledgeable consumers are particularly open to cultural immersion, and this should affect their thinking about how they migrate customers like these online.

This study indicates that the online-versus-offline shopping debate has evolved beyond product fit, purchase experience, returns, and even customer service and must include discussion of curating high cultural value brands. As retail experiences continued turbulence, I expect a clear demarcation to emerge based on brand culture: Culturally lean brands will be more efficiently sold online, while culturally rich brands will benefit from having physical stores in addition to e-commerce.

While e-commerce is likely to grow and physical retail will have a decreasing footprint, brand owners should focus on effectively curating brand culture online and at stores. The better customers understand a brand, the more likely they are to appreciate its cultural value, which translates into a stronger bond between customers and products and greater pleasure for shoppers. Indeed, retail stores could be designed as “brand cultural centers,” with a clear mandate to convey brand meanings and cement loyalty.