Date: 28 February 2024, Wednesday
Time: 10:30-12:00
Place: MA-330
The Value of Experience-Centric Stores in Omnichannel Retail:
A Multi-Method Approach at the Category Level
by
Ayşe Çetinel
Koç University
Abstract: More online retailers are proliferating the brick-and-mortar channel. To guide this expansion strategy, we have examined three omnichannel store openings of an online-first reseller of consumer electronics: two large experience-centric stores and one small city-center format. Using an event-style, differences-indifferences model to capture store- and temporal-level heterogeneity, we unearth the effect of opening a physical store on total net revenue and its underlying components. One unique advantage of our empirical setting is the large mix of categories that vary in buyer benefits sought in a store visit (advice, physical inspection). Leveraging this variety, we analyzed for category-level insights as to when and why experience-centric stores provide value to omnichannel retailers. Contrary to prior research, our results reveal physical retail expansion, either by experience-centric or small stores, as not yielding a significant positive effect toward online sales. Rather, we find patterns of cannibalization – quite significant for one of the two large stores. Revenue generated by the small store failed to offset sales lost in the online channel. For the large experience-centric stores, however, we reveal increases in total net revenue in the range of 21% – 23% after opening, rising further long term. We also observe significant variation in the total net revenue uplift across product categories. To provide further insights into why stores contribute in omnichannel retail, we supplemented our analyses with data from an online consumer survey measuring the perceived utility of stores per category for three stages in the customer journey: information search, fulfillment, and product returns. Our findings demonstrate for destination categories that our utility-based framework is very effective in explaining the value that stores bring to retailers and consumers in the short run and, to a lesser extent, long run. Store openings deliver higher overall revenue increases in categories where consumers perceive stores to provide more utility. However, our framework exerts substantially less explanatory power for accessory categories, highlighting the need for further research here. Our results offer valuable insights for retailers as to what product categories best leverage the experience-centric store, and understanding of the dynamics between the online and offline channels in omnichannel retail.
Short bio: Ayşe is a Ph.D. candidate in Operations Management at Koç University. Her research centers on addressing challenges within retail operations at the marketing-operations interface. Her specific interests lie in business analytics, omnichannel strategies, and digital transformation. Ayşe’s research, supported by funding from TUBITAK and Marketing Science Institute, aims to address empirically grounded problems that are inspired by real-world practices. Her teaching interests are Operations Management, and Business Analytics, and she has taught an undergraduate course in Operations Management at Koç University.
She has over 10 years of management experience in the US retail and ecommerce sector working at companies such as Williams Sonoma, and Shutterfly.com. She holds a BSc in Finance from the Ohio State University and an MSc in Big Data and Business Analytics from Istanbul Technical University’s Industrial Engineering Department.