The Effects of Discounted Store Openings on Customer Shopping Behavior: Evidence from a Multichannel Retailer (Job Market Paper)
Following the consumers’ tightening of belts post the Great Recession and with the sustained performance of off-priced retailers, many of the full-priced retailers have relied on off-priced or discounted stores as a lever to grow their customer base. In this study, the authors empirically examine the effects of a multichannel retailer’s discounted store openings (DSO) on customer shopping behavior via the incumbent channels of the retailer. Leveraging a unique customer-level transaction dataset that spans pre- and post- opening of multiple discounted stores across the United States by a high-end department store retailer, this study seeks to disentangle the effects of DSO on the incumbent channels, namely the upscale regular physical stores and the online stores and to document the possible mechanisms that drive customer behavior in response to DSO. The authors adopt a quasi-experimental approach and employ the fixed effects difference-in-differences estimator to estimate the impact of these store openings on customer spending and product returns behavior. Their results show that DSO results in a decrease in customer spending in the regular store channel and a significant increase in spending in the online channel. The authors attribute the decrease in spending in the regular store to a possible substitution mechanism and find that price-sensitive customers migrate more to the discounted store channel. They propose and identify a returns effect as the underlying mechanism that drives spending in the online channel. The findings indicate that product returns increase more for customers who are located nearer to the newly opened stores, have low prior experience with the brand, and in product categories that carry uncertain fit-and-feel products. To rule out effects of confounding factors and to handle endogeneity issues in their research design, the authors perform a series of robustness checks. Notably, the authors exploit the staggered opening of discounted stores to compare the behavior of customers who were affected early to those affected later by these store openings. They also employ the coarsened exact matching (CEM) technique to show that their results are robust. Based on the results, the study offers prescriptions on how multichannel retailers can leverage the discounted store channel as a tool, consistent with their overall customer-centric strategy.
The Effects of In-Store Clienteling Technology Implementation on Customer Spending and Product Returns: Evidence from a Multichannel Retailer (Under review in Journal of Marketing)
The authors examine the effects of an innovative in-store clienteling technology (ISCT) – designed to help sales associates deliver personalized interactions with customers who visit physical stores –on customer behavior. Leveraging a quasi-experimental design of a multichannel retailer implementing ISCT in its physical stores and a novel customer-level transaction dataset that spans pre and post implementation, the authors quantify the effects of ISCT implementation on customer-level spending and product-return behavior. By using a fixed effects difference-in-differences estimator, the authors find that ISCT implementation helps increase customer spending and decrease product returns. The benefits of ISCT are stronger for customers with lower prior spending levels and are more pronounced for flagship physical stores. The authors propose and find empirical evidence of two underlying mechanisms – customer-delight effect and uncertainty-reduction effect – by which sales associates with the help of ISCT influence customer behavior. The authors perform a series of robustness checks to rule out effects of confounding factors. Based on the results, the authors offer prescriptions on how retailers can leverage in-store technologies to elevate customers’ shopping experience.
The Effects of Sustainability Events on Customer Purchase Behavior of Sustainable Brands: Insights from a Multichannel Retailer
Sustainability and environmental awareness issues have gained in prominence in the recent times. Many high-end retailers offer a distinct sustainable line of products – products that are created with the good of the planet in mind, using sustainably farmed fibers, recycled and repurposed materials, and eco-friendly manufacturing practices – to appeal to customers who care about sustainability and related issues. In this study, the authors empirically examine how environmental awareness and sustainability events affect the behavior of customers of sustainable brands of a multichannel retailer. Using a large customer-level transaction dataset from a high-end multichannel retailer that is based in the United States, the authors adopt quasi-experimental research design to study the impact of multiple environmental awareness and sustainability events on customers’ purchase behavior of sustainable products. The authors use Twitter data and employ machine learning based sentiment analysis techniques to study the effect of sustainability events on retailer brand sentiment. The study sheds light on the differential effects of the environmental awareness and sustainability events on the slow and fast fashion brands of the retailer and between the physical store, online and mobile app channels of the retailer. The study provides critical insights on the role of sustainable brands and products in a retailer’s product portfolio on customer engagement.