The Effects of an In-Store Social Retail Experience on the Store Visit Intention in Luxury Fashion Brands
Master’s Thesis Consumer Marketing
Date: 25-06-21
Institution: University of Amsterdam
Programme: Msc Business Administration – Track Consumer Marketing
EBEC approval number: 20210326030304
Amount of words: 18.100
Amount of pages: 80
Author: Gracia van Meegeren
Student number: 11055634
E-mail: graciavanm@hotmail.com
Thesis supervisor: Dr. H. Fasaei
Statement of originality
This document is written by student Gracia van Meegeren who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Table of contents
Statement of originality 2
List of tables and figures 5
Acknowledgements 6
Abstract 7
1. Introduction 8
1.1 Background and problem identification 8
1.2 Research goals 12
1.3 Managerial and academic relevance 13
1.4 Research design 13
1.5 Reader’s guide 14
2. Theoretical Framework 15
2.1 In-store ‘social’ experience: The concept 15
2.2 Store visit intention: dependent variable 16
2.3 Elements of an ‘in-store social experience’ 17
2.2.1 Digitalization: Independent variable 1 20
2.2.2 Socialization: Independent variable 2 23
2.2.3 Personalization: Independent variable 3 26
2.4 Conceptual framework 29
3. Methodology 30
3.1 Research design 30
3.1.1 Research aim 30
3.1.2 Method 31
3.1.3 Internal and external validity 32
3.2 Data collection methods 34
3.2.1 Sampling method 34
3.2.2 Measures 35
3.3 Data preparation and statistical procedure 37
4. Results 39
4.1 Missing value 39
4.2 Recoding 39
4.3 Computing Scale Means and Reliability 39
4.4 Repeated measures ANOVA 41
4.5 Additional ANOVA test 45
5. Discussion 46
5.1 Discussion of results 46
5.2 Theoretical implications 54
5.3 Practical implications 55
5.4 Limitations and recommendations 56
6. Conclusion 59
References 61
Appendices 69
List of tables and figures
Table 1. Cronbach's Alpha
Table 2. Means and standard deviations of store visit intention by type of in-store element Table 3. Mauchly’s test for repeated measures ANOVA
Table 4. Results of repeated measures ANOVA: effect of digitalization, socialization, personalization, all elements and no elements on store visit intention: main effect
Table 5. Simple contrasts between an element (or all elements) and no element, within repeated measures ANOVA
Table 6. Levene’s test based on median
Table 7. Test of between-subject effects: main and interaction effects gender and age (control variables)
Figure 1. Conceptual model: hypotheses Figure 2. Estimated marginal means
Figure 3. Estimated marginal means by gender
Acknowledgements
This Master thesis is written as part of the finalization of the Master of Science in Business Administration - track Consumer Marketing at the University of Amsterdam. It concerns research into the effects of various elements of an ‘in-store social retail experience’ on store visit intention in the luxury fashion industry, that could secure the necessity of physical stores. It has been a great passion of mine to write this thesis, because this subject interests me a great deal and being able to do research in this field has been a privilege.
Writing this thesis would not have been possible without the help of a number of people whom I wish to thank. First and foremost, I would like to express my gratitude to my thesis supervisor Dr Hesam Fasaei. He made me feel comfortable during this process and provided me with valuable feedback and guidelines that kept me on track throughout the writing of my thesis. He was also very excited about my subject which motivated me even more. Thank you very much for your interest and support. Additionally, I would like to express my appreciation for the second reader in advance for taking the time and effort to read this thesis. I hope you will find it interesting. Furthermore, I would like to thank all the participants that took part in my research. Without their cooperation, I would not have been able to conduct this research and finish my thesis. Lastly, I wish to express a great amount of gratitude to my family who have supported and motivated me from the beginning of my master’s to the very end. Thank you for your moral support.
Abstract
Shopping in the luxury fashion industry takes place online more and more often. It is the fastest growing channel, partly because millennials and Generation Z favor the convenience online shopping brings, two groups that gain increasingly more power in the luxury fashion world. The question is whether this means the end of luxury fashion stores. The necessity of these stores could be increased by playing into the needs of the powerful millennials and Generation Z. Nowadays, they want digitalization, socialization and personalization in their physical shopping experience. In literature, it has been found that digital elements increase intrinsic customer satisfaction and
influence their shopping experience positively. It has also been found that social elements elevate the brand experience because it makes consumers feel pleased and satisfied. Lastly, it has been found that personalization in-store creates gratitude, delight and customer satisfaction. Based on these previous findings, the researcher was interested in the effects that the elements digitalization,
socialization and personalization would have on store visit intention when it comes to luxury fashion stores. It was expected that all three elements positively affect store visit intention. A vignette experiment through survey research using a within-subjects design was conducted, with millennials and Generation Z as the target group. Results in this study indeed showed that digitalization, socialization and personalization all had significant positive effects on store visit intention. It was also found that all three elements combined had the highest significant effect on store visit intention, because consumers felt positively towards the idea that there was something for everyone to enjoy in the store. The conclusion of this research is therefore that these elements have a positive effect on store visit intention of millennials and Generation Z in the context of luxury fashion. This provides valuable managerial implications, since adding these elements to the store will indeed attract these powerful generations to the luxury fashion stores, keeping these stores necessary in the luxury fashion industry. Future research could investigate the effects of these three elements on other aspects, like brand-consumer relationships.
1. Introduction
1.1 Background and problem identification
Forbes (2019): “Online shopping is killing physical stores.” Statements like these are popping up more often, also regarding luxury fashion brands (DeAcetis, 2020). Are these statements really true?
Brick-and-mortar stores are indeed struggling, partly due to the rise of e-commerce which in 2016 already made up 40 percent of retail sales growth in the US (Adhi et al., 2020). Younger shoppers preferred e-shopping even more: 42 percent of millennials say they favor the online retail experience and avoid stores. Within luxury fashion it was also stated that online remained the fastest-growing channel, reaching 12% worldwide penetration of luxury sales in 2019 (D’Arpizio et al., 2019). This nearly doubled to 23% in 2020 (D’Arpizio et al., 2021). Personal luxury goods have the highest online penetration and growth. Online is becoming the leading channel for luxury purchases by 2025, there was almost no growth in the amount of stores operated directly by brands in 2020, and they expect a possible decline in store footprints in 2021 (D’Arpizio et al., 2021). And this is all being accelerated by the Covid-19 crisis; They expect online luxury sales to account for 30% of the total sales in 2025 because of these circumstances (D’Arpizio et al., 2021). So does this officially mean the end of physical stores of luxury fashion brands? And if not, how can luxury fashion brands turn this around successfully before it is too late? It is apparent that more insight is needed.
Through the years, many benefits of the physical stores have been identified in the luxury fashion industry (Fionda and Moore, 2009; Bäckström and Johansson, 2017; McCabe and Nowlis, 2003;
Gupta, Su and Walter 2004; Otto and Chung 2000; Peck and Childers 2003;
Puthiyamadam and Reyes, 2018; Liu et al., 2013). The first one is that customers are able to touch the products and examine actual products. Products with primarily material properties, such as fashion items, are more likely to be preferred in shopping environments that allow physical inspection (physical stores) than in those environments that do not (McCabe and Nowlis, 2003;
Gupta, Su and Walter 2004; Otto and Chung 2000; Liu et al., 2013). This means that it triggers the sense of touch. By touching the products, they are able to assess these products better, making them
feel more confident and thus leading faster to purchases (Peck and Childers 2003). These are therefore reasons for customers to visit physical stores. Another advantage of physical stores is the face-to-face customer service, interactive service offered at physical stores helps them locate products, get advice or just a pleasant conversation. It’s the personalized expertise, knowledge and answers to questions that people still want. People still prefer human interaction and want to talk to staff (Puthiyamadam and Reyes, 2018). It makes them feel special, it elevates their experience and it saves them time. The level of customized, instant attention is something people cannot find online.
Other advantages are the possibility of quick, hassle-free returns, no shipping costs and the fact that people can take their item home immediately, which means immediate satisfaction. It was also always seen as a pleasant item on someone’s day, to get out of the house and have a nice experience and social interactions (Liu et al., 2013).
Despite these advantages, the fact remains that purchases in retail stores are declining compared to online purchases in luxury fashion (D’Arpizio et al., 2021). This is partly because shopping in physical stores have more transaction costs, people do not want to risk ‘wasting a trip’ because they did not buy anything (Moe and Fader, 2004). In general people tend to use online channels because it is faster and more convenient (Kumar and Kashyap, 2018; Jiang et al., 2013). The question is if this means that retail stores will meet their end. This is not likely. It is true that online purchases will make up 30% of total luxury purchases by 2023, compared to only 8% in 2016, and therefore retail purchases are declining (D’Arpizio et al., 2021). But that still leaves 70% of total luxury purchases in the physical stores by 2025, the vast majority. Today, about 90% of retail sales take place in retail stores; less than 10% of total retail sales take place online at the moment (Danziger 2017). People are still willing to come to stores, but something has to change to make it more appealing because, as shown, retail purchases are in fact declining. The question is how this can be turned around.
This is where millennials (ages 24 to 39 in 2020) and Generation Z come in (Dimcock, 2019). It is important to find a way to attract both of these groups to the physical stores because if luxury fashion brands succeed in that, they will manage to attract a group as big as around 70% of the total luxury market to the physical stores from 2025 onwards, increasing in-store purchases and
therefore securing the future of physical luxury fashion stores because they stay needed (D’Arpizio et al., 2021). They are both, however, online orientated groups. How then can luxury fashion brands successfully attract them to the physical stores?
The way to do that is by offering them a complete experience in-store instead of merely a shop with some products in it. Millennials and Generation Z expect more than just a store to buy products from. That is not going to be enough anymore. When it comes to luxury shopping, millennials crave unique shopping experiences with personalization, digital elements and social elements (Calienes, 2016). Generation Z has the same needs when shopping (Vojvodić, 2019). If luxury brands manage to gather these elements inside a shopping experience in-store, they might attract these two immense groups to their stores. This ‘in-store social retail experience’ is a brand new concept in luxury fashion, and Burberry first came up with it in its new retail store in the tech city Shenzhen which opened in mid-2020 (“Burberry debuts luxury’s first social retail store in shenzhen, china, powered by tencent technology”, 2020). The effectiveness of this concept has therefore not been researched yet. It consists of all three elements that are craved by millennials and Generation Z. According to Burberry, this concept will redefine luxury retail. The combination of these elements could be the reason for that. Chanel has already used a similar experience in its beauty store in New York, called the ‘Atelier Beauté Boutique’ (Shatzman, 2019). This experience is also a mix of some of these elements and is therefore a new kind of store.
Both of these examples might exactly be what consumers need when looking at what elements they value in an in-store experience. And with the COVID-19 vaccine now available to the public, people crave social connection, since the world was put on hold socially for the past year.
Experiences like these will bring people together again, ready to reconnect and could therefore also be an incentive to visit physical stores more often in a post-COVID-19 world, keeping them relevant. To ensure that this new concept will contribute to the necessity of physical retail stores in luxury fashion brands, conducting research on this topic is important.
In literature, research has been done on the effects of these elements individually, also regarding experiences in-store. For example, experiential experiences in physical stores improve brand experience, a positive retail experience results in purchases of standard and exclusive store products (Jahn et al. 2018). Physical stores still hold promise when unique and more intense customer experiences are offered (Grewal, Levy, and Kumar 2009; Verhoef et al. 2009). Furthermore, personalization and interactivity also make the in-store shopping experience more attractive (Berman, 2018). Brands already engaged in personalization, but mostly online (e.g. (Aguirre et al., 2015; Shen and Ball, 2009). The effect of offline personalization (except the attention customers get from the staff) is relatively new. Regarding digitalization in-store, literature states that smart physical stores are augmented with intelligent technology that can sense, connect, control and interact with shoppers (Roy et al., 2017), relying on interconnected networks of information about consumer behavior. Smart retailing integrates technologies in physical retail stores, enhancing customer experience by merging physical and digital dimensions and thereby creating an interactive experience (this could include personalization) (Riegger et al. 2021). It is also called
“phygitalization,” that is, combining the physical and the digital within the same space (Belghiti et al., 2016). When executed well, consumers perceive functional benefits, but also emotional benefits, in the form of inspiration, intrinsic satisfaction or the shopping experience (Riegger et al. 2021).
In previous literature, there has already been written a lot about the effects of the social, digital and personalized elements in a store, but mostly regarding their effects on purchase intention and customer satisfaction, rather than store visit intention (Kim and Kim, 2007, 2008; Yoo et al., 2010; Hu and Jasper, 2006; Morris, Inkpen and Venolia, 2014; Bock, Mangus, & Folse, 2016;
Vesanen, 2007). Furthermore, previous research mainly focused on their needs and wants and states that they have a need for personalization, digital elements and social elements in a store (Calienes, 2016; Vojvodić, 2019). However, insufficient attention was given on the effects of these elements on behavior. This is probably because these groups are just now gaining power as consumers, especially Generation Z is a very new group. In five years these groups will account for more than half of the luxury market, making them very relevant now in the (luxury) retail context. Thus, more research could be done in this area, especially regarding their behavior in the retail industry. Also, in previous
literature, a lot has already been written on the success of fashion stores in general, using elements like personalization and digitalization (Alexander & Cano, 2020). However, in the context of luxury fashion, research on the effect of these elements is lacking. Therefore, research on these matters is necessary, because increasing store visits from millennials and Generation Z by using these elements in these luxury fashion stores, will keep these stores successful and necessary.
1.2 Research goals
The goal of this research is to provide empirical evidence that offering the three elements of the in-store social experience, digitalization, socialization and personalization, will indeed increase the store visit intention in luxury fashion brands. The target group of this research is millennials and Generation Z. If these elements indeed increase store visit intention of those groups, it will mean that luxury fashion brands can attract people that make up almost half of the luxury market to their physical stores, therefore securing the relevance of these stores in the future. Therefore, the research question this thesis aims to answer is:
How do various elements of an in-store social retail experience affect the store visit intention of consumers regarding luxury fashion brands?
This question will be answered by means of these sub questions:
1. What is an ‘in-store social experience’ in luxury fashion stores and what elements does it consist of?
2. What effect do digital elements have on the store visit intention of millennials and Generation Z when it comes to luxury fashion stores?
3. What effect do social elements have on the store visit intention of millennials and Generation Z when it comes to luxury fashion stores?
4. What effect does personalization have on the store visit intention of millennials and Generation Z when it comes to luxury fashion stores?
1.3 Managerial and academic relevance
This research provides many valuable practical and academic contributions, which will be discussed in more detail in chapter 5 paragraph 2 of this thesis. The first theoretical contribution is that this research contributes to the streams of research the behavioral effects of digital elements, the effects of social elements and the effects of personalized elements in-store (Kim and Kim, 2007, 2008; Yoo et al., 2010; Hu and Jasper, 2006; Morris, Inkpen and Venolia, 2014; Bock, Mangus, & Folse, 2016;
Vesanen, 2007), by empirically investigating their effects on store visit intention. The second theoretical contribution is that this research enriches the body of knowledge on millennials and Generation Z (Calienes, 2016; Vojvodić, 2019), by investigating the effects of digitalization,
socialization and personalization on their store visit intention. Lastly, this research contributes to the body of knowledge on the success of fashion stores and the effects of digitalization, socialization and personalization on fashion stores (Alexander & Cano, 2020), by investigating the effects of these elements on the success of luxury fashion stores, by researching whether these elements increase consumers’ intentions to visit luxury fashion stores. In terms of academic relevance, this research is relevant for managers of luxury fashion brands, because they will have gained empirical evidence that the elements of an in-store social experience contributes to the necessity of physical stores in luxury fashion. This is because these elements positively influence store visit intention of millennials and Generation Z, an immense and fast-growing group in luxury fashion. Creating stores with such elements will also be good for brand awareness, word-of-mouth marketing and brand love, because it will provide positive and exciting customer experiences. Lastly, using the store visit intention as the dependent variable of research provides a useful managerial implication that the use of these elements in a store will increase store visits (Baek et al. 2020).
1.4 Research design
To answer the main research question, quantitative research was conducted by means of a vignette experiment in survey research. Respondents were millennials/Gen Y (born between 1981 and 1996) and Generation Z (born between 1996 and 2012) who enjoy (occasionally purchasing) items from
luxury fashion brands. This research consists of one survey in a within subjects design, where respondents were asked a set of questions regarding the in-store social experience and its various elements. They were asked if this in-store social experience (or the separate elements in the other situations) contributes to their store visit intention regarding luxury fashion brands that offer such an experience.
1.5 Reader’s guide
This research is outlined as follows. First, extant literature will be reviewed by examining what an in-store social retail experience entails, what elements it consists of and their effects on the store visit intention of millennials and Generation Z when it comes to luxury fashion stores. Thereafter the effects of these elements on the store visit intention of consumers in the luxury fashion industry will be hypothesized. Then, the methodology and results of the survey will be described. Building on these results, a discussion of the findings is presented. Next, the contributions and limitations of this study, as well as directions for future research will be outlined. Finally, this research will be
concluded by answering the main research question and indicating the implications of the outcomes of this study.
2. Theoretical Framework
2.1 In-store ‘social’ experience: The concept
This experience is a brand new concept in luxury fashion, and Burberry first came up with it in its new retail store in the tech city Shenzhen which opened in mid-2020. This concept has therefore not been researched yet. Burberry calls it a social retail experience (“Burberry debuts luxury’s first social retail store in Shenzhen, China, powered by tencent technology”, 2020). It is an innovative
experience where the social and physical worlds meet in a digitally immersive retail experience, which according to them will redefine luxury retail. It provides a social element, because it connects people online and offline. This concept takes interactions from social media and brings them into a physical retail environment. Customers can share their experiences with their communities. The store looks visually attractive, making it an ‘instagrammable’ experience, triggering millennials and Generation Z to share their experience online as well. It also has a cafe to let customers connect with people in-store. Personalization is offered through the WeChat custom mini program, which brings the store to life through exclusive content and personalized experiences that can be unlocked, features such as learning about products, client services, in-store appointment bookings, events and table reservations in the in-store café. The more the customer engages with Burberry, the richer their experience becomes. Within the mini program, customers can earn rewards through the Burberry social currency feature. Each customer gets a cute animal character, evolving as they engage in-store and social. Rewards differ from exclusive café menu items to mini program content. Another goal was to let technology and digitalization meet with physical experiences in-store. An example is the interactive store window, which is a living sculpture: the window reflects the viewer’s shape and responds to body movement, creating a unique moment that can be photographed and shared with friends. The window evolves through the seasons and reflects the latest house codes and collections.
It also sells some collections exclusive to that store. And by scanning QR codes, customers can find Burberry’s latest collections, seasonal products and discover exclusive pieces only available to buy in the Shenzhen store. They connect to digital screens and unlock additional content and product storytelling. It lastly has fitting rooms with customizable music to listen to. Throughout the entire
store there are prints, key house codes and logos of the brand visible, so people will associate this nice experience, and the emotional connection they built with the brand, with the store. This experience contains all elements millennials and Generation Z crave combined: personalization, digitalization, socialization/interactivity (online and on social networks), experiential experiences, and visibility. This could work as a major incentive to get this group to the physical stores.
A similar digitalized and personalized experience is offered by Chanel in its experimental beauty store in New York (Shatzman, 2019). People have to put their belongings in a locker, except their phone to create a profile that lets them keep track of the products they test out and love or to book appointments. The store is divided in different ‘stages’ in the beauty process, all having an
‘instagrammable look’. In some zones, the in-house atelier guide provides you with products based on your specific needs. In the Lip bar, personal samples are arranged for individual testing. In the Fragrance section, people can blindly sniff scents to find their favorite one. This experience is fully focused on personalization. In the Coco lab, a space created for social and digital experiences, customers can create the perfect selfie and share it with the Chanel community. The store is one big workshop where you experiment.. The store also offers social gatherings with beverages, enhancing the social element. Again, this physical store offers a full ‘social retail experience’, containing all the elements of this special in-store experience.
Thus, the elements of the in-store social experience are digitalization, socialization, personalization, elements that have already to some extent been discussed in existing literature (Grewal, Levy, and Kumar 2009; Verhoef et al. 2009; Berman, 2018; Roy et al., 2017; Riegger et al.
2021; Belghiti et al., 2016).
2.2 Store visit intention: dependent variable
Before the elements of this in-store social retail experience, and thus the independent variables, will be discussed, it is important to first explain the attributes of the dependent variable: store visit intention, in order to link the independent variables (the elements) to the dependent variable (store visit intention). The store visit intention means the estimate that a consumer makes of the probability that he/she visits the store (Fishbein and Ajzen, 2010). This means that the consumer makes an
estimate in his head about how likely he is to visit a certain store. Positive stimuli increase this intention because that person’s need to visit the store to experience it himself increases. Many stimuli could increase the store visit intention of a person. According to Meents et al. (2019), informativeness and entertainment positively influence store visit intentions, and an irritative experience negatively influences store visit intention. This also follows from Ducoffe’s research (1995, 1996), who states that entertainment has a positive effect on store visit intention. The
strongest determinant is irritation, followed by entertainment. Digital innovations like virtual reality on a website can also increase physical store visit intention (Chung et al., 2015; Baek et al., 2020).
According to Baek et al. (2020), brand experiences also have a positive effect on store visit
intention: Sensory and behavioural experiences directly increase store visit intention. To experience these sensory and behavioral experiences, physical contact is necessary (Brakus et al., 2009). Brand equity and destination brand equity also have a positive effect on store visit intention (Ferns and Walls, 2012; Mummalaneni, 2005). And when this brand equity is formed by intellectual and emotional experiences, this also increases store visit intention, which means that there is an indirect positive effect of those experiences on store visit intention (Baek et al., 2020). Thus, in the retail context, entertainment and digital innovations have a positive effect on store visit intention. This could also apply to the following elements which will be discussed in the next paragraphs (digital, social and personalized elements in-store) because they all have entertaining facets.
2.3 Elements of an ‘in-store social experience’
Before the in-store social experience surfaced, researchers already focused on the overall importance of offering an experience in physical stores, the concept and its importance was first recognized in 1982 (Holbrook and Hirschman, 1982). It became relevant when the “Experience Economy” was recognized as a new era where customers want more than high-quality products and services; they want satisfying experiences while shopping (Pine and Gilmore, 1998). This was the reason brands started to use the experience as a strategic tool in gaining a competitive advantage (Pine and Gilmore, 1998). An experience is a state produced in any individual as a response to a stimulus (Poulsson and Kale, 2004). Certain stimuli trigger these induced experiences (Schmitt, 1999), They
have cause and purpose and are therefore states that arise when there is a stimulus (Brakus et al., 2009). Experiences consist of emotions, thoughts, appraisals and activities during or as the result of a stimulus (Goode et al., 2010). They are interconnected and as the experience develops, they feed back into each other (Poulsson and Kale, 2004).
Within the context of the retail environment, an experience is the outcome of an interaction between a subject, which is the customer, and an object, which is the one that offers the experience, as well as co-creation between them (Bustamante and Rubio, 2017). When the customer interacts with the product or the environment of the physical store of the brand and its staff, practices and staff, the experience happens: the shopping experience. Another type of experience is the consumption experience, which happens when the customer consumes/uses the product. Because of these interactions, an experience is also defined as a multidimensional construct that during the entire customer journey focuses on a customer’s emotional, cognitive, behavioral, social and sensorial responses to a brand’s offerings (Lemon and Verhoef, 2016). An experience only surfaces if it awakens feelings or sensations that are memorable to the customer (Poulsson and Kale, 2004). For that to happen, the interaction must generate novelty, learning, surprise, personal relevance and engagement in the customer. So if the physical store connects with the customer by making the customer feel engaged in the shopping activity or environment and lets the customer actively
participate in this shopping experience, this experience is memorable (Pine and Gilmore, 1998). That is why companies strive to engage customers during the shopping experience to make it memorable (Pine and Gilmore, 1998). This has to be done in a way that customers perceive value during the experience and remember this value. The experience has to be induced, personal, with a purpose, responding to the contact between customer and company (Meyer and Schwager, 2007), and lets the customer participate on rational, sensory, emotional and physical levels (Pine and Gilmore, 1998;
Poulsson and Kale, 2004; Gentile et al., 2007).
Offering a customer experience has become an important objective among brands (Grewal et al., 2009). There is an experiential paradigm shift in shopping, where making the physical store an
experience can engage customers and make them stay and shop in that store (Sachdeva and Goel, 2015). Experiential marketing assumes that consumers are emotional and rational and want to achieve pleasurable experiences (e.g. Schmitt, 1999; Spence et al., 2014). It aims to engage
customers at emotional, cognitive, social, physical and sensory levels (Bustamante and Rubio, 2017;
Schmitt, 1999; Verhoef et al., 2009). A positive customer experience provided by a company creates a sustainable advantage over time. Customer experience is therefore seen as a cornerstone of
marketing (De Keyser et al., 2015). A successful physical store is less about the products it sells, and more about how it is being sold. It is important to emotionally and behaviorally engage customers, through interaction between customer and brand, and by excelling in emotional appeal. Offering an in-store experience helps achieving this. An in-store customer experience is the interaction with and the subjective internal response to the physical retail environment. In the store, customers respond to and interpret the stimuli through internal emotional, cognitive and physical processes, and also through interaction with other people, like the staff of the store, which are social processes (Verhoef et al., 2009). The physical well-being of the customer in the physical store (energy, vitality,
comfort/discomfort) is closely related to the responses of that customer to sensory stimuli like colors, scent, ability to touch, music etc., because these responses are physical (De Looze et al., 2003; Bitner, 1992; Erevelles, 1998; Verhoef et al., 2009). For example, especially when it comes to luxury fashion items, customers want to visit the physical store to physically inspect the items. This is because it triggers the touch sense. Being able to touch it gives them a feeling of comfort, which results in buying the item faster (McCabe and Nowlis, 2003; Gupta, Su and Walter, 2004; Otto and Chung, 2000; Liu et al., 2013; Peck and Childers, 2003).
What makes physical stores valuable is this lived, phenomenological experience that the store can offer, which comes alive through the interaction between product and customer during the store visit.
The responses of the customer to the in-store stimuli makes the experience come to live. It forms a social reality and this experience can positively influence customers’ perceptions of the brand and its store (Bustamante and Rubio, 2017). The customer experience has a lot of importance since it influences the shopping journey from early expectations to the post-purchase stage (Verhoef et al.
(2009). Furthermore, the in-store experience determines how the brand and its store is perceived by the customer (Gentile et al., 2007). If this is positive, the customer will be more loyal to the brand and/or its store, and less price elastic (Schmitt, 1999). Other benefits are that it can differentiate a company from its competitors, affect perceptions of product/ service quality, encourage customer identification with a brand and create brand image. One of the most important benefits is that it can also engage the customer to try products, to shop, and, most importantly, to be loyal (Berry et al., 2002; Carú and Cova, 2003; Gentile et al., 2007; Meyer and Schwager, 2007; Pine and Gilmore, 1998; Schmitt, 1999; Verhoef et al., 2009). They will come back to the brand and to the store if they had a positive in-store shopping experience. The customer experience can therefore constitute the most significant value proposition in an exchange relationship (Berry et al., 2002).
Offering an experience is therefore effective for physical stores, because it is the needs that most customers have nowadays. However, just offering an experience in-store is not enough in the modern age, with customers like millennials and Generation Z. They have specific needs when it comes to in-store experiences, because for comfort and price they can also choose online platforms for their purchase. The most important ones are social, digital and personalized elements in the in-store experience.
2.2.1 Digitalization: Independent variable 1
Modern customers nowadays demand digital elements in their shopping experience (Lissitsa and Kol, 2016). It is the digital age after all. This does not have to be online, however. Digitalization can also occur offline, in physical retail stores. A technological retail revolution is taking place, blurring the line between offline and online shopping. There are more and more technologies used by retailers that enhance the customer experience. Brands that embrace these technological
opportunities are more likely to offer a successful customer experience (Ho, 2020). The in-store experience is an element of the customer journey (Lemon and Verhoef, 2016) and technologies could be important touch points for customers, but also help and augment frontline employee tasks. Digital signage such as touchscreens and digital displays are popular digital devices in retail stores (Dennis
et al. 2010; Kent et al. 2018). Examples are allowing in-store shoppers to virtually try on clothes to check size or style, and then pay immediately after trying it on (Roggeveen et al. 2016). This could for example be through a store-app. This increases convenience enormously. This technology in-store environment containing interaction and experiences enhanced through these digital elements is called the digital atmosphere (Inman and Nikolova 2017).
The customer experience can be changed by these modern technologies by making the experience more convenient, and by changing how the customer shops and interacts while in-store. Nowadays, consumers desire a convenient, frictionless and easy experience, and also social presence because they feel these features will enhance the customer experience in-store.
Convenience means the reduced effort and time consumers must spend to buy or use products and services, because they will have the help of technology in the areas of service convenience: decision, access, transaction, benefit and post-benefit (Berry et al., 2002). Decision convenience means the time and effort to reach make-or-buy decisions. Access convenience are the resources to request a service or the use of voice activated systems (Bandaranayake 2018).
Transaction convenience are payment-related tasks such as paying online on a store app so you do not have to wait in line. Benefit conveniences are the resource expenditures needed to get the core benefits of the products. Post-benefit convenience is the time and effort to request additional services from a company or compensation after failure. For all these areas, the service evaluation of
consumers will be more favorable, the less time and effort they expend in each area. And the infusion of technology in stores increases each type of convenience, because technology gives people the possibility to explore, shop and evaluate their in-store experience in new, modern ways.
Technologies like Augmented and Virtual Reality enhance decision convenience because they can experience the product in many different ways (Heller et al. 2019). Think of an in-store mirror to virtually try on clothes. They also increase visualization and thus benefit convenience. Scanning QR codes to receive information about the products also increases benefit convenience.
As stated before, many customers seek interactive experiences and social interaction through platforms that provide a sense of connection (Hyder, 2014; Pew Research Center, 2010; Redmond,
2017). Thus, people also have a strong need for social presence (Donald, 1991; Granovetter, 1985), meaning the felt presence of others. This could mean physically present, but it could also come through reading posts from other customers on social media or communicating online with a friend while shopping in the store. Social presence means the extent to which this technology makes consumers sense that they are in the presence of others (van Doorn et al. 2017). This could be the result of interacting with the machine (e.g., robots) (Heerink et al., 2010; van Doorn et al., 2017), technology’s support of human connections (Zhu, Benbasat and Jiang, 2010) (for example social media posts or collaborative online shopping), or technologies that humanize the brand (Schroll et al.
2018).
Lastly, the use of technology also increases interactivity and entertainment, the importance of which has increased in recent years (Kim, 2001; Kozinets et al., 2002 ). When the shopping experience is more enjoyable, consumers purchase faster (Kim and Kim, 2008). Therefore, providing fun and entertainment in-store positively influences the shopping experience (Diep and Sweeney, 2008), consumer satisfaction (Soderlund and Julander, 2009) and user experience (Pantano and Tavernise, 2009). By putting enjoyable elements in the store, like digital features that let consumers experiment with the products, it improves their shopping experience, entertains them, and
communicates the brand in new and attractive manners (Burke, 2002; Michon et al., 2006; Chang and Burke, 2007). Technology in-store is a good way to improve the in-store consumer experience through entertainment. It also increases interactivity with the products and knowledge of consumer wants and needs, which then further enhances the consumer shopping experience, making it more interesting and exciting (Kim et al., 2007; Yoo et al., 2010).
This desire for a convenient experience and a social presence is a chance for brands to choose the right technologies to play into that, to provide a successful customer experience. That is why it is important to put this in the context of the physical retail environment. In the Burberry example, the store in Shenzhen has firstly a store specific app, through which people can connect online and offline, feeling a social presence. Burberry also let technology and digitalization meet with physical experiences in-store. An example is the living sculpture as an interactive store window, which
reflects the viewer’s shape and responds to body movement. And by scanning QR codes, customers can find Burberry’s latest collections, seasonal products and discover exclusive pieces only available to buy in the Shenzhen store. They connect to digital screens and unlock additional content and product storytelling.
Thus, technological features in-store provide many benefits because they increase social presence and convenience, two things consumers crave in a shopping experience nowadays. Based on the above, it is therefore assumed that digital elements in a physical luxury fashion store positively impact store visit intention.
H1: Digital elements in a physical luxury fashion store have a positive effect on store visit intention.
2.2.2 Socialization: Independent variable 2
Socialization is the first element that is part of an in-store social retail experience. According to previous literature, physical stores provide a good opportunity for interaction between people (Brocato et al., 2012; Hu and Jasper, 2006; Pan and Zinkhan, 2006). A large reason why customers shop in physical stores is because they enjoy socializing with others, whether it’s with employees or fellow shoppers. And this physical store is the perfect place for that because it offers human
interaction. Consumers can talk to salespeople and fellow shoppers with whom they have the opportunity to establish social relationships through communication and friendliness (Hu and Jasper, 2006; Moore et al., 2005; Reynolds and Beatty, 1999). This social element involves the customers and their social context, and the relationships they have with themselves and others while in this experience (Gentile et al., 2007; Schmitt, 1999). This part of the experience is called the social identity theory (Tajfel, 1981), which is part of the self-concept of the customer and it involves the emotional need and knowledge of belonging to a social group (Tajfel, 1981). It therefore contributes to regulating the individual’s self-image, behavior in groups, and relationships with the physical environment. It thus contributes to the organization of the person’s experience in a social world and helps build a relationship between the store’s social meaning and the customer (Bustamante and
Rubio, 2017). When the customer feels belonging to a group, he categorizes himself and the ones he interacts with in the store (Carlson et al., 2007) and this implies the psychological and social
connection with other groups and individuals that appreciate strong emotional ties (Reed, 2002). The intensity and quality of the arised relationships between the individual, his ideals, and other people who the individual interacts with in a social environment, is what makes the social component in an experience powerful (Ouwersloot and Odekerken-Schröder, 2008).
In the retail context, the social component of an experience is the relationship a customer forms with a social system, which is the store, by means of interaction with its members. These relationships are firstly customer-employees, which could be advice or actual interaction (Hu and Jasper, 2006;
Menon and Dubé, 2000). Furthermore, customer-customer interaction could also be advice/opinions or actual engagement through interaction (Moore et al., 2005; Parker and Ward, 2000; Yoo et al., 2012). Consumers feel more aroused or pleased with a store where more social cues are present (Hu and Jasper, 2006). So to create more excitement, social elements are necessary to incorporate in a store. Because the customer’s in-store shopping experience is formed by their interactions with all store elements (Bäckström and Johansson, 2006), one of the things brands play into are social characteristics (Baker, 1986). It is therefore important to create conditions to ensure that customers experience in-store socializing (Borges et al., 2010). The social environment in-store significantly influences consumers’ brand experience, which also means that social cues in the store environment are important in developing brand experience (Kumar & Kim 2014).
For all the reasons mentioned above, companies need to use the need of customers for interaction and emotional ties with fellow shoppers, by highlighting the social elements in the store. In the Burberry example, Burberry uses the social needs of its customers and plays into it by opening an in-store cafe with the purpose of letting its Burberry community connect with other shoppers while shopping (“Burberry debuts luxury’s first social retail store in shenzhen, china, powered by tencent technology”, 2020). This firstly lets their customers feel like they could be part of a community if they visit the store, therefore triggering their need of belonging. Secondly, the brand offers the
customers the opportunity to interact and develop social ties, and to socialize outside of their daily lives. Using their social needs by incorporating elements like these in the store could therefore be very effective in attracting them to the store.
Besides social elements in-store, brands can also play into the social behaviour of customers on their social media, while shopping in the physical stores. More and more often, customers engage on social media platforms while shopping in a physical store, socially engaging online and offline (Morris, Inkpen and Venolia, 2014). One way is called remote shopping advice, where
non-customers give advice to customers who are in store at that moment. This happens mostly through their phones when they send them photos, or through social media. The advice could come from friends and family, but also from other sources, customers find all sources of advice useful from social media, even strange sources. Customers respond very positively to this form of social experience. This is a way for brands of augmenting in-store shopping. Playing into
customer-to-noncustomer interactions is a way of extending the social dimension of the store
environment. This could be done by introducing a smartphone app, specifically to enhance the social elements of an in-store experience by letting the customers socially engage online and offline, while in the physical store. The purpose of the app would be to support seeking remote shopping advice.
Customers would value this, because they have the need to combine socially engaging online and offline with shopping in the physical store. It helps them connect. The advice will also encourage them to purchase, because it gives them more information and certainty (Morris, Inkpen and Venolia, 2014). These kinds of interactions through social online platforms while shopping in-store encourage store choice and influence consumer perceptions of the shopping experience (Sands, Harper and Ferraro, 2011).
Innovations like the app make it possible to socially interact in multiple ways. This is why they attract the modern generations to the store; It allows them to shop in physical stores, while still engaging on digital platforms, fulfilling all their social needs online and offline. 47% of Generation Z customers use their smartphones when shopping in a store (Vojvodić, 2019). Whether that means
asking for advice, or sharing their wonderful experience on social platforms. Chanel enables the latter with its ‘content creation room’ in the beauty store in New York, where customers can share their experience with the Chanel community and with friends (Shatzman, 2019). If a brand enables them to engage online while still shopping in-store, it attracts many people to their store. Coming back to the Burberry social in-store experience, Burberry also provides a possibility of online and offline social interaction with the brand, its products and with other people (“Burberry debuts luxury’s first social retail store in Shenzhen, China, powered by tencent technology”, 2020). The store takes interactions from social media and brings them into the physical retail environment.
Through the mini program WeChat, which they install on their phones, customers can unlock exclusive content and personalised experiences and share them with their communities.
Considering the above, it is expected that social elements in a physical luxury fashion store have a positive effect on store visit intention.
H2: Social elements in a physical luxury fashion store have a positive effect on store visit intention.
2.2.3 Personalization: Independent variable 3
Personalization is also an important need of customers, especially millennials and Generation Z.
Personalization is usually researched and used by brands in the online environment (e.g. Aguirre et al., 2015; Shen and Ball, 2009). However, in physical stores, personalization could also play an important role. Especially since it is established that millennials and Generation Z prefer
personalized experiences, it is important to also incorporate it in the physical store environment, to attract this big group to the luxury fashion stores. Consumers love personalization online so much, they now demand it offline as well (McKinsey, 2019a). In personalization, it is important to “deliver the right content to the right person at the right time” (Tam & Ho, 2006, p. 867), to provide
solutions to their needs. There is no definition of personalization which is universally accepted (Vesanen, 2007), but many definitions contain the passiveness of consumers, the notion that it is an individual, targeted marketing strategy, and that it is mostly initiated by the company (Aguirre et al.,
2015; Tam & Ho, 2006). When adaptive information processing takes place, as well as
self-referencing and elaboration likelihood theories, favorable consequences occur (Tam & Ho, 2006). The personalization should draw more attention to the product by creating self-associations, providing a good match with the preferences of consumers and an enhanced elaboration of relevant information. As a result, this positively influences purchase decisions by creating gratitude, delight and customer satisfaction (Bock, Mangus, & Folse, 2016; Vesanen, 2007).
While in-store, personalization could be in the form of individual attention that the store gives to a customer, like personal recommendations for your needs and personal style, or personal cards in your bag or sent to your home. Other examples are being helped in the store to find a certain style or complement it, or makeovers and check-ups, relying on sales representatives’ observations which they use to adapt their behavior (Gwinner et al., 2005). In the Chanel beauty store example, customers enter the Lip Lab, where a few lipsticks are lined up just for that customer to find their perfect shade. In the perfume area, they can choose their own individual perfume (Shatzman, 2019).
These are also personalized experiences.
Personalization could also go hand in hand with technology, which is called
technology-enabled personalization (TEP) in-store, like public displays of recommendations or the integration of human traits into technology, which engage customers further (Riegger et al., 2021).
TEP is the integration of digital and physical dimensions in an offline environment in order to provide consumers with context-specific, relevant information coming from both historic and real-time data, without needing store employees. With a combination of emotional and cognitive technologies, companies strive to build customer relationships (Huang & Rust, 2017). TEP relies on information technology and databases of the past behavior of consumers to tailor their
personalization in-store to every consumer’s needs (Aguirre et al., 2015; Shen & Ball, 2009). The advantage of a store that offers TEP, so both context-specific, traditional personalization by means of its employees, as well as technology driven personalization with data about past consumer behavior, is that this store is able to offer a high and complete level of personalization for every consumer, in every way. Interactions between customer and retailer are digital (e.g. screens or robots). This form
of personalization is craved by the consumer, because it enables them to get content that is better preselected to match their needs.
To make customers more engaged during the experience in-store, the personalization needs to provide emotional value. This can happen through technology that entertains customers and inspires them beyond customers’ common search behaviors (Riegger et al., 2021). This could take place in the form of intrinsic satisfaction, inspiration, the pleasure of discounts, or the shopping experience itself. When the consumer appreciates his experience, hedonic value in retail increases through entertainment and consumer delight (Babin et al., 1994; Arnold et al., 2005). This could make a retailer very differentiated (Finn, 2005). The consumer wants inspirational content that enables him to discover new things besides his common search behavior. They are looking for more than just functional suggestions that match their preferences (Vesanen, 2007). Personalization both traditional and by means of the precision of technology combined help identify new purchase options and suggestions. It makes them aware of needs and desires they did not even know they had (Johnson et al., 2008). This inspiration leads to delight because positive emotions are triggered. This is because the positive surprise leads to pleasure and joy (Böttger, et al., 2017).
This combination in TEP in stores also increases intrinsic satisfaction, because it increases positive emotions from affirmation and personal recognition. This has two positive results. A highly personalized store that recognizes consumers and remembers their previous purchases, increases those consumers’ purchase intentions and also makes consumers select more expensive products (Accenture Interactive, 2018). Personalization also affects consumers’ attention and the resulting cognitive processes positively (Tam & Ho, 2006).
In the Burberry example, personalization is offered through the WeChat custom mini program, which brings the store to life through exclusive content and personalized experiences that can be unlocked, features such as learning about products, client services, in-store appointment bookings, events and table reservations in the in-store café. The more the customer engages with Burberry, the richer their experience becomes. It also has fitting rooms with customizable music to listen to. A similar personalized experience is offered by Chanel in its experimental beauty store (Shatzman,
2019). In some zones, the in-house atelier guide provides you with products based on your specific needs. In the Lip bar, personal samples are arranged for individual testing. In the Fragrance section, people can blindly sniff scents to find their personal favorite. This experience is fully focused on personalization.
So consumers want personalization during their in-store experience (Riegger et al. 2021).
Based on the above, it is expected that personalization in a physical luxury fashion store has a positive effect on store visit intention.
H3: Personalization in a physical luxury fashion store has a positive effect on store visit intention.
2.4 Conceptual framework
The proposed conceptual framework considers digitalization, socialization and personalization as the independent variables and the store visit intention as the dependent variable. In particular, this research will investigate the effects of those elements on the store visit intention of consumers regarding physical luxury fashion stores.
Figure 1: Conceptual model: hypotheses
3. Methodology
In this section, the methodological approach in terms of research design and research methods is described. Additionally, the data collection methods and sample in the empirical analysis is elaborated. Finally, the reliability, validity and limitations of the analysis are discussed.
3.1 Research design
3.1.1 Research aim
The goal of this research was to provide empirical evidence that offering the elements digitalization, socialization and personalization (together: an in-store social experience) would indeed increase the store visit intention of consumers and thus the necessity of physical stores in luxury fashion brands.
The elements have been covered in existing literature. However, the effects of those elements on store visit intention has not been researched yet. This research answered the question if these three elements have a positive effect on millennials and Generation Z, and would in fact attract them to physical luxury fashion stores and thus increase their store visit intention. This is relevant, because if so, it will mean that luxury fashion brands can attract people that make up almost 70% of the luxury market in five years to their physical stores, therefore securing store necessity in the future. Thus, the elements of an in-store social experience could play a significant role in the luxury fashion industry and in the necessity of the physical stores of the luxury fashion brands. Therefore, the research question this thesis aimed to answer was: How do various elements of an in-store social experience affect the store visit intention in luxury fashion brands?
To properly answer this research question, several sub-questions were formulated:
1. What is an ‘in-store social experience’ in luxury fashion stores and what elements does it consist of?
2. What effect do digital elements have on the store visit intention of millennials and Generation Z when it comes to luxury fashion stores?
3. What effect do social elements have on the store visit intention of millennials and Generation Z when it comes to luxury fashion stores?
4. What effect does personalization have on the store visit intention of millennials and Generation Z when it comes to luxury fashion stores?
3.1.2 Method
The research was explanatory. In order to scientifically test the hypotheses and answer the proposed research question, quantitative research was conducted by means of a vignette experiment in survey research (Atzmüller et al., 2010). Therefore, the research was correlational, to see if the elements of the in-store social experience were paired with an increased store visit intention of consumers in the luxury fashion industry. The researcher thus collected primary data to understand the intentions and opinions of multiple groups of people in certain situations. A survey was used as the data collection instrument to gather cross-sectional data, because this is useful to generalize the findings and for using statistics to test hypotheses. It is also the most common in this research field. One survey with all of the vignettes was administered digitally, to create a within-subjects vignette research design with five conditions (digitalization, socialization, personalization, all three elements, no element).
While research about the effects of these three elements on store visit intention in the luxury fashion industry has not yet been conducted, there are a few related subjects that have been researched by means of a survey. One of them is about one of the elements, digitalization, in fashion retail stores (Kim et al., 2020). This research investigates how the digital atmosphere affects consumers’
purchase behavior patterns. The method that was used was a survey. Another example is a research paper about the effect of smart, innovative technologies in physical store retail settings, which was also investigated by means of a survey (Vojvodić, 2019). A third example is a research paper about personalization and its effect on customers while in a physical store, which is also researched by means of a survey (Wetzlinger et al. 2017).
Since these research papers are slightly related to this research, which contains multiple elements and their effect on the increased store visit intention, this thesis also used a survey as the method for the research.
Increasingly more experiments in survey research have gained attention, since the experiment’s internal validity is complemented by the external validity of surveys (Schlüter & Schmidt, 2010;
Gaines et al., 2007; Sniderman & Grob, 1996). Specifically, vignette experiments embedded in surveys—or factorial surveys— are getting more attention (Atzmüller & Steiner, 2010). A vignette experiment within survey research was the best choice for this particular research, because this research consisted of measuring the intentions of consumers in multiple scenarios concerning the in-score social experience in physical luxury fashion stores. The scenarios entailed the situation that the luxury fashion store offered one of the three elements of the in-store social experience
(digitalization, socialization or personalization). The fourth scenario was the situation that the luxury fashion store offered none of the elements. An extra scenario was that the luxury fashion store offered the full in-store social experience, containing all three elements. Every respondent got to see all scenarios, after which they needed to indicate their store visit intentions. A vignette experiment through survey research was the ideal way to research these five situations, because a vignette experiment consists of presenting participants with realistic and carefully constructed scenarios (vignettes) to research dependent variables like behaviors, intentions and attitudes, thus enhancing experimental realism and also enabling researchers to control and manipulate independent variables (Aguinis and Bradley, 2014). This is why conducting a vignette experiment was a good way to measure multiple situations regarding the in-store social experience in physical luxury fashion stores presented to the same group of millennials and Generation Z.
3.1.3 Internal and external validity
Internal validity refers to the validity of inferences about the cause effect relationship between the presented vignette stimuli and respondents’ reaction to the stimuli (Shadish, Cook & Campbell, 2002). Internal validity was established by experimental control which enables unique assessment of the vignette factors’ causal effect on the outcome variable. This means that the effect estimates are free of bias. External validity is the extent to which the results of a study can be generalized to and across people, stimuli, other situations, and times (Aronsen et al. 2007). Reliability of a vignette experiment means a balanced and blocked experimental design, reliable vignette measurements, and
a stratified respondent sample of sufficient size, resulting in sufficiently powered hypothesis tests and precize effect estimates (Hinkelmann & Kempthorne, 1994).
An advantage of vignette experiments in survey research is that vignette questions are less abstract and more realistic than regular surveys, the multivalent character of vignettes made a simultaneous investigation of the factors varied in the vignette experiment possible, interaction effects among vignettes could be tested and estimated. Vignettes are flexible and can be used for different purposes and different formats. Another reason why a vignette experiment was the ideal method of research here, is because it was the best way to solve the dilemma of experimental research that results in high levels of internal validity but also in threats to the generalizability and external validity versus conducting nonexperimental research (like surveys) that usually has outstanding external validity but whose conclusions are ambiguous regarding causal relationships (Aguinis and Bradley, 2014). And the flexibility of the vignettes was a good technique to avoid socially desirable or politically correct answers. Finally, many respondents preferred vignettes over monotonous survey questions. All these advantages contributed to the internal validity, reliability and construct validity. Highly contextualized vignettes increase construct validity, which is the degree to which the vignettes measure what the researcher intends to measure. And embedding the vignette experiment in a survey (with random sampling) extends a vignette experiment’s external validity to the survey’s target population, and thus made sure of generalizable results. This is because for example a high level of realism presented in the stimulus presentation, so that the scenarios simulate more approximately experiences in the real world (Heslin, Vandewalle, & Latham, 2006;
Hughes & Huby, 2002).
Thus, the vignette experiment in survey research had both very good internal and external validity and good reliability, which made this a strong way of testing this relatively new research subject.
3.2 Data collection methods
3.2.1 Sampling method
The population for this study was made up of millennials and Generation Z who enjoy (occasionally buying) luxury fashion items. Anyone born between 1981 and 1996 (ages 24 to 39 in 2020) is considered a millennial (Dimcock, 2019). This group is also referred to as an online generation (Mangold and Smith, 2012), or Generation Y. They are more market and technology savvy than their earlier generations (Nowak et al., 2006; Brosdahl and Carpenter, 2011), and digital technologies influence their lives immensely, like socializing, hobbies or shopping (Lissitsa and Kol, 2016). They tend to involve more on online activities, including online shopping (Lester et al., 2006). Anyone born between 1997 and 2012 is considered to be part of Generation Z (Dimcock, 2019). This is a generation that is even more diverse than the millennials. Another difference is that millennials grew up in a recession, while Generation Z grew up in an economically flourishing period. Also,
millennials grew up during the internet revolution, while Generation Z has had all these technologies available from the start (Dimcock, 2019).
Both groups are relevant to the luxury fashion industry: Millennials accounted for 35% of consumption in 2019 and by 2025 could make up 45-50% of the luxury market (D’Arpizio et al., 2021). Generation Z accounted for 8% in 2019 and could make up more than 20% of the luxury market by 2025, which means the group is fast growing and will be almost three times as large as in 2019 (D’Arpizio et al., 2021). Together these groups will account for almost 70% of the market in less than five years. Generation Z will even account for more than 40% of the luxury market by 2035 (D’Arpizio et al., 2020). It was therefore important to find a way to attract both of these groups to the physical stores because if luxury fashion brands succeed in that, they will manage to attract a group as big as around 70% of the total luxury fashion market to the physical stores from 2025 onwards, increasing in-store purchases and therefore securing the future of physical luxury fashion stores because they stay needed. This is why making those two age groups the sample of this
research was relevant to measure the effects of the elements of an in-store social retail experience on their store visit intention and thus on the necessity of those luxury fashion stores.
Since the sampling frame was known, this research was conducted using volunteer sampling. The survey was conducted on Qualtrics. It was distributed through social media and email (20%), and was also placed on the free online market research forum SurveySwap (80%). In this survey
research, the aim was to gather 200 respondents, who are millennials or Generation Z. This aim was achieved: the sample size was 200 respondents. The total was six situations in a within-subject design; All respondents got to see all of the vignettes and had to fill in the whole survey.
Respondents had approximately one week to fill in the survey and the survey itself took about ten minutes to complete. The response rate was difficult to predict, due to the distribution of the survey through multiple online platforms, and response rates of this (new) research subject were rarely mentioned.
3.2.2 Measures
The type of vignette study that was used for this research was the paper people study, which is the most frequently used one. In a paper people study, vignettes are presented to participants typically in written form, and then participants are asked to make explicit judgments, decisions and choices or express behavioral preferences. This fit with the research goals of this thesis, since participants had to read a vignette that manipulated the independent variable. This would either be digitalization, socialization, personalization, the entire in-store social experience or no element at all. All of the independent variables (digitalization, socialization and personalization) were incorporated in this vignette study (and thus translated into vignettes). Participants were first asked about their age and gender. Then, they were asked to respond to a few questions about each vignette. Every vignette contained the same questions about store visit intention: They were asked to what extent they agreed that the presented vignette influenced their store visit intention positively. Thus, after seeing a description of the element(s) of the in-store social experience, accompanied with some example pictures to illustrate the experience offered by the store better, participants had to express their store visit intention. No specific brand was shown, all vignettes were fictional situations within the luxury
