Research Paper 4
Research Paper 4
Research Paper 4
Abstract
Purpose – Omni-channel marketing in the retail environment involves the integration
of multi-channel marketing activities to provide a unified and holistic shopping
experience to customers. The purpose of this paper is to understand the impact of omni-
channel marketing in the retail environment with respect to various types of shoppers.
Understanding how an omni-channel retailing model interacts with customers’
preferences in the context of physical retail space becomes crucial to examine how it
may affect retailers’ marketing and business operation models.
Design/methodology/approach – This research applies hierarchical and k-means
cluster analysis to survey data collected from 36 shopping malls in Hong Kong.
Principal components analysis (PCA) was used to evaluate the validity of the 36 mall
attractiveness attributes, i.e., omni-channels for shopping malls. The k-means cluster
analysis was then conducted to group respondents with similar perceived mall
attractiveness.
Findings – The study identifies that while shoppers have a slightly positive attitude
towards innovative retail technologies, the traditional factors for successful mall
operation such as location, tenant mix, facilities and management services still play a
dominant role. Our findings imply that the impact of omni-channel retailing is
contingent on shoppers’ characteristics after other conventional physical attractiveness
of retail spaces are taken into consideration.
Originality/value – In this research, omni-channel is conceptualised as a
multidimensional construct of shopping malls’ attractiveness and how different
customers’ types perceive these attributes. The finding indicates that retailers have to
consider the customer-centric approach in devising omni-channel marketing strategies
in the retail environment.
Keywords: Omni-channel retailing; consumer marketing, customer satisfaction;
customer characteristics, principal components, k-cluster
_________________________________
* Corresponding author;
Email (william.cheung@auckland.ac.nz), Department of Property, The University of Auckland
Business School, Owen G Glenn Building, 12 Grafton Road, Auckland 1142, New Zealand
Omni-channel retailing refers to a retail strategy that integrates multiple sales channels
into a unified and holistic shopping experience for customers. While omni-channel
retailing is undoubtedly the direction towards which the retail industry is heading, many
retailers are implementing omni-channel by focusing on how to enhance online sales
and in turn, are neglecting their connection to their physical storefront, resulting in the
underperformance (Berman, 2019). Indeed, although multi-channel and omni-channel
retailing has gained a lot of interest among retailing and marketing researchers in the
recent years, the complexity of the topic still requires us to advance our knowledge in
this area, in particular, the critical success factors in moving from multi-channel to
omni-channel retailing (Verhoef, Kannan, & Inman, 2015; Najib & Siddiqui, 2019).
Using shopping mall customers in Hong Kong as a sample, this study aims to
conceptualise omni-channel retailing from a customer-centric standpoint.
In the past two decades the revolutionary virtual institutions created by the Internet have
directed much research attention to marketing channel strategies in the retail
environment (Greer & Kenner, 1999; Ward, 2001; Burke, 2002; Dixon & Marston,
2005; Griffiths & Howard, 2008). With the advent of various online shopping platforms,
shoppers are no longer constrained by their physical distance from the shops or the
associated travelling time costs. As long as the internet connection, or “interactivity” is
provided and sustained at a satisfactory level, transactions can be completed with secure
protocols, and product quality is guaranteed. Using such e-channels, it is not difficult
to find a higher level of shopping satisfaction (Chen and Chang, 2003). But this
manifestation of comfort and convenience in online shopping which has been
developed in the new age of information economy eventually comes head-to-head with
the conventional physical shopping outlets from which customers are being channelled
away. Retail businesses considering their overall marketing strategies, therefore, realise
the need to incorporate online retailing into their physical retail spaces: as a
consequence, the new institutional arrangement between “clicks” and “bricks” emerges
(Griffiths & Howard, 2008; Rippé et al., 2016).
Hong Kong, with the highest mall density in the world, i.e., one mall per square mile
(Stefan, 2016), has undoubtedly witnessed a competitive retail environment. In recent
years retailers in Hong Kong, like those in many Asia-Pacific countries, have adopted
online payment and developed shopping mall mobile applications that provide more
convenience and personalised customers’ experience (Lu et al., 2018; Marino & Presti,
2019). Thus, understanding the factors that determine the attractiveness of shopping
malls from the consumers’ perspectives, and the segments of shoppers that are easily
drawn by technological appeals will become a critical success factor in establishing
omni-channel marketing in the retail environment. This will help retailers and shopping
mall managers devise appropriate marketing strategies to accommodate the rapid
change in technologies.
Our study contributes to the existing omni-channel marketing literature in the context
of the retail market in several ways. First, we use the case of Hong Kong to empirically
demonstrate that, subject to the conventional physical attractiveness attributes of retail
spaces, the impact of omni-channel retailing is contingent on shoppers’ characteristics.
As Ting et al. (2019) suggested, identifying customer preferences and maximising their
engagement in omni-channel strategies is challenging: we attempt to provide insight on
that. Second, while most discussions on omni-channel marketing in the retail
environment have rested on the virtues of formalising channel management and
integration, this study conceptualises the relationship between omni-channel retailing
and shoppers’ characteristics in the specific context of shopping malls. In particular,
our findings suggest that there is no conclusive evidence that young people, who are
usually more tech-savvy, are more attracted than older shoppers to innovative retail
technologies. In fact, young people are often infrequent users who do not consider these
technologies important when doing their shopping. Third, this study also contributes to
the debate on how to move from multi-channel to omni-channel retailing in light of the
customers’ preferences. The rest of the paper will be structured as follows. Section 2
provides a literature review on omni-channel retailing. Section 3 develops two testable
hypotheses based on Chen et al.’s (2018) framework on omni-channel business research.
Section 4 describes the sample, the data collected, and the research design, and reports
the empirical results. Section 5 will conclude the paper.
Retail technologies involve the convergence of online and offline sales platforms to
produce a more shopper-oriented customer experience, thus directly impacting
customer behaviour, store appeal, customer satisfaction and returns (Willems et al.,
2017). Through this enhancement of the entire shopping experience, customer loyalty
to, and trust in, retailers are established and thus generate a higher purchase intention
(von Briel, 2018). More recently, leveraging mobile technologies and big data analyses
has allowed retailers to proactively approach and attract customers (Conforto, 1995;
Marino & Presti, 2019) while receiving real-time feedback from them, which facilitates
the formulation of better-informed marketing strategies (Willems et al., 2017). Built on
multi-channel, omni-channel retailing adds greater convenience and value-added
Omni-channel marketing in the retail environment can also lead to increased sales
across channels and enhanced operational efficiency (von Briel, 2018). For example,
real-time inventory management allows more frequent checking of product availability
and boosts the efficiency with which customers’ needs are met. Research on omni-
channel retailing has demonstrated that marketing on product availability affects sales
growth and customer satisfaction (Milicevic & Grubor, 2015). However, only a few
retailers today are successfully executing on all of their omni-channel initiatives. One
of the factors that hinder the momentum towards integrating commerce across channels
is their lack of understanding of how different customers perceive the innovative retail
technologies in omni-channels. Indeed, many retailers are just guessing (Ozuem, Patten
& Azemi, 2019, p.71). Of course, retailers may have proprietary data on how consumers
are using their channels, but ‘omni’ has a Latin meaning “all things”, implying that
marketing may be an “omniscience” (“perceiving all”). Omni-channel marketing
covers not only what is happening in various channels, but also how people perceive
the channels.
Previous research has tended to treat online and offline channels as mutually exclusive
and has disregarded the possibility for retailers to leverage cross-channel integration to
deliver a seamless shopping experience. The consumer-centric diagnostic research
stream (i.e., Type 3) addresses questions pertaining to the adoption of online channels
in relation to offline channels (e.g., Bock et al., 2012; Datta, 2011). For instance,
Verhoef et al. (2007) explain consumers' preferences for different channels. Many
studies belonging to this research type are mainly about determining factors that
influence consumers' choice of online versus offline channels and shed light on why
specific consumers opt for particular channels. The relevant factors include channel
characteristics (Maity & Dass, 2014), external influences (Chintagunta et al., 2012;
Valentini, 2011), individual attributes (Ansari, 2008; Chintagunta et al., 2012; Valentini,
2011), and purchasing habits (Chintagunta et al., 2012).
[Figure 1 Inserted]
[Figure 2 Inserted]
On the other hand, although the information economy provides a new institutional
Yet shoppers do not all behave uniformly, and they make shopping decisions based on
different criteria. Different demographic characteristics and shopping behaviour would
lead to different customers’ preferences for the mall’s attractiveness. Ismail El-Adly
(2007) identifies three segments of shoppers, namely “relaxed shoppers” who value
comfort and convenience, “demanding shoppers” who consider all attractiveness
factors important, and “pragmatic shoppers” who are only concerned with product
quality and prices. Both “relaxed shoppers” and “demanding shoppers” belong to the
younger segments while “pragmatic shoppers” are usually the older age groups. On the
other hand, Sit, Merrilees & Birch (2003) identify two “pro-entertainment” shopper
segments, namely “entertainment shoppers” and “service shoppers”, who seek
stimulation and socialisation through entertainment attributes. The two segments are
both composed of mainly young shoppers with low to average incomes.
Meanwhile, the “serious” shopper segment, comprising mainly older shoppers, does
not regard entertainment as an essential factor. The results of the study by Sit, Merrilees
& Birch (2003) suggest that young people are more attracted to entertainment features
[Table 1 Inserted]
The perceived level of importance of these different mall attractiveness attributes was
measured on a Likert scale of 1 to 5, with 1 being “not at all important” and 5 “very
important”. The higher the value, the more important the attribute is 1. Before the main
analysis, Kaiser-Meyer-Olkin (KMO) and Bartlett’s tests were used to verify the
1
The ANOVA is performed to ensure that all the attributes of shopping malls are statistically different
among the identified clusters.
[Figure 3 Inserted]
On the other hand, promotional activities are the least important factor group
contributing to mall attractiveness among all the components. Its mean score of 3.2 out
of 5 shows that promotional events and loyalty programmes are not particularly
appealing to customers. Moreover, it is generally accepted that online shopping sites
usually provide a better bargain in terms of pricing, and customers are not physically
looking for special price promotional events at the malls. In terms of the relative
importance of various attributes among all these nine components, the two most crucial
The results also show that shoppers were rather neutral to retail innovative technologies.
“V27. Availability of shopping mall mobile app”, “V28. Availability of multiple online
and offline sales channel” and “V35. High-tech entertainment experience” all had a
mean rating of 3.0. Other attributes which are of lower importance include “V7.
Existence of a cinema”, “V25. Loyalty programmes” and “V36. Interactions between
retailers and consumers through social media”. The results are presented in Table 2.
[Table 2 Inserted]
Specifically, the k-means cluster analysis started with Ward’s method to compute the
sum of squared distances within clusters as the coefficient as agglomeration proceeded,
which could be visualised in the agglomeration schedule. Agglomeration should stop
when the increase in the coefficient between two stages becomes large enough to
minimise the variance within-cluster, hence determining the number of clusters, k
(Sharma, 2011). Such clustering enabled us to assign shoppers into k clusters, within
which they had similar attribute preferences. Once the clusters were identified, their
characteristics, i.e., demographics, shopping behaviour and perceived mall
attractiveness attributes, were profiled. Such a segmentation might enable retailers to
[Table 3 Inserted]
The empirical results show that young people do not particularly consider high-tech
entertainment experiences and interactions with retailers through social media
important when doing their shopping. “Time-killers” (Cluster 1) and “pragmatic
shoppers” (Cluster 3) are younger segments, and the former only gave scores of 1.7 and
1.8 to the two attributes respectively, indicating that they are not very important. The
latter segment showed a rather neutral attitude to the two attributes (i.e., scores of 3.2
and 3.3 respectively). While some might assert that online-shopping is only popular
among the younger generation, other platforms can attract senior citizens to adapt to
internet-based activities (Bijalwan & Sirswal, 2013). With each generation being more
computer/internet literate than the previous one, one would expect future generations
to be more accustomed to online-shopping based on this correlation (Kumar et al.,
2015), and in a few generations from now we may see a society where online-shopping
is more the norm than the exception. With growing internet popularity in each
demographic sector in our society, the development of the information economy is more
and more dependent on institutional arrangements prescribed by the local authority in
each society, including rules and regulations with regard to internet platform activities.
Consequently, the study of changing retail spatial configurations is not only a real estate
study (such as Dixon & Marston, 2005; or Kok, 2007) but also a social analysis of the
spatial ramifications of the entire changing society (Thomas & Carraher, 2014).
Meanwhile, “tech-savvy shoppers” (Cluster 4) gave the highest rating for the two
2
The perceived level of importance of 36 mall attractiveness attributes by different clusters is shown in
the Appendix Table A1.
[Table 4 Inserted]
5. Concluding Remarks
Omni-channel retailing has become essential to the future development of retail
operations. Research on omni-channel retailing has blossomed substantially over the
last lustrum covering different countries and markets (Beck and Rygl, 2015; Huré, et
al., 2017; Yumurtacı Hüseyinoğlu et al., 2017; Zhang et al., 2018; Chopra, 2018;
Melacini et al., 2018; Ye et al., 2018). The popularity of omni-channel retailing creates
new challenges not only for retailers but also for suppliers and other stakeholders within
the supply chain (Hübner et al., 2016; Murfield et al., 2017). In fact, in some cases,
even traditional offline retailers can benefit from omni-channel retailing (for example,
when online customer reviews are fed back for marketing and ordering purposes) (Li
et al., 2019). This implies that to capitalise the benefits of omni-channel retailing, there
is a need for operators to change their mindset about “the extent to which different
channels compete with and complement one another” (Ailawadi and Farris, 2017), and
more importantly to be more customer-centric. Also, to fully implement omni-channel
retailing, especially in a market with substantial geographical and cultural diversity, the
overall retail operation including marketing, logistics, supply chains and organisational
management strategy should be considered together in a holistic approach (Ye et al.,
This study is novel in the sense that it contributes to the existing omni-channel literature
by empirically demonstrating that the impact of omni-channel retailing is contingent to
the shoppers’ characteristics after taking into consideration of other conventional
physical attractiveness attributes of retail spaces. The findings reinforce Chen et al.’s
(2018) framework by highlighting the importance of the interaction between omni-
channel retailers and heterogeneous consumers. We applied k-means cluster analysis
and principal component analysis to identify seven consumers segments, namely “time-
killers”, “spending shoppers”, “pragmatic shoppers”, “tech-savvy and demanding
shoppers”, “driving shoppers”, “traditional shoppers”, and “service shoppers” that
interact with various shopping mall attractiveness attributes. Each of the segments has
its distinctive demographics and shopping preferences in terms of its mall attractiveness
attributes, in particular, the retail innovative technologies that are the necessary
condition for implementing omni-channel retailing.
Our findings also indicate that there is no conclusive evidence that young people are
more attracted to retail innovative technologies: interestingly, they are often infrequent
users who do not consider these technologies important when shopping. The results of
this study also illustrate a generally low user frequency of retail innovative technologies
in shopping malls in Hong Kong. This is not satisfactory from a retail channel
management point of view, especially for those intending to implement omni-channel
retailing in a major global city. Our study shows that relatively few local customers now
place a significant emphasis on technologies when conducting shopping: not because
they are mostly technology illiterate, but more likely because they do not see shopping
mall operators as providing a seamless customer experience over different retailing
channels.
Goldfarb (2013) once in his article “The internet killed distance; mobile brought it back”
vividly illustrates how consumers shop nowadays with mobile applications that can
help to reinstate the importance of the physical locations of retail shops. Understanding
why and how customers prefer to a particular type(s) of channel(s) becomes
instrumental in allowing omni-channel retailing work for the operators. Examination of
how this new omni-channel retailing mode provides a value-creation for the consumer,
which requires a thorough understanding of how different attributes in the omni-
channel may attract different types of customers: our empirical analyses have
contributed to this development.
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Cluster
Avg. F Sig.
1 2 3 4 5 6 7
Retail innovative technologies
V36. Interactions between retailers
and consumers through 1.8 3.2 3.3 4.2 2.6 2.9 3.5 3.1 35.661 0.000
social media
V35. High-tech entertainment 3.0 3.2 4.2 2.8 2.7 3.2 3.0 44.483 0.000
1.7
experience
V32. Personalisation 1.9 3.2 3.1 4.3 2.9 3.0 3.9 3.2 41.512 0.000
V33. Smart way-finding 2.3 3.5 3.2 4.3 2.9 3.1 3.5 3.3 22.288 0.000
V34. Mobile payment system 2.9 3.5 3.8 4.5 3.3 3.6 4.1 3.7 20.563 0.000
V30. Smart dining experience 2.6 3.5 3.4 4.5 3.0 3.9 3.8 3.5 25.134 0.000
V29. Synchronisation of online 3.3 2.9 4.2 2.8 3.6 3.8 3.2 38.350 0.000
2.1
and offline sales channels
Facilities and management services
V16. Adequate toilets 4.2 3.8 4.2 4.5 3.7 4.8 4.2 4.2 13.768 0.000
V15. Adequate lifts and escalators 3.9 3.8 3.7 4.3 3.4 4.6 4.2 4.0 16.163 0.000
V14. Adequate signage 3.5 3.8 3.8 4.2 3.0 4.6 4.0 3.8 16.014 0.000
V18. Cleanliness of mall 4.2 4.1 4.5 4.6 3.8 4.9 4.6 4.4 21.500 0.000
V19. Security of mall 4.1 3.9 4.1 4.5 3.6 4.8 4.4 4.2 19.965 0.000
V17. Customer service quality 3.8 3.8 3.7 4.4 3.4 4.7 4.2 4.0 21.766 0.000
Promotional activities
V24. Promotional events 2.8 3.2 2.9 4.0 3.1 3.7 3.5 3.3 13.176 0.000
V26. Adequate publicity of 3.4 2.8 4.1 2.8 3.6 3.7 3.3 23.268 0.000
2.4
promotional activities
V25. Loyalty programmes 2.1 3.2 2.8 3.9 2.7 3.6 3.4 3.1 20.325 0.000
Anchor tenants
V7. Existence of a cinema 2.3 3.5 3.2 3.7 2.4 4.2 2.6 3.1 27.695 0.000
V8. Existence of a supermarket 2.9 3.8 3.5 4.1 2.9 4.4 3.1 3.5 20.717 0.000
V6. Existence of a food court 3.1 3.9 3.4 4.2 3.3 4.3 3.5 3.7 12.616 0.000
Mall positioning
V9. Convenient location 4.5 4.1 4.5 4.5 3.8 4.6 4.3 4.3 8.848 0.000
V10. Convenient transportation
4.6 4.1 4.7 4.6 3.6 4.7 4.5 4.4 15.763 0.000
network
V1. Variety of brands 4.0 3.8 3.8 4.1 3.3 4.2 4.0 3.9 6.549 0.000
V2. Variety of products 4.3 4.0 4.0 4.3 3.8 4.5 4.3 4.2 7.163 0.000
V3. Quality of products 4.3 4.0 4.0 4.5 3.4 4.6 4.5 4.2 23.774 0.000
Convenience
V12. Ease of finding entrances and
3.5 3.7 3.5 4.3 2.8 4.2 4.0 3.7 19.152 0.000
exits
Retailer Consumer
Type 1 – Retailer-centric diagnostic Type 3 – Consumer-centric diagnostic
studies: studies:
Diagnostic
analyses why there is a growing trend for analyses why the adoption of online
pure online and offline retailers to channels in relation to their offline
converge on multichannel arrangement channels
Where: