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Exploring the Role of Omni-channel Marketing in the Retail

Environment from a Shopper Perspective

Ling Hin Li a, Ka Shing Cheung*b, Wing Sze, Tse a


a
Department of Real Estate and Construction, University of Hong Kong, Hong Kong;
b
Department of Property, The University of Auckland Business School, New Zealand

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

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1. Introduction
Creating a seamless shopping experience over multiple retailing channels is challenging.
For decades, many retailers have been adopting multi-channel marketing strategies to
incorporate the Internet of Things and digital technologies into their retail businesses,
thereby significantly transforming the retailing landscape (Beck and Rygl, 2015).
Multi-channel retailing considers the design, deployment, coordination, and evaluation
of the different channels through which firms interact with their customers, aiming to
increase customer value through the building, development and maintenance of
relationships (Neslin et al., 2006). However, multi-channel retailing usually focuses on
enhancing the performance of a particular channel (Ailawadi and Farris, 2017), while
overlooking the connections among various channels. Because of this, the multi-
channel strategy is often inadequate to address increasingly demanding customers. That
puts retailers under pressure to reshape their retail channel management and business
models appropriately for the relentless sales-growth race. Omni-channel arises as a new
retailing approach that can take advantage of innovative retail technologies to satisfy
customers with whatever channels they choose. In recent years this business model has
started to replace the multi-channel model by integrating various platforms to provide
consumers with a synchronised services interface and seamless experience (Yurova et
al. 2017; Rizvi & Siddiqui, 2019).

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.

Retailers are encountering many operational questions, such as how to identify

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customer preferences, how to maximise customer engagement value using various
marketing channels, and how consumer behaviour varies in multi-channel marketing in
the competitive retail market. For example, Harris, Riley and Hand (2018) indicate that
the high level of diversity and complication in shoppers’ journey configurations across
different platforms poses a challenge to marketing researchers and retailers.
Furthermore, the use of multiple channels has altered company structure including the
roles of sales forces and may result in the risk of cannibalisation and potential conflicts
in resource allocation and distribution (Kollmann, Kuckertz, & Kayser, 2012; Yan 2010;
Yan, Wang & Zhou, 2010).

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).

However, there is a lack of theoretical and empirical understanding of how retailers


may harness the power of omni-channel with its focus on customer experiences. The
impact of omni-channel on different customers needs to be further conceptualised and
evaluated. This study, therefore, aims, by using the case of Hong Kong, to gain a better
understanding of the role of shopping malls in applying omni-channel retailing
strategies. Specifically, we hypothesise that despite many retail innovative technologies
that significantly affect the attractiveness of physical retail space after taking into
account other conventional attributes of malls, the impacts of retail innovative

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technologies are mainly contingent on the characteristics of shoppers.

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.

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2. Literature Review
Shopping was originally a physical activity carried out within the “bricks” of the retail
properties, while the Internet of Things (IoT) has gradually led a synchronisation of
“clicks with bricks” in consumers’ experience (Picot-Coupey, 2016). While the growing
popularity of online shopping substantially redefines the landscape of retailing business,
“clicks” (i.e., the online shopping) is unlikely to take over the role of “bricks” (i.e., the
retail stores), and therefore a fundamental question for marketing research is “how to
develop a strategy that covers across multiple marketing channels to maximise
opportunities to interact with prospective customers in the retail environment?”
Recently, a new cross-channel content strategy called “omni-channel” marketing has
started to emerge, aiming to provide customers with a seamless retailing experience.

Omni-channel marketing in the retail environment means taking a broader perspective


on retail channels and understanding how shoppers in their search and purchase process
are influenced and move through marketing channels (Verhoef, Kannan & Inmanc,
2015). The concept is essential to optimise multiple retailing channels in delivering
goods and services to customers by means of both a physical and a digital presence.
This differs from traditional multi-channel retailing where individual channels have
been optimised without necessarily taking the holistic retailing experience into account.
By integrating the latest digitalisation technologies especially mobile devices into
physical retail spaces, omni-channel enhances shopping convenience and helps retailers
understand strategic moves for the future of retailing business (Verhoef et al., 2015;
Chopra, 2016; Yrjölä et al., 2018).

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

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elements such as social and entertainment events to brick-and-mortar store visits
(Willems et al., 2017), which in turn maintains or even enhances customer visits to
these physical stores.

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.

Based on Chen et al. (2018)’s framework, omni-channel research consists of four


predominant streams which can be categorised under various perspectives (i.e.,
consumer versus retailer) and research orientation (i.e., diagnostic versus prescriptive).
Regarding perspectives, consumer-centric omni-channel research considers the factors
that shape consumers' reception on omni-channel business, while retailer-centric
research examines the enablers and inhibitors of retailers in implementing omni-
channel business. In terms of research perspective, diagnostic studies are mainly
descriptive and seek to pinpoint consumer behaviours and retailers’ strategies in omni-
channels; whereas prescriptive studies emphasise omni-channel business solutions that
integrate online and offline channels.

The four predominant streams of omni-channel research are shown in Figure 1.


Retailer-centric diagnostic studies (i.e., Type 1) relate to omni-channel analysis
concerning with the motivation behind a growing trend for pure online and offline
retailers to converge on multichannel arrangements. Zettelmeyer (2000) suggests that

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traditional “bricks-and-mortar” retailers are pressured to expand their online channels
to capture the market in round-the-clock digital environments, thereby adapting to the
stagnation in offline sales. Nevertheless, traditional “bricks-and-mortar” retailers can
offer complementary services that cannot be easily replicated by purely online retailers
(Luo et al., 2015).

Retailer-centric prescriptive studies on omni-channel research (i.e., Type 2) focus on


analysing how retailers realise an omni-channel setup. Given the high capital
investment in infrastructure, omni-channel retailers are at a disadvantage when
competing with pure online rivals. The fundamental question of this research stream
becomes “what are the primary strategic considerations for retailers in embarking on
omni-channel ventures?”

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).

Consumer-centric prescriptive studies (i.e., Type 4) aim to devise omni-channel


marketing strategies that lock consumers in through the delivery of integrated shopping
experiences. But as Verhoef et al. (2007) suggest, consumers have a habit of soliciting
product information in one channel (e.g., reading product reviews online) and making
the actual purchase in another (e.g., shopping malls in our case) which is a behaviour
labelled by Chiu et al. (2011) as cross-channel free riding.

[Figure 1 Inserted]

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3. Development of Hypothesis
While Chen et al.’s (2018) framework elucidate the four major domains in omni-
channel research, the linkages between perspectives (i.e., consumer versus retailer) and
research orientation (i.e., diagnostic versus prescriptive) are relatively unclear. How do
omni-channel retailers interact with heterogeneous consumers? Figure 2 illustrates that
the sphere of exchange is an expanded mechanism that includes both the online
institutional arrangement (i.e., the “clicks”) and the traditional physical retail space (i.e.,
the “bricks”). For ordinary consumer products, as long as the online arrangement
provides the least-cost solution (including time cost), the relationship between the
online retail agent and the customer evolves around contractual and financial
arrangements only (as illustrated in dotted line in Figure 2). The sphere of exchange,
therefore, is a two-section arrangement involving the delivery of the actual products
being executed (as indicated by solid lines in Figure 2) by the delivery agent (courier)
who has a contractual arrangement with the online agent to deliver. Physical retail
stores, therefore, are being replaced by this new institutional arrangement that satisfies
both the retailer and the customers. Under the online delivery model, the replacement
of physical space also removes the element of retail rent from this business model. The
saving in rent allows transaction cost for both the retailers and the customers to be
further reduced. This saving also helps the retailers to subsidise partly or even
completely the service fees required by the couriers, making online shopping even more
appealing for the customers.

[Figure 2 Inserted]

With the convergence of e-commerce technologies, there is a fundamental shift in the


way retail businesses operate. The new retail environment is created, retail industry
boundaries are blurred, and the products’ landscape is redefined. Established ‘bricks
and mortar’ retailers (i.e., retail shopping malls) are finding themselves confronted
with the new retail environment in a virtual marketplace of developing dynamic
information interactions, as opposed to a marketplace of physical and institutionalised
interactions. Such a new institutional arrangement in the sphere of exchange
diminishes the importance of physical retail space, and in some cases even replaces it
completely.

On the other hand, although the information economy provides a new institutional

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arrangement for product delivery, whether online-shopping poses as a threat to the
traditional retail space remains contentious (Ward, 2001; Razali et al., 2014). Many
manufacturers still rely on physical retailers to distribute their consumer products as the
least-cost service function. Interestingly, because a lot of products sold online are
delivered to the customers at a low cost, adding a new agent in the supply chain during
the exchange process does not add transaction costs to the customers. Hence, this new
institutional arrangement in the sphere of exchange under the new information economy
allows a relatively speedy exchange to take place that works almost as effectively and
satisfactorily as the conventional exchange which takes place inside the retail space.

Therefore, embracing such a challenge, “how to connect retailer’s perspectives (i.e.,


Type 1 and 2 research) to the consumer’s perspective (Type 3 and 4 research)” in the
Chen et al.’s (2018) framework is a further question that established ‘bricks and mortar’
retailers need to ask. To understand how omni-channel retailers interact with consumers,
we set two hypotheses in this study to test.

Hypothesis 1: Retail innovative technologies significantly affect the attractiveness of


physical retail space (i.e., shopping malls) after other conventional attractiveness
attributes of shopping malls are taken into account.

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

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in shopping malls. These studies point us to the fact that retail channels must be
contingent on the shoppers’ characteristics. To this end, this study aims to use shoppers
in malls of Hong Kong to illustrate the interaction between omni-retail channels and
various types of shoppers. The findings will shed light on the importance of considering
shoppers’ characteristics when they are implementing their omni-channels retailing.

Hypothesis 2: The impacts of retail innovative technologies and other attractiveness


attributes of shopping malls are significantly different among various types of shoppers.

4. Research Design and Empirical Results

4.1. Data and sample collection


This study focuses, from the consumers’ perspective, on the level of importance of
various mall attractiveness attributes under omni-channel retailing. The data collection
process lasted for three months, from October to December 2018 in Hong Kong.
Questionnaires were distributed online through social media and chat group apps to
reach a broad audience of different age groups to avoid sampling bias. In total, 318
responses were received. After those with missing data were discarded, 297 effective
responses were received in total, meeting the targeted sample size of 250 respondents.
A total of 36 factors of shopping mall attractiveness, grouped under seven categories,
namely 1) trade and tenant mix, 2) accessibility, 3) facilities, 4) management services,
5) shopping environment, 6) promotional activities, and 7) retail innovative
technologies (i.e., omni-channel retailing), were included in the questionnaire. Ratings
of attractiveness were made on a five-point Likert scale. Table 1 summarises the details
of these attributes.

[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.

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sample adequacy for each variable. The KMO statistic is a measure of the proportion
of variance among variables that might be the common variance. The lower the
proportion, the more suited the data is to Factor Analysis. KMO test indicated a value
0.863, which is between 0.8 and 1.0, meaning that a sufficient proportion of variance
in the variables (Cerny & Kaiser, 1977). Bartlett’s test of sphericity was also conducted
to check whether there was a redundancy between variables that could be summarised
for some factors (Snedecor and Cochran, 1989). The test also confirmed that there was
no significant redundancy in the variables used. In addition, Figure 3 illustrates the
distribution of age and income of respondents. As indicated, the sample distribution did
not skew towards a particular group and is therefore considered to be satisfactory.

[Figure 3 Inserted]

4.2. Principal Component Analysis (PCA) on Shopping Malls


Attractiveness
To test Hypothesis 1 (H1), we adopted a Principal Component Analysis (PCA) to
evaluate the validity of the 36 mall attractiveness attributes, i.e., omni-channels for
shopping malls. The PCA aims to extract useful factors and reduce the amount of data
to deal with. The principal component analysis was applied to the 36 attractiveness
attributes (i.e., V1-V36). The results indicated that nine principal components with
eigenvalues higher than one, and they together explained 64.5% of data variability. This
suggests that these 36 mall attributes could be orthogonalised into nine categories. The
suggested categorisation of mall attributes and their corresponding factor loadings in
descending order are listed in Table 1. The higher the loading, the higher correlation
between the variable and its corresponding component. The components were labelled
by observing the common features of the variables which the component was comprised
of. The first factor labelled “retail innovative technologies”, consists of seven attributes
which are related to new technologies applied in shopping malls to enhance the
customer experience. This component characterises various enablers for implementing
omni-channel retailing in shopping malls, including the interactions between retailers
and consumers through social media, high-tech entertainment experiences,
personalisation, smart path-finding, mobile payment system, smart dining experiences,
and synchronisation of online and offline sales channels. Other components include:
“facilities and management services”, “promotional activities”, “anchor tenants”, “mall

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positioning”, “convenience” and “shopping environment”, “parking facilities and
amenities” and “pragmatic considerations”. All these nine mall attractiveness
components acquired a mean score of perceived importance higher than 3.0, indicating
that all of them were important to the attractiveness of shopping malls. Some
components appeared to be more important than others, while some were perceived to
be relatively neutral when it came to shopping malls’ attractiveness.

“Retail innovative technologies” acquired an importance rating of 3.3 out of 5,


indicating that although “retail innovative technologies” contribute reasonably high to
malls’ attractiveness in general, compared to other traditional success factors, mobile
payment systems and smart dining experiences were perceived to be more important in
this group. Meanwhile, shoppers were rather neutral to high-tech entertainment
experience such as virtual reality (VR), augmented reality (AR) and interactions with
retailers through social media. These results also confirm our Hypothesis 1 that the
“retail innovative technologies” do significantly affect the attractiveness of shopping
malls after taking into account of other conventional attractiveness attributes which will
be discussed below.

Mall positioning, which includes the aspects of the convenience of location,


transportation network, variety of brands and products and quality of products, is
invariably the most important factor. This component attained the highest mean score
(4.2 out of 5) among all shoppers. The second most crucial component is facilities and
management services, rated 4.1 out of 5. This factor includes the provision of adequate
toilets, lifts, escalators and signage as well as cleanliness, security and customer service
quality of the mall. It was followed by the group “pragmatic considerations”, with an
average importance rating of 4.0 out of 5. This factor is concerned with appropriate
pricing and suitability of stores and products.

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

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ones are “V18. Cleanliness of mall” and “V10. Convenient transportation network”,
which both had the highest mean rating of 4.4. Another essential attribute is “V9.
Convenient location”, rated 4.3. Other attributes include “V2. Variety of products”, V3.
Quality of products”, “V16. Adequate toilets”, “V19. Security of mall”, and “V23. Air
quality and temperature”, which all had ratings of 4.2. The least important attribute is
“V20. Pleasant background music”, which is the only attribute attaining a mean score
below 3.

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]

4.3. The interaction between omni-channels and types of shoppers


To test Hypothesis 2 (H2), hierarchical cluster analysis was used to determine the
number of clusters and profile cluster centres, followed by k-means cluster analysis
which segmented shoppers according to the attractiveness attributes of the shopping
malls. This k-means cluster analysis aims at grouping respondents with similar
perceived mall attractiveness attributes together, achieving a maximum between-cluster
variation and a minimum within-cluster variation (Malo, 2015). This allows us to
understand whether “retail innovative technologies” are perceived as important to a
specific type of shoppers.

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

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target specific customers groups for implementing omni-channel retailing. Statistical
significance among the segment profiles was checked to ensure meaningful and
contrasting segmentation 2.

As previously mentioned, the k-means cluster analysis is a process used to segment


shoppers according to the mall attractiveness attributes into seven clusters in
accordance with the perceived level of importance of the different mall attractiveness
attributes by different clusters. The process of conducting this clustering has already
been explained. The dominant characteristics of each cluster (i.e., type of shoppers) are
summarised in Table 3.

[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.

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attributes. This shows that the importance of high-tech entertainment experiences and
interactions through social media is related to the habitual use of innovative retail
technologies rather than age differences. “Tech-savvy and demanding shoppers”
(Cluster 4) and “service shoppers” (Cluster 7) who belonged to higher-income groups
placed relatively higher importance on smart parking experiences when these two
clusters. Segments placing lower importance on this attribute were “time-killers”
(Cluster 1) and “pragmatic shoppers” (Cluster 3), who in general had low to average
monthly incomes. “Tech-savvy and demanding shoppers” (Cluster 4) and “service
shoppers” (Cluster 7) are dominated by the married while “time-killers” (Cluster 1) and
“pragmatic shoppers” (Cluster 3) are mostly singles. The former two groups placed
higher importance on smart parking experiences, while the latter two did not (Table 4).
All these reflect the strong characteristic-oriented preferences among different shoppers,
and the cluster analysis may potentially help retailers to examine these preferences at a
microscopic level.

[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.,

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2018).

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.

Indeed, creating a satisfactory shopping environment that gratifies the changing


consumer behaviour and shopping experience is of paramount importance to retail mall
operators, and eventually hinges on a proactive management approach adopted by the
operators (Chebat, Sirgy & Grzeskowiak, 2010; Singh & Sahay, 2012; Kushwaha,
Ubeja & Chatterjee, 2017). Using innovative retail technologies is beneficial to both
retailers and customers (von Briel, 2018). For the retailers, it enhances their
competitiveness in this digital age and enables them to attain higher sales volume,

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business profitability and corporate image (Dinu, 2015). This can be achieved through
four aspects, namely cognitive faithfulness, emotional faithfulness, conative
faithfulness and behavioural faithfulness (Abrudan, Plaias, & Dabija, 2015). Innovation
in operating and managing shopping centres has been proved to result in a more
favourable mall image, higher customer satisfaction, and intention to revisit and
purchase again (Abrudan et al., 2015).

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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Table 1: The 36 attractiveness attributes of shopping malls and their suggested grouping
by principal component analysis

Component Variables Loading


Retail innovative V36. Interactions between retailers and consumers via social media 0.768
technologies V35. High-tech entertainment experience 0.762
V32. Personalisation 0.748
V33. Smart way-finding 0.741
V34. Mobile payment system 0.695
V30. Smart dining experience 0.589
V29. Synchronisation of online and offline sales channels 0.494
Facilities and V16. Adequate toilets 0.747
management V15. Adequate lifts and escalators 0.713
services V14. Adequate signage 0.702
V18. Cleanliness of mall 0.569
V19. Security of mall 0.513
V17. Customer service quality 0.448
Promotional V24. Promotional events 0.804
activities V26. Adequate publicity of promotional activities 0.794
V25. Loyalty programmes 0.769
Anchor tenants V7. Existence of a cinema 0.799
V8. Existence of a supermarket 0.786
V6. Existence of a food court 0.703
Mall positioning V9. Convenient location 0.805
V10. Convenient transportation network 0.782
V1. Variety of brands 0.566
V2. Variety of products 0.523
V3. Quality of products 0.359
Convenience V12. Ease of finding entrances and exits 0.628
V11. Appropriate trading hours 0.591
V28. Availability of multiple online and offline sales channels 0.514
V27. Availability of shopping mall mobile app 0.443
Shopping V21. Mall decorations 0.740
environment V22. Comfortable lighting 0.671
V23. Air quality and temperature 0.543
V20. Pleasant background music 0.386
Parking facilities V13. Adequate parking space 0.715
and amenities V31. Smart parking experience 0.629
Pragmatic V5. Appropriate pricing 0.758
considerations V4. Stores and products are suited for needs 0.747

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Table 2: Ranking and mean scores of the most and least important mall attributes

Importance Mean score


Mall attractiveness attribute
ranking (out of 5)
Most important
1 V18. Cleanliness of mall 4.4
V10. Convenient transportation network
2 V9. Convenient location 4.3
3 V2. Variety of products 4.2
V3. Quality of products
V16. Adequate toilets
V19. Security of mall
V23. Air quality and temperature
Least important
1 V20. Pleasant background music 2.8
2 V27. Availability of shopping mall mobile app 3.0
V28. Availability of multiple online and offline sales
channel
V35. High-tech entertainment experience
3 V7. Existence of a cinema 3.1
V25. Loyalty programmes
V36. Interactions between retailers and consumers
through social media
Legend: 1 - not at all important
2 - not very important
3 - neutral
4 - important
5 - very important

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Table 3: Dominant characteristics of the 7 shopper segments

Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 Cluster 6 Cluster 7


Time- Tech-savvy
Spending Pragmatic Driving Traditional Service
killers demanding
Demographics
Gender Both Both Both Both Both Female Both
Middle- Middle- Middle-
Age Young Older Young Older
aged/ Older aged/ Older aged/ Older
Single/
Marital status Single Married Single Married Married Married
Married
Above Above
Monthly income Average Low High High High
average average
Shopping behaviour
Have used retail
innovative Yes Yes Yes Yes Yes Yes Yes
technologies before
Median frequency
Less than Less than Less than
of using retail 2-3 times 2-3 times
once per Monthly Monthly once per once per
innovative per month per month
month month month
technologies
Median frequency 2-3 times 2-3 times 2-3 times per 2-3 times
Weekly Weekly Weekly
of visiting a mall per month per month month per month
Motives of visiting S/ WS/ S/ WS/
S/ WS/ D S/ D/ E/ G S/ D S/WS/ E/ G S/ G
a mall D/ E E/ G
Median time
1-2 hours 1-2 hours 1-2 hours 1-2 hours 1-2 hours 1-2 hours 1-2 hours
spent per visit
Number of cases 15 82 26 60 25 27 62
% of total cases 5% 28% 9% 20% 8% 9% 21%
Legend: S - Shopping;
WS - Window-shopping;
D - Dining;
E - Entertainment;
G - Gathering with family/ friends

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Table 4: Shopper segments and the impacts of different mall attributes

More important attributes Less important attributes Shopper segment


Cluster 1 ● Mall positioning ● Retail innovative Time-killers
technologies
(5%) ● Promotional activities
● Parking facilities and
amenities
● Anchor tenants
● Convenience
Cluster 2 ● Anchor tenants / Spending shoppers
(28%)
Cluster 3 ● Pragmatic considerations ● Parking facilities and Pragmatic shoppers
amenities
(9%) ● Promotional activities
● Convenience
Cluster 4 ● Retail innovative / Tech-savvy shoppers
technologies
(20%)

Cluster 5 ● Parking facilities and ● Convenience Driving shoppers


amenities ● Anchor tenants
(8%) ● Retail innovative
technologies
● Promotional activities
● Shopping environment
Cluster 6 ● Facilities and / Traditional shoppers
management services
(9%) ● Pragmatic considerations
● Convenience
Cluster 7 ● Facilities and ● Anchor tenants Service shoppers
(21%) management services
● Pragmatic considerations
● Convenience

Electronic copy available at: https://ssrn.com/abstract=4240229


Appendix
Table A1: Perceived level of importance of 36 mall attractiveness attributes by different
clusters

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

Electronic copy available at: https://ssrn.com/abstract=4240229


Cluster
Avg. F Sig.
1 2 3 4 5 6 7
V11. Appropriate trading hours 3.7 3.8 3.9 4.3 3.0 4.6 4.1 3.9 20.219 0.000
V28. Availability of multiple
2.1 3.1 2.5 4.0 2.6 3.4 3.6 3.0 36.771 0.000
online and offline sales channels
V27. Availability of shopping mall
2.3 3.2 2.2 3.8 2.9 3.4 3.2 3.0 21.290 0.000
mobile app
Shopping environment
V21. Mall decorations 3.3 3.5 3.1 4.0 2.9 4.0 3.6 3.5 13.250 0.000
V22. Comfortable lighting 3.7 3.8 3.8 4.2 3.4 4.4 4.0 3.9 10.930 0.000
V23. Air quality and temperature 4.1 4.0 4.3 4.5 3.6 4.8 4.4 4.2 16.726 0.000
V20. Pleasant background music 2.7 2.9 2.3 3.5 2.0 3.4 2.9 2.8 16.725 0.000
Parking facilities and amenities
V13. Adequate parking space 2.9 3.4 2.2 4.1 3.6 3.9 3.5 3.4 19.494 0.000
V31. Smart parking experience 2.2 3.4 2.3 4.4 3.2 3.5 3.6 3.2 37.207 0.000
Pragmatic considerations
V5. Appropriate pricing 3.9 3.9 4.3 4.3 3.4 4.5 4.3 4.1 9.996 0.000
V4. Stores and products are suited
3.7 3.8 4.0 4.2 3.5 4.4 4.0 3.9 5.999 0.000
for needs

Notes: Cluster 1 refers to Time-killer shoppers; Cluster 2 represents spending shoppers;


Cluster 3 includes the pragmatic shoppers; Cluster 4 consists of demanding and tech-savvy
shoppers; Cluster 5 comprises driving shoppers; Cluster 6 has the traditional shoppers;
Cluster 7 are those service shoppers.

Electronic copy available at: https://ssrn.com/abstract=4240229


Figure 1: Four predominant research streams in omni-channel retailing

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

Type 2 – Retailer-centric prescriptive Type 4 – Consumer-centric


studies: prescriptive studies:
Prescriptive

analyse how retailers strategically analyse how to devise omni-channel


embark on omni-channel ventures marketing strategies to deliver an
integrated consumer experience

Source: Authors compiled based on Chen et al. (2018); “how to connect


retailer’s perspectives (i.e., Type 1 and 2 research) to the consumer’s
perspective (Type 3 and 4 research)” is the focus of this research.

Figure 2: The role of retail space in the new information economy

Where:

- Single-lined arrows represent movement of products/factors of production


- Double-lined arrows represent movement of monetary payment

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Figure 3: Distribution of respondents’ age and monthly income

Electronic copy available at: https://ssrn.com/abstract=4240229

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