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RETAIL IS DETAIL Customers’ Attraction to Physical Retail Stores Within Consumer Electronics

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RETAIL IS DETAIL Customers’ Attraction to Physical Retail Stores Within Consumer Electronics RETAIL IS DETAIL Customers’ Attraction to Physical Retail Stores Within Consumer Electronics Tina Mohammadi Business and Economics, master's level 2020 Luleå University of Technology Department of Business Administration, Technology and Social Sciences RETAIL IS DETAIL - Customers’ Attraction to Physical Retail Stores Within Consumer Electronics ____________________________________________________________________________________ Tina Mohammadi Business and Economics, master's level 2020 Department of Business Administration, Technology and Social Sciences ACKNOWLEDGEMENTS —————————————————————————————————————————— This master thesis represents the final project of the master program in business and economics. The author would like to thank everyone who have contributed to the progress and quality of this thesis. First, a sincere thanks to my supervisor Joseph Vella for supporting my thesis and providing valuable feedback and helpful guidance. The author would also like to extend a thank you to all the participants, the consumers for taking time to participate and answer the questions. Also a big thanks to the head managers for providing with relevant data, without their insight and expertise this thesis would not have been possible to perform. A final thanks goes to all course members who have supported with valuable feedback during this journey. Luleå, June 2020 Tina Mohammadi ABSTRACT —————————————————————————————————————————— Most companies' desire is to create customer relationships and the working methods have changed as a result of the increased e-commerce. Because of digitalization, the retailing field has changed dramatically. Consequently, physical stores are facing competition from online companies. Previous literature has stated that physical stores now have to focus on what happens inside the store in order to generate a pleasant experience. The research question focused on examining how Elgiganten, the largest consumer electronic store in Sweden, use customer experience and customer value in order to influence store attractiveness. This was carried out by using a qualitative approach, an exploratory nature and by conducting in-depth interviews with consumers and the company's head managers. The main findings of this study suggest that customers can not take advantage of some services when buying through e-commerce. This ability to provide service is an important part of the handling of competition from e-commerce. The retailers need to find the right balance between engagement and emotions in the physical retail environment in order to appeal to the consumers’ desires of trust & reliability in order to create an attractive experience point. By means of this, the thesis emphasised the imperative of creating experience in offline retailing. Keywords: Customer Experience, Customer relationship, E-commerce, Customer service, Physical stores, Retail industry, Consumer electronics, Elgiganten, CRM SAMMANFATTNING —————————————————————————————————————————— Företagens önskan är att skapa kundrelationer och arbetsmetoderna har förändrats till följd av den ökade e-handeln. På grund av digitaliseringen har detaljhandeln förändrats drastiskt. Följaktligen står fysiska butiker hotade inför konkurrens i och med e-handelns framväxt. I litteraturen anges att fysiska butiker måste fokusera på att skapa en upplevelse för kunderna. Forskningsfrågan fokuserade på att undersöka hur Elgiganten, Sveriges ledande aktör inom hemelektronik, använder kundupplevelse och kundvärde för att påverka butiks-attraktivitet. Studien har genomförts genom att använda ett kvalitativt tillvägagångssätt med utforskande karaktär och genom att fördjupa intervjuer med konsumenter och företagets chefer. De viktigaste resultaten från denna studie tyder på att kunderna inte kan dra nytta av vissa tjänster när de handlar online. Denna förmåga att tillhandahålla tjänster är en viktig del av hanteringen av konkurrensen från e-handeln. De fysiska butikerna måste hitta rätt balans mellan engagemang och känslor i den fysiska detaljhandelsmiljön för att vädja till konsumenternas önskemål om förtroende och tillförlitlighet för att skapa en attraktiv upplevelsepunkt. I och med detta betonade avhandlingen hur viktigt det är att skapa upplevelser inom detaljhandel. Nyckelord: Kundupplevelse, Kundrelation, E-handel, Kundtjänst, Fysiska butiker, Detaljhandel, Konsumentelektronik, Elgiganten, CRM TABLE OF CONTENT —————————————————————————————————————————— 1. INTRODUCTION 1 1.1 Elgiganten AB 1 1.2 Background 1 1.3 Problem Discussion 3 1.4 Research Purpose 4 1.5 Delimitations 4 2. LITERATURE REVIEW 5 2.1 Customer Shopping Behaviour 5 2.2 Customer Relationship 6 2.3 Customer Relationship Management 7 2.4 Customer Experience 9 2.4.1 In-Store Customer Experience Perspectives 10 2.4.2 In-Store Customer Experience Creation 10 2.4.3 In-Store Customer Experience Challenges 14 2.4.4 Customer Engagement as a Way to Enhance Customer Experience 15 2.5 Customer Satisfaction 16 2.6 Frame of Reference 17 3. METHODOLOGY 20 3.1 Research Purpose 20 3.2 Research Approach 21 3.3 Research Strategy 22 3.4 Data Collection 23 3.5 Sample Selection 24 3.6 Data Analysis 25 3.7 Quality Standards 26 3.7.1 Reliability 26 3.7.2 Validity 27 4. EMPIRICAL DATA 29 4.1 Shopping Behavior 29 4.2 Customer Relationships 30 4.3 Customer Relationship Management 32 4.4 Customer Experience 34 4.5 Customer Satisfaction 35 5. DATA ANALYSIS 37 5.1 Customer Shopping Behaviour 37 5.2 Customer Relationship 37 5.3 Customer Relationship Management 39 5.4 Customer Experience 39 5.5 Customer Satisfaction 41 6. CONCLUSIONS 42 6.1 Conclusions 42 6.2 Theoretical Contributions 45 6.3 Practical Contributions 45 6.4 Limitations & Suggestions for Future Research 47 7. LIST OF REFERENCES 48 Appendix A: Interview Guide for Head Managers ​ Appendix B: Intervjuguide för Chefer ​ Appendix C: Interview Guide for Consumers ​ Appendix D: Intervjuguide för Konsumenter ​ 1. INTRODUCTION —————————————————————————————————————————— This chapter will introduce the background of e-commerce and its growth and the changes in the retail landscape within consumer electronics. Moreover, the problematization and purpose of this paper are stated, as well as the research question that is derived from it. Lastly, an illustration of intended contribution to the field of research.The chapter continues with a problem discussion along with the purpose of the study. Finally, delimitations of the research are presented. 1.1 Elgiganten AB Elgiganten AB are one of Scandinavia’s largest retailer in consumer electronics. The company started in 1994 and has since then expanded greatly to consists of 117 wholly owned department stores and 39 franchise stores. Today Elgiganten AB has approximately 3200 employees. The company is wholly owned by the Norwegian company Elkjøp Nordic AS, which in turn is owned by the British company Dixons Carphone plc. Elgiganten AB uses three sales channels: physical and online stores and Elgiganten Contact Center. (Elgiganten AB, 2020) 1.2 Background Elgiganten is just one of many retailers that tries to survive through the development of digitalisation. This development of digitalisation is recognised as one of the most impactful ongoing transformations in today’s world. From a business perspective, especially the retail industry is affected tremendously. The commerce is constantly changing with people's new ways of living and consuming. (Hagberg & Jonsson, 2016). According to Arnberg, Bergh, Nevander & Svensson (2018), there is a shift in retail where consumers tend to shop online instead of physical stores. As a result, e-commerce is gaining increased sales for each passing year. Today economic growth takes a large place online, and it has made significant consequences for traditional physical stores (Mosquera, Olarte-Pascual & Ayensa, 2018). Digital development continues, which is characterized by the fact that more people carry out their everyday activities via digital platforms, everything from shopping for food to reading the morning newspaper (Arnberg et al., 2018). Based on previous facts it is therefore interesting to study how traditional strategies for companies are affected when the outside 1 world undergoes structural changes. What way do physical stores compete today when their outside world has changed so fundamentally and how do stores market themselves in a digitalized world are questions that should be observed. (Rosenström, 2016). The result for 2019, showed an eventful year for Swedish e-commerce. Total e-commerce growth for the full year was 13 percent, which means that Swedish e-commerce revenue amounted to SEK 87 billion in 2019, which was an increase of 10 billion from the previous year. In 2020, the full-year forecast is that the commerce will grow by over 11 percent and amount to almost SEK 97 billion. E-commerce will therefore, if nothing unforeseen, probably reach the milestone of SEK 100 billion in sales in 2021. (PostNord, HUI Research & Svensk Digital Handel, 2020). The digitalization of the various industries is changing the way the market works and new strategies and models are needed to compete in a constantly evolving market (Netemeyer, Maxham & Lichtenstein, 2010). New technologies are applied in different ways in different industries and at the same time changing customer needs, which means that companies must keep up with the development in order not to risk falling behind their competitors (Gupta, Hanssens, Hardie, Khan, Kumar, Lin & Sriram, 2006). For physical stores, it becomes even more important
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