THE ROLE OF THE PHYSICAL STORE IN AN OMNICHANNEL STRATEGY A qualitative study of Generation Z in the Swedish fashion industry Axel Wedebrand, Charlotta Ödling Department of Business Administration Master’s Program in Marketing and Finance Master's Thesis in Business Administration II, 15 Credits, Spring 2021 Supervisor: Vladimir Vanyushyn Abstract The modern retail landscape is experiencing a continuous change due to digitalization. With the growing number of available channels, consumers' consequent behavior within the fashion retail environment are becoming ever more complex. Which thus poses a challenge for fashion retailers in trying to not only understand them, but how to serve them best. Along this evolution of retail due to digitalization, physical retail stores have closed down due to the increasing competition from e-commerce, although it remains the biggest distribution channel. The role of the physical store is thus experiencing elements of an existential crisis. In this, Generation Z remains an ambiguous consumer segment whose importance will only increase as the generation comes into its purchasing prime. But, Generation Z is not yet well understood as limited research exists on the subject. And as they’re the digital native generation, where retail omnichannel strategies are commonplace, seeking to understand their attitudes, preferences and perceptions of omnichannel retailing, but also the physical store, is thus essential moving into the future. Therefore, the purpose of this study is to distinguish and explore the value of the physical store in the eyes of Generation Z in an omnichannel strategy, within the context of fashion retailing. RQ: What is the role of physical fashion stores within omnichannel strategy, in regard to Generation Z? In order to answer the research question, the method of choice was a qualitative one. The consequent empirical findings were gathered from seven semi-structured interviews, six from Generation Z respondents and one from the CCO of Gina Tricot, yielding a managerial perspective. Thus, allowing for triangulation opportunities. Moreover, besides the empirical findings, we present a proposed framework which illustrates how and why Generation Z’s behavior, preferences and perceptions have ultimately altered the role of physical stores to be one of increasing complementarity within the context of an omnichannel strategy. In describing this evolution, multiple characteristics of Generation Z are distinguished. Finally, this thesis provides a deepened knowledge on how retailers may use their physical store within an omnichannel strategy to better serve Generation Z consumers in order to enhance customer experience and satisfaction. The empirical findings exhibit the physical store as an essential part for consumers within the context of other available channels online. Where multiple aspects otherwise not satisfied through online channels, serve an important purpose for Generation Z consumers. This thesis may thus offer value for retailers in how to balance various appreciated aspects of the physical store, whilst incorporating some of the desired elements of online, to increase the customer experience of physical stores. Key Words: Generation Z, Omnichannel, Physical Store, Customer Journey, Customer Experience, Shopping Behavior, Fashion, Retail, Webrooming, Showrooming, Cross- Channel Freeriding, E-Commerce, Brick-and-Mortar. [This page is intentionally left blank] Acknowledgements We would like to begin with showing all respondents much worthy appreciation for participating in the interviews, as this study would not have been feasible without them. A special thank you to Renée Säverot, CCO at Gina Tricot, who provided us with exceptional knowledge and inputs. Also, we’d like to thank all consumer respondents who shared their insights, it’s been inspiring and instrumental to our study. We’d also like to thank our supervisor, Vladimir Vanyushyn, who provided us with guidance and valuable insights throughout the length of this thesis. Umeå University, May 26th, 2021 Axel Wedebrand Charlotta Ödling [This page is intentionally left blank] Table of Contents 1. Introduction .............................................................................................................................. 1 1.1 Trends in the retail industry ................................................................................................. 1 1.2 The rise of omnichannel ...................................................................................................... 2 1.3 The physical store within omnichannel ............................................................................... 2 1.4 Fashion retail in the age of digitalization ............................................................................ 3 1.5 Generation Z’s impact on the future of fashion retail.......................................................... 3 1.6 Synthesis .............................................................................................................................. 4 1.7 Research Question ............................................................................................................... 4 1.8 Purpose ................................................................................................................................ 4 1.9 Delimitations ....................................................................................................................... 5 2. Research Philosophy ................................................................................................................ 6 2.1 Ontological Assumption ...................................................................................................... 6 2.2 Epistemological Assumption ............................................................................................... 6 2.3 Research approach ............................................................................................................... 6 2.4 Literature search and source criticism ................................................................................. 7 3. Literature Review .................................................................................................................... 9 3.1 Omnichannel ........................................................................................................................ 9 3.1.1 Going from multichannel to omnichannel.................................................................................. 9 3.1.2 Challenges and opportunities within an omnichannel strategy ................................................ 10 3.1.3 Traditional role of the physical store ........................................................................................ 10 3.1.4 E-commerce and digital stores ................................................................................................. 11 3.1.5 New forms of the physical store ............................................................................................... 12 3.2 Consumer behavior in an omnichannel context................................................................. 13 3.2.1 Customer Experience ............................................................................................................... 13 3.2.2 Shopping Behavior ................................................................................................................... 15 3.2.3 Customer Journey ..................................................................................................................... 15 3.3 Attributes of Generation Z ................................................................................................. 18 3.4 The Swedish Fashion Industry .......................................................................................... 19 3.5 Summary literature review ................................................................................................ 20 4. Practical Methodology ........................................................................................................... 22 4.1 Research Design ................................................................................................................ 22 4.2 Data Collection Method ..................................................................................................... 23 4.3 Sampling ............................................................................................................................ 24 4.4 Data collection tool ............................................................................................................ 26 4.4.1 Construction of interview guides ............................................................................................. 26 4.4.2 Pilot study ................................................................................................................................. 28 4.5 The Interview Process........................................................................................................ 28 4.6 Data analysis method ......................................................................................................... 29 4.7 Quality Criteria .................................................................................................................. 29 4.8 Ethical Considerations ....................................................................................................... 31 5. Empirical Findings ................................................................................................................