Reinventing the in-store customer experience A qualitative case study research on how beauty brands are utilizing digital technologies in brick-and-mortar to create value Student Name: Anne Houwers Student Number: 510695 Supervisor: Drs. Matthijs Leendertse Master Media Studies - Media & Business Erasmus School of History, Culture and Communication Erasmus University Rotterdam Master's Thesis June 2020 REINVENTING THE IN-STORE CUSTOMER EXPERIENCE ABSTRACT Digital technologies are everywhere nowadays, and the possibilities that they provide are endless. As a result, new strategies and business models are ongoingly developed, leading to the disruption of many industries throughout the past decades. One approach concerns the customer experience and the enhancement thereof through the utilization of digital technologies. Following the notion that the beauty industry is one of the most prominent markets when assessing digital advancement, it is arguably significant for brands within this market to keep up with digital transformations in order to not lose relevance. More specifically, the in-store customer experience is identified as one area of the customer journey in which technology can facilitate enhancement. Although, a considerable amount of research already targets the customer experience, both independently and as part of the overall journey, no study has been conducted yet regarding the manner in which beauty brands are utilizing technology to enhance the in-store customer experience. To fill this gap in the literature, this study answers the following research question: How are beauty brands utilizing digital technologies to enhance their in-store customer experience. To do so, a qualitative comparative case study research design has been employed for which eleven beauty brands were selected based on their conduct regarding the implementation of technology. As the chosen cases are already successfully applying technology in-store, interesting insights are provided regarding the most utilized and sufficient approaches. The cases were built from a series of carefully selected articles and assessed in a deductive manner through a thematic analysis based on theoretically developed concepts. The three key concepts guiding the structure of this analysis concern emotional, functional, and sensory value creation. The results indicate that the customer experience is predominantly enhanced through emotional and functional value creation, with sensory value creation as a deeper layer of the first two. Yet, in agreement with the theory, conduct regarding emotional value is more prominently executed than functional value creation. Though, in essence, almost none of the sub-themes of the three value creation realms is working independently, and thus the notion of the customer experience as a holistic concept is accepted throughout this study. KEYWORDS: Customer Experience, Digital Technology, Beauty, Brick-and-mortar, Value Creation 2 Table of content 1. Introduction ..................................................................................................................................... 7 1.1 Brick-and-mortar versus e-commerce .................................................................................... 7 1.2 Research question and sub-questions .................................................................................... 8 1.3 Scientific and societal relevance ........................................................................................... 10 1.4 Thesis roadmap ..................................................................................................................... 10 2. Theoretical framework .................................................................................................................. 12 2.1 The role of technology .......................................................................................................... 12 2.1.1 Smart technology .......................................................................................................... 13 2.1.2 Technological acceptance ............................................................................................. 13 2.2 Defining the customer experience ........................................................................................ 13 2.2.1 The customer experience versus the customer journey ............................................... 15 2.2.2 The significance of the customer experience ................................................................ 16 2.2.3 The significance of the customer experience in the beauty industry ........................... 17 2.3 Touchpoints in the customer experience .............................................................................. 17 2.4 Value creation and the customer experience ....................................................................... 19 2.4.1 Emotional value creation............................................................................................... 20 2.4.2 Functional value creation .............................................................................................. 22 2.4.3 Sensory value creation .................................................................................................. 23 2.5 Conceptual model ................................................................................................................. 25 3. Methodology ................................................................................................................................. 26 3.1 Qualitative approach: comparative case studies .................................................................. 26 3.1.1 Advantages and limitations of case studies .................................................................. 27 3.2 Validity and reliability ............................................................................................................ 27 3.2.1 Validity ........................................................................................................................... 28 3.2.2 Reliability ....................................................................................................................... 28 3.3 Case study selection .............................................................................................................. 28 3.4 Units of analysis ..................................................................................................................... 32 3.5 Data collection process ......................................................................................................... 33 3.6 Operationalization ................................................................................................................. 33 3.7 Method of analysis: thematic ................................................................................................ 35 4. Analysis and results ....................................................................................................................... 37 4.1 Emotional value creation ...................................................................................................... 37 3 4.1.1 Aesthetics ...................................................................................................................... 37 4.1.2 Memorability ................................................................................................................. 40 4.1.3 Personalization .............................................................................................................. 43 4.1.4 Education ....................................................................................................................... 45 4.1.5 Safety ............................................................................................................................. 48 4.2 Functional value creation ...................................................................................................... 51 4.2.1 Performance and quality ............................................................................................... 51 4.2.2 Convenience .................................................................................................................. 54 4.2.3 Availability ..................................................................................................................... 57 4.3 Sensory value creation .......................................................................................................... 59 4.3.1 Sound ............................................................................................................................. 59 4.3.2 Sight ............................................................................................................................... 61 5. Discussion and conclusion ............................................................................................................. 63 5.1 Significant findings and theoretical implications .................................................................. 63 5.2 Practical implications ............................................................................................................. 66 5.3 Limitations ............................................................................................................................. 66 5.4 Future research ..................................................................................................................... 67 6. Bibliography