How does channel integration quality enrich customer experiences with omnichannel retailers an examination of mediating and moderating mechanisms

Drawing upon the stimulus-organism-response SOR framework, this thesis fills this important research gap by examining the effects of channel integration quality CIQ on customer experienc

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

──────────────────

NGUYEN LE XUAN DOANH

HOW DOES CHANNEL INTEGRATION QUALITY ENRICH CUSTOMER EXPERIENCES WITH OMNICHANNEL RETAILERS? AN EXAMINATION OF MEDIATING AND

MODERATING MECHANISMS

MASTER BY RESEARCH THESIS

Ho Chi Minh City – 2019

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

──────────────────

NGUYEN LE XUAN DOANH

HOW DOES CHANNEL INTEGRATION QUALITY ENRICH CUSTOMER EXPERIENCES WITH OMNICHANNEL RETAILERS? AN EXAMINATION OF MEDIATING AND

MODERATING MECHANISMS

Specialization: Commercial Business Specialization code: 8340121

MASTER BY RESEARCH THESIS

SUPERVISOR: Dr LE NHAT HANH

Ho Chi Minh City - 2019

DECLARATION

I, Nguyen Le Xuan Doanh, declare that the Master by Research thesis entitled

“How does channel integration quality enrich customer experiences with omnichannel retailers? An examination of mediating and moderating mechanisms”

has been composed solely by myself, with the enduring support, instruction, and insight from my supervisor Dr Le Nhat Hanh Except where states otherwise by reference or acknowledgment, the work presented is entirely my own

Signed:

Nguyen Le Xuan Doanh

Date:

ACKNOWLEDGMENTS

I owe a debt of gratitude to my supervisor, Dr Le Nhat Hanh, for her enduring support, instruction, and insight She helped direct my interests towards relevant topics and methodological innovations in retailing, and made my experience as a master by research student truly memorable

Besides, I am grateful to all of my teachers at School of International Business

- Marketing, University of Economics Ho Chi Minh City for their help and support throughout my studies

TABLE OF CONTENTS SECOND TITLE PAGE

DECLARATION

ACKNOWLEDGMENTS

TABLE OF CONTENTS

LIST OF ABBREVIATIONS

LIST OF TABLES

LIST OF FIGURES

ABSTRACT

CHAPTER 01: INTRODUCTION 1

1.1 Research background and statement of the problem 1

1.2 Research objectives 4

1.3 Subject and scope of research 5

1.4 Research method 5

1.5 Research contribution 6

1.6 Research structure 6

CHAPTER 02: LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT 8

2.1 Omnichannel retailers 8

2.2 Channel integration quality with omnichannel retailers 9

2.3 Customer experience with omnichannel retailers 11

2.4 Prior relevant studies 14

2.5 Research framework and hypothesis development 21

2.5.1 Stimulus-Organism–Response (SOR) framework 21

2.5.2 The influences of channel integration quality (CIQ) on customer

experience 21

2.5.3 The mediating mechanism: CIQ – customer empowerment – the customer experience 24

2.5.4 The moderating effect of internet usage 25

2.5.5 The influence of the customer experience on patronage intention 26

2.6 Summary 29

CHAPTER 03: RESEARCH METHOD 30

3.1 Research process 30

3.2 Measurement scales 32

3.3 Questionnaire design 36

3.4 Sample and data collection 36

3.5 Sample characteristics 38

3.6 Data analysis method 39

3.7 Summary 41

CHAPTER 04: DATA ANALYSIS AND RESULTS 42

4.1 Assessment of measurement model 42

4.2 Test for common method bias 46

4.3 Assessment of structural model 48

4.4 FIMIX analysis for data heterogeneity 52

4.5 Summary 52

CHAPTER 05: DISCUSSION AND CONCLUSION 54

5.1 Discussion of results 54

5.2 Research implications 56

5.3 Limitations and futher research 58

LIST OF PUBLICATIONS

REFERENCES

APPENDICES

LIST OF ABBREVIATIONS

SOR: Stimulus-Organism-Response

CIQ: Channel integration quality (CSC: Channel-service configuration, BCSC:

Breadth of channel-service choice, TCSC: Transparency of channel-service configuration, InI: Integrated interactions, CC: Content consistency, PC: Process consistency)

CCI: Cross-channel integration

HCM: Ho Chi Minh

PLS-SEM: Partial least squares structural equation modeling

CMB: Common method bias

VIF: Variance inflation factor

SRMR: Standardized root mean square residual

FIMIX-PLS: Finite mixture PLS

HTMT: Heterotrait-Monotrait ratio

AVE: Average variance extracted

LIST OF TABLES

Table 2.1 Definitions and examples of the sub-dimensions of CIQ……… 9

Table 3.1 Measurement scales……… 33

Table 3.2 Sample demographic characteristics……….39

Table 4.1 Scale accuracy analysis……….44

Table 4.2 Scale accuracy analysis: Discriminant validity assessment……… 45

Table 4.3 Test for common method bias (CMB)……… 46

Table 4.4 Inner VIF value……….48

Table 4.5 Significance testing results of the structural model path coefficients… 49

Table 4.6 Significance testing results of the total indirect effects………50

Table 4.7 FIMIX-PLS results for the relative segment sizes and retention criteria 52

LIST OF FIGURES

Figure 2.1 Research model of Lee et al (2019)………15

Figure 2.2 Research model of Zhang et al (2018)………16

Figure 2.3 Research model of McLean et al (2018)……….17

Figure 2.4 Research model of Shen et al (2018)……… 19

Figure 2.5 Research model of Li et al (2018)……… 20

Figure 2.6 Research framework and hypotheses……… 28

Figure 3.1 Research process……….31

Figure 4.1 Research model in Stage I………42

Figure 4.2 Research model in Stage II……… 43

Figure 4.3 Analysis results………51

1 Title

Thesis title: “How does channel integration quality enrich customer experiences with omnichannel retailers? An examination of mediating and moderating mechanisms”

Presented by: Nguyen Le Xuan Doanh

Supervisor: Dr Le Nhat Hanh

Submitted to: University of Economics Ho Chi Minh City

2 Abstract

While omnichannel has been a bloated retail buzzword for years, little is known about the dynamic mechanism of forming customer experience and the subsequent patronage behavior in the context of omnichannel retailers Drawing upon the stimulus-organism-response (SOR) framework, this thesis fills this important research gap by examining the effects of channel integration quality (CIQ) on customer experience through the mediating role of customer empowerment as well

as the moderating role of internet usage, which in turn results in patronage intention The partial least squares structural equation modeling (PLS-SEM) with two-stage approach is employed to empirically test the research framework with 312 customers

of the omnichannel retailers in Vietnam The findings reveals that two dimensions of CIQ (i.e., channel-service configuration and integrated interactions) significantly affect customer experience, which in turn leads to patronage intention Moreover, customer empowerment complementarily mediates the impacts of CIQ dimensions

on customer experience, while internet usage strengthens the positive relationships between customer experience and its precursors This thesis was concluded with the meaningful practical implications for omnichannel retailers to optimize their channel management that delivers a seamless shopping experience to their customers

3 Keywords: Omnichannel retailers; Channel integration quality; Customer

experience; Customer empowerment

1 CHAPTER 01: INTRODUCTION 1.1 Research background and statement of the problem

Over the last few years, retailing has advanced dramatically, while technological advancement has enabled retailers to connect and conduct transactions with their customers through various channels such as websites, mobile apps, social media, and so on The way retailers interact with their customers has also been reshaped completely For instance, with artificial intelligence, it is predicted that 90%

of traditional human retail interactions will be replaced by online shopbots; meanwhile, virtual and augmented reality will allow customers to see and touch merchandise virtually (Pilkington, 2019) With multiple channels and interactive touchpoints during customer shopping journeys, it is crucial for retailers to apply omnichannel strategies to serve customers with seamless switching among all available channels and across every touchpoint (Shen et al., 2018) According to Walk-Morris (2019), about 67% of U.S retailers consider the omnichannel strategy

to be a top priority, as it helps them capture the contemporary showrooming and webrooming shopping trends of customers while maintaining competitive advantages (Graham, 2017; Radial, 2016; Lee et al., 2019) A recent report by IDC Retail Insights indicates that retailers have gained an increase in 15–35% in average transaction size and 5–10% in loyal customer profitability by using the omnichannel strategy (Winkler, 2019)

In Vietnam, according to We Are Social’s report, the number of internet users has reached 64 million, equivalent to 67% of the population Meanwhile, the rate of owning internet access devices among Vietnamese consumers has increased (i.e., 72% of the Vietnamese adult population use smartphone, 43% use laptop or desktop computer, and 13% use tablet) (Kemp, 2018) Along with these rapid development, omnichannel retailing has recently emerged as a new trend in Vietnam (Anh Hoa, 2017) According to a study conducted by Sapo – an omnichannel retailing platform operating in Vietnam, 97% of retail store owners applied omnichannel strategy to their business in 2018 (Tuyet An, 2019) Omnichannel approach is also considered

as a new weapon to help Vietnamese retailers maintain and expand market share (Vietnamnet, 2017)

Omnichannel retailers refer to those businesses using the retailing business model which operates in a number of channels and touchpoints with synergetic management that excludes natural borders among channels (Lee et al., 2019; Verhoef

et al., 2015; Zhang et al., 2018) Creating a well-integrated and unified customer experience at anytime, anywhere, through any channel is the ultimate aim of omnichannel retailers (Frazer and Stiehler, 2014; Jocevski et al., 2019) Historically, the concept of customer experience has been studied in different contexts of retailing, from physical-store retailing (Bäckström and Johansson, 2017; Jones et al., 2010; Sachdeva and Goel, 2015; Terblanche, 2018) to e-retailing (Martin et al., 2015; Pandey and Chawla, 2018; Rose et al., 2012), m-retailing (McLean et al., 2018; Tseng and Yazdanifard, 2015), and even multichannel retailing (Blázquez, 2014; Lemon and Verhoef, 2016) However, in the context of omnichannel retailers, the seamless customer experience in which customers cognitively and affectively respond to an omnichannel retailer (McLean et al., 2018) continues to be a challenge for both practitioners and academia Nearly 80% of retailers admit their lack of success in offering customers a unified experience across channels (Periscope, 2016) According to a recent survey conducted by TNS, 61% of U.S customers have difficultly switching from one channel to another when interacting with omnichannel retailers (Dreyer, 2014); while 87% of global customers think that brands need to put more effort into delivering a seamless experience (Zendesk, 2013) With respect to the academic side, research on the omnichannel experience remains scant and the mechanisms that underpin the seamless customer experience are not fully understood (Lemon and Verhoef, 2016) To our best knowledge, the few existing studies attempt

to conceptualize and describe the omnichannel experience have been qualitative and exploratory in nature (Cook, 2014; Frazer and Stiehler, 2014; Melero et al., 2016; Parise et al., 2016; Peltola et al., 2015) Thus, much uncertainty still exists about the

formation of the omnichannel customer experience as well as subsequent behavioral outcomes such as patronage intention

Channel integration quality (CIQ hereafter) is regarded as a key factor determining the ability of omnichannel retailers to manage customer relationships across channels and deliver customers with a seamless purchasing experience throughout their shopping journey (c.f., Lee et al., 2019) According to Sousa and Voss (2006), CIQ is comprised of two components: channel-service configuration and integrated interactions The former refers to the wide range and flexible combination of various online and offline channel services, while the later describes the consistency and uniformity of both content and process attributes through different channels provided by omnichannel retailers In recent years, a number of novel service combinations and functional attributes with regard to CIQ have been implemented by omnichannel retailers For instance, big-box omnichannel retailers like Walmart and Target have been successful in launching the “buy online, pick up in-store” or “click and collect” service (Walk-Morris, 2019b) Moreover, in order to excluding the natural boundaries between channels and providing customers with a seamless experience, many of the in-store technologies (e.g., in-store interactive digital kiosks, interactive fitting rooms, price-checkers) as well as the robust mobile app features (e.g., scan-and-go, push notifications for in-store, online promotions) have been invested in by omnichannel retailers (Grant, 2018; Jocevski et al., 2019; Sopadjieva et al., 2017) Tesco’s Scan Pay Go app allows customers to scan and pay for their purchase by using their smartphones without visiting the store cashier, while the Amazon Go offers shoppers a brick-and-mortar shopping experience without the checkout line (Reuters, 2018; Wood, 2018) In Vietnam, VinMart and Co.opmart are vanguard retailers in scan-and-go technology, which helps customers save time when shopping by offering a prompt payment option (Dantri, 2019; Hai Kim, 2019) With these tremendous efforts to improve CIQ, it is important to evaluate the effectiveness

of CIQ on enhancing the seamless customer experience in the context of omnichannel retailers

Customer empowerment refers to the level of control over where, when and how

to shop and to get delivery that customers receive during their shopping journey (Zhang et al., 2018) According to Prentice et al (2016), the internet and advanced technologies increasingly provide business firms with the opportunity to empower customers at their fingertips Indeed, a number of customers today are avid users of touchpoints (Sopadjieva et al., 2017) and are technology-savvy (Azhari and Bennett, 2015); as such, empowering customers with the ability to shape their own consumption experiences has become an inevitability for online businesses In the context of omnichannel retailers, this thesis expects the important role of customer empowerment in influencing the omnichannel experience and presume that the process of integrating various online and physical channels should provide an increasing autonomy for customers to make their own choices at all stages of their shopping journey In other words, customer empowerment is predicted to play a mediating role on the linkage from CIQ to a seamless omnichannel experience This proposition will be explored in the current study In addition, according to Chang and Chen (2008), customers who spend more time online tend to accumulate more internet-related knowledge and skills, and consequently they should be more familiar with omnichannel retailers’ available offerings Thus, this thesis contend that internet usage exhibits a contingency role in affecting customer perception and evaluation in the context of omnichannel retailing settings

1.2 Research objectives

Given the above voids in the extant literature, the current study aims to contribute to the scarce literature on customers’ seamless experience with omnichannel retailers by offering relevant insights into the dynamic mechanisms of forming the omnichannel experience and its subsequent patronage behavior In particular, this empirical study attempts to:

(1) Examine the effects of the two components of CIQ (i.e., channel-service configuration and integrated interactions) on the customer experience

(2) Explore the mediating role of customer empowerment on the relationship between CIQ and the customer experience

(3) Identify the moderating role of internet usage on the effects of CIQ and customer empowerment on the customer experience

(4) Assess exactly how this customer experience results in patronage intention The findings of this work offer important practical knowledge for omnichannel retailers to optimize their channel management that delivers a seamless shopping experience to their customers

1.3 Subject and scope of research

The subject of this research is customers who used to have experience of shopping with omnichannel retailers We targets customers from four well-known omnichannel retailers (i.e., Nguyen Kim, FPT Shop, The Gioi Di Dong, Concung) Besides, respondents can also self-declared the omnichannel retailer they are most familiar with Data for the current thesis were collected at the five busiest shopping mall and office buildings in the metropolitan area of Ho-Chi-Minh City (i.e., Vincom Center, Saigon Square, Takashimaya Vietnam; Diamond Plaza; Parkson Plaza) Research was conducted from 06/2019 to 11/2019

1.4 Research method

The current thesis is defined as an empirical research The partial least squares structural equation modeling (PLS-SEM) approach is applied to quantitatively examine the dynamic mechanisms of forming the customer experience and its subsequent patronage behavior in omnichannel retailers context According to Hair

et al (2017), there are two types of theory which be required when develop path models in PLS-SEM: measurement theory and structural theory The former represents how the studied constructs are measured, while the later describes the relationships between them In this study, all studied constructs are modeled based

on a reflective measurement model, which the scales are adopted from prior studies

From literature review, a structural model for this work is also drawn upon the stimulus-organism-response (SOR) framework

After translating all measurement scales into Vietnamese - the official language of the current research context, a questionnaire is designed, pre-tested with

20 customers and then modified to ensure its clarity before distribution The next stage is to conduct a paper-based survey for data collection Then, the dataset is analyzed using SmartPLS 3.2.8 and consisted of the following steps: assessment of measurement model, test for common method bias (CMB), assessment of the structural model with hypotheses testing, and the FIMIX analysis for data heterogeneity

1.5 Research contribution

This project provides an important opportunity to advance the understanding of customer experience with omnichannel retailers First of all, the current thesis empirically demonstrates the centrality of a well-integrated experience in omnichannel strategies In addition, while previous researches on customer experience in omnichannel retailing contexts are generally qualitative and exploratory in nature, this study makes a major contribution to the existing literature

by quantitatively examining the dynamic mechanisms of forming customer experience and its subsequent patronage behavior And finally, the findings of this work offer some important insights into optimizing the channel management to help omnichannel retailers delivering a seamless, consistent and unified shopping experience to their customers

dimensions/ sub-dimensions; (2) reviews five studies that are relevant to this thesis; (3) introduces the stimulus - organism – response (SOR) framework; and finally (4) presents the research model and the associated hypotheses

Chapter 03 – Research method: This chapter is concerned with the method used for the current thesis, including the research process, measurement scales, questionnaire design, sample and data collection, as well as the sample characteristics and data analysis method

Chapter 04 – Data analysis and results: This section analyzes the dataset of the research It consists of the following steps: assessment of measurement model, test for common method bias, assessment of structural model, and FIMIX analysis for data heterogeneity

Chapter 05 – Discussion and conclusion: This final chapter briefs the important results of the current thesis and provides actionable insights for omnichannel retailers

to optimize their channel management Moreover, the research limitations and recommendations for further research are also mentioned

2 CHAPTER 02: LITERATURE REVIEW AND HYPOTHESIS

DEVELOPMENT 2.1 Omnichannel retailers

Omnichannel retailers refer to those with retailing business model of operating

in numerous channels and touchpoints with a synergetic management that excludes the natural borders among channels (Lee et al., 2019; Verhoef et al., 2015; Zhang et al., 2018) Although omnichannel is shifted from multichannel (Shen et al., 2018), these two concepts are definitely different in a number of respects First of all, in constrast to multichannel retailers which mainly focus on physical store, website and direct marketing (e.g., catalog) (Verhoef et al., 2015); the channel scope of omnichannel is broader, including brick-and-mortar store, website, mobile app, social media, as well as all other customer touchpoints (Shen et al., 2018) Morever, multichannel retailers usually design and manage the channels separately, with a limited integration between channels (Shen et al., 2018) On the other hand, omnichannel retailers try to co-ordinate all their channel management activities across areas of information exchange, joint operations, logistics, pricing, promotion, inventories, order fulfillment and even after sales services (Li et al., 2018; Lee et al., 2019) Finally, whereas multichannel retailers gear towards optimizing customer experience with each channel (Shen et al., 2018), the ultimate aim of omnichannel retailers is serving customers with a seamless, consistent and well-integrated experience at anytime, anywhere, through any channels (Frazer and Stiehler, 2014; Jocevski et al., 2019)

According to Lee et al (2019), omnichannel studies can be categorized into two streams: organizational-level studies and individual-level studies Organizational-level studies approach this topic from the point of view of firm’s management, such

as examining the impact of channels on retailer’s performance (Cao and Li, 2015); how to measure and manage channel distribution (Ailawadi and Farris, 2017); or related marketing issues that retailers must to care (Melero et al., 2016) Individual-level studies, on the other hand, focus on customer behavior Most studies in the field

of omnichannel customer behavior have concerned the purchase intention (Cook, 2014; Juaneda-Ayensa et al., 2016) as well as the channel choice (Park and Lee, 2017;

Xu and Jackson, 2019) However, in regard to omnichannel customer experience, researchers have not treated it in much detail Although the few of prior studies have dealt with the impact of channel integration quality on customer respones to omnichannel retailers (Shen et al., 2018; Zhang et al., 2018; Lee et al., 2019), research

on the relationship between channel integration quality and customer experience has been still deficient, especially the empirical studies with fully mechanism

2.2 Channel integration quality with omnichannel retailers

Channel integration quality (CIQ) is regarded as a key factor that determine omnichannel retailers’ ability to manage customer relationships across channels and deliver customers with a seamless purchasing experience during their entire shopping journey (c.f., Lee et al., 2019) In their major study, Sousa and Voss (2006) propose

a conceptual framework for CIQ in general context with two dimensions: service configuration and integrated interactions Each of them has two sub-dimensions as shown particularly in Table 2.1

channel-Table 2.1 Definitions and examples of the sub-dimensions of CIQ

The degree to which customers can choose alternative channels for a given service or can accomplish preferred tasks through an individual channel

It’s very easy for customers to know the product details through both the retailer’s online and offline channels

Transparency

of service confguration

channel-The degree to which customers are aware of the existence channels and services as well as the differences between such service attributes across channels

Customers can come to physical stores to find and evaluate products but finish the purchase online

Integrated

interactions

Content consistency

The consistency of content offered by retailers across channels, which allows customer to receive the same response

to an enquiry posted through different channels

Price and promotion are consistent for both the retailer’s online and offline channels

Process consistency

consistency of relevant and comparable process attributes across channels (e.g., the feel, image, and delivery speed of services)

Regardless of which customers call the customer care hotline

Sources: Sousa and Voss (2006); Shen et al (2018); Lee et al (2019)

To date, serveral studies have attempted to examine the critical role played by CIQ in different contexts such as multichannel banking service (Hsieh et al., 2012; Seck and Philippe, 2013), multichannel retailers (Lee and Kim, 2010; Wu and Chang,

2016), omnichannel catering service (Shen et al., 2018), omnichannel retailing (Lee

et al., 2019) Drawing upon Sousa and Voss (2006)’s framework and in line with these previous studies, the current thesis defines channel-service configuration and integrated interactions as the two components of CIQ The former refers to the wide range and flexible combination of various online and offline channel services, while the later describes the consistency and uniformity of both content and process attributes through different channels provided by onnichannel retailers

2.3 Customer experience with omnichannel retailers

Modern customers’ behavior become even more complex and sophisticated nowadays Instead of shopping on an individual channel, they move across channels anytime, anywhere, at any stages during their purchasing process (Zhang et al., 2018) For instance, they may search for information on websites, check prices on their mobile apps, and order products at physical stores, or they can do things the other ways around Customers are expected to obtain services from any channel with the same customer identity/account (Zhang et al., 2018), and all of the supports and offerings require consistency in multiple touchpoints across channels (Ieva and Ziliani, 2018) These changes in customer behavior and expectations require retailers

to integrate all their channel activities across areas of information exchange, joint operations, logistics, pricing, promotion, inventories, order fulfillment and even after-sales services through their omnichannel strategy (Lee et al., 2019; Li et al., 2018) Delivering customers with seamless, consistent, and unified experiences regardless

of the channel or purchasing stage is cited as a top priority of omnichannel retailers (Frazer and Stiehler, 2014; Lee et al., 2019)

Historically, the concept of customer experience have been studied in different contexts of retailing, from physical stores retailing (Jones et al., 2010; Sachdeva and Goel, 2015; Bäckström and Johansson, 2017; Terblanche, 2018) to e-retailing (Rose

et al., 2012; Martin et al., 2015; Pandey and Chawla, 2018) and m-retailing (Tseng and Yazdanifard, 2015; McLean et al., 2018) For example, McLean et al (2018)

develop a “Mobile Application Customer Experience Model” which highlights the impact of utilitarian factors of technology on customer experience during use of retailers’ mobile applications On the other hand, a number of authors have recently considered customer experience in the context of multichannel retailing (Blázquez, 2014) and multichannel marketing (Lemon and Verhoef, 2016; Brun et al., 2017) Standing out among these studies, Lemon and Verhoef (2016) conceptualize customer experience throughout the customer journey with a firm across multiple touchpoints, as customer behavior have become more complex in multichannel context

Despite practitioners’ consistent emphasis on the crucial role of creating and managing customer experience throughout the entire shopping journey, according to Lemon and Verhoef (2016) the extant customer experience literature is still in its nascent stage; as such, the customer experience will be one of the most challenging research topics in the coming years In the context of omnichannel retailers, the empirical works directly related to the customer experience are even scarcer The few existing studies attempt to conceptualize and describe the customer experience, thus being qualitative and exploratory in nature In particular, Melero et al (2016) approach this phenomenon from marketing’s viewpoint and point out key challenges

to develop an integrated omnichannel customer experience, including adopting a customer centric approach, unifying all touchpoints across all channels, delivering personalized customer experiences, integrating the available channels and delighting customers across channels Similarly, some other studies such as Cook (2014), Frazer and Stiehler (2014), Parise et al (2016), Peltola et al (2015) qualitatively explore the customer experience from different perspectives, such as in-store experience, experiential marketing, operational management and digital technology The literature review also reveals two quantitative studies by Azhari and Bennett (2015) and Ieva and Ziliani (2018) on the omnichannel experience Using the descriptive statistics method, Azhari and Bennett (2015) explore the role of digital technology in physical stores to create an emotional and sensory experience; while Ieva and Ziliani

(2018) focus on the customer experience management perspective, using latent class cluster analysis to segment customers Overall to date, what we know about the omnichannel experience comes from qualitative perspectives; while a few quantitative studies focus solely on the individual channel experience (Azhari and Bennett, 2015) or examined it from one of management perpsectives (Ieva and Ziliani, 2018) Such approaches, however, fail to empirically address a seamless experience cross all available channels, as well as to understand the dynamic mechanisms of forming customer experience and its subsequent patronage behavior

in the context of omnichannel retailers

Although a number of definitions of customer experience exist in the literature (also see, Lemon and Verhoef, 2016; McLean et al., 2018; Rose et al., 2012), the major stream of research advocates that the customer experience is holistic in nature and defined as a multidimensional psychological perspective (Azhari and Bennett, 2015; Brun et al., 2017; Frazer and Stiehler, 2014; Ieva and Ziliani, 2018; Lemon and Verhoef, 2016; McLean et al., 2018) According to McLean et al (2018), customer experience is comprised of cognitive and affective dimensions that customers have with a company through all cues and touchpoints among the entire customer journey Customer satisfaction with an experience reflects their cognitive component of the experience (Lemke et al., 2011; Lemon and Verhoef, 2016), while customer emotions can represent the affective aspect of the experience (Oliver, 1993)

A number of authors have considered customer satisfaction to be a central element in understanding the customer experience (Lemon and Verhoef, 2016; McLean et al., 2018) Furthermore, customer emotions have been also studied as a dimension to measure customer experience in various retailing settings such as physical store retailing (Grace and O’Cass, 2005), e-retailing (Kim et al., 2007) and m-retailing (McLean et al., 2018) Consistent with the prior relevant retailing research, the current thesis defines the omnichannel experience as a second-order construct of two dimensions, satisfaction with experience and positive emotions This approach allows us to not only investigate customers’ cognitive evaluation about the

overall experience that omnichannel retailers offer to them (referring to the

“satisfaction with experience” dimension), but also examine customer affections/emotions during the purchase journey across all available touchpoints with omnichannel retailers (referring to the “positive emotions” dimension)

2.4 Prior relevant studies

(1) Customer engagement through omnichannel retailing: The effects of channel integration quality (Lee et al., 2019)

This study explores the influences of channel integration quality (CIQ) on customer engagement in omnichannel retailing context, as well as the positive outcomes resulting from such engagement Based on social exchange theory, Lee et

al (2019) posit two dimensions of CIQ (i.e., channel-service configuration and integrated interactions, with two sub-dimensions for each of them) as the antecedents

of customer engagement; while customer engagement is a second-order construct (including conscious attention, enthused participation, and social connection) The outcomes are repurchase intention and positive word-of-mouth (see Figure 2.1) Data analysis from 490 U.S shoppers reveals that all the CIQ dimensions positively affect customer engagement, which in turn leads to repurchase intention and positive word-of-mouth However, the effects are definitely different between high-involvement products (represented by Apple) and low-involvement products (represented by Kroger) These findings make an important contribution to the field

of customer engagement in the context of omnichannel retailing and at the individual level; and also provide useful ideas for retailers to engage customers across channels

Note: CSC: Channel-service configuration, BCSC: Breadth of channel-service choice, TCSC: Transparency of channel-service configuration, InI: Integrated interactions, CC: Content consistency, PC: Process consistency, WOM: word-of-mouth

Figure 2.1 Research model of Lee et al (2019)

(2) The impact of channel integration on consumer responses in omnichannel retailing: The mediating effect of consumer empowerment (Zhang et al., 2018)

The purpose of this paper is to examine the impact of channel integration on consumer respones in the context of omnichannel retailing; and the mediating role of consumer empowerment in this relationship Drawing upon the stimulus – organism

- response (SOR) framework, Zhang et al (2018) define channel integration as a second – order formative construct which promotes consumer empowerment; in turn

Channel integration quality

Repurchase intention

Positive WOM

Conscious attention

Enthused participation

Social connection

Control variables:

Physical store quality Virtual store quality Demographics

H 1

H 2

H 3

H 4

leads to increased trust and satisfaction and improved patronage behavior (see Figure 2.2.)

Data analysis from 155 Chinese shoppers demonstrates that channel integration has a positive relationship with consumer patronage intention and this relationship is mediated by consumer empowerment Moreover, consumer empowerment is positively related to perceived trust and satisfaction This study makes a major contribution to research on omnichannel retailing by not only demonstrating the critical role of channel integration but also explaining how it can enhance positive consumer respones and patronage behavior

Figure 2.2 Research model of Zhang et al (2018)

(3) Developing a Mobile Applications Customer Experience Model (MACE) - Implications for Retailers (McLean et al., 2018)

This research attempts to examine customer experience in the context of commerce by developing a Mobile Applications Customer Experience Model Based

Trust

Satisfaction

Patronage intention

on Technology Acceptance Model, Flow Theory and Expectancy Confirmation Theory with Information Technology, McLean et al (2018) posit utilitarian factors

of technology (including three dimensions: ease of use, convenience and customisation), timeliness and enjoyment as the key variables influencing customer experience, which in turn results in customers’ frequency of use (see Figure 2.3) Data are collected from 1024 UK consumers, in the context of shopping with the four retailers’ mobile applications (i.e., H&M, Next, John Lewis and Marks & Spencer) The results highlight the importance of utilitarian factors in delivering an excellent customer experience Moreover, this paper reveals that customers have a negative experience if they perceive to spend longer time than necessary when using the mobile application On the other hand, gender and smartphone screen-size play a moderating role on the customer experience This project provides an important opportunity to advance the understanding of customer experience in m-retailing through Mobile Applications Customer Experience Model and provide the key insights for retailers on how to enrich their customer experience with mobile application channel

Figure 2.3 Research model of McLean et al (2018)

Timeliness Moderators: Gender, Screen size

(4) Channel integration quality, perceived fluency and omnichannel service usage: The moderating roles of internal and external usage experience (Shen et al., 2018)

This paper investigates the factors that affect omnichannel service usage Following Wixom & Todd framework, Shen et al (2018) develop a research framework including object-based beliefs (which is represented by channel integration quality with four dimensions: channel choice breadth, channel service transparency, content consistency and process consistency) and behavioral beliefs (which is represented by perceived fluency) Besides, behavior-based traits (i.e., internal and external usage experience) are considered as moderators for the relationship between behavioral beliefs and usage behavior (see Figure 2.4)

Data are collected from 401 users of an omnichannel catering service platforms

in Mainland China The findings indicate that channel integration quality significantly affects customers’ perceived fluency across channels, which in turn leads to omnichannel service usage Moreover, internal usage experience weakens, while external usage experience strengthens the positive relationship between perceived fluency and usage behavior This project provides an important opportunity

to advance the understanding of omnichannel service from customer behavior’s viewpoint and also suggests several insights for omnichannel service providers to optimize their channel management for delivering a smooth service experience to their customers

Figure 2.4 Research model of Shen et al (2018)

(5) Customer's reaction to cross-channel integration in omnichannel retailing: The mediating roles of retailer uncertainty, identity attractiveness, and switching costs (Li et al., 2018)

This paper gives an account of the mechanisms through which customers react

to cross-channel integration (CCI) in the context of omnichannel retailing Following the Push-Pull-Mooring framework, Li et al (2018) develop a research framework which retailer uncertainty, identity attractiveness, and switching costs play pushing, pulling, and mooring roles, respectively, in shaping customers’ respones to CCI (i.e., customer retention and interest in alternatives); while showrooming behavior acts as

a moderator in these relationships (see Figure 2.5)

Omnichannel service usage

Internal usage experience

External usage experience

The analysis results of 259 Chinese shoppers reveal that retailer uncertainty, identity attractiveness, and switching costs partially mediate the effect of CCI on customer retention, while fully mediating the relationship between CCI and interest

in alternatives Furthermore, the showrooming behavior is found to strengthen the negative relationship between CCI and retailer uncertainty This empirical work presented here provides an investigation into how customers react to CCI through the dynamic mechanisms and points out important insights for omnichannel retailers to implement their CCI strategy

Figure 2.5 Research model of Li et al (2018)

Retailer uncertainty

Identity attractiveness

Customer retention

Push-pull effects

Switching costs

Interest in alternatives

2.5 Research framework and hypothesis development

2.5.1 Stimulus-Organism–Response (SOR) framework

The SOR framework (Mehrabian and Russell, 1974) is one of the most extensively adopted theoretical frameworks for explaining customer shopping behaviors in various contexts of retailing such as offline retailing (Morin et al., 2007), e-retailing (Eroglu et al., 2001; Wang et al., 2011; Wu et al., 2013), multichannel retailing (Hsieh et al., 2012; Pantano and Viassone, 2015) and omnichannel retailing (Lazaris et al., 2017; Zhang et al., 2018) This framework points out the relationship among the stimulus (S), consumers’ internal states (O) and subsequent behavior (R) The stimulus affects consumers’ internal states, which in turn results in their respones

In particular, stimulus refers to the retail environmental stimuli, such as in-store music, store atmosphere, channel availability, channel integration (Morin et al., 2007; Pantano and Viassone, 2015; Zhang et al., 2018) In line with Lee et al (2019), in the current thesis, two components of CIQ (i.e., channel-service configuration and integrated interactions) are considered to be the stimulus In addition, according to Zhang et al (2018), organism represents customers’ internal states, which consist of not only internal activities (e.g., perception, feeling and thinking) but also affective, emotional and cognitive states (e.g., pleasure and satisfaction) Thus, customer empowerment and customer experience are regarded as the organism in the research framework Finally, customer patronage intention is proposed to stand for the behavioral response in the SOR framework In summary, the current study’s research framework (Figure 2.6) is primarily drawn from the SOR framework that serves as a basis for the development of the following hypotheses

2.5.2 The influences of channel integration quality (CIQ) on customer experience

Channel integration quality refers to the degree to which a retailer coordinates operations and interactions across its multiple channels to provide a unified shopping journey for its customers (Zhang et al., 2018) Based on the SOR framework, CIQ as

an environmental stimulus is expected to affect customers’ internal states, such as customer experience Since CIQ of omnichannel retailers are comprised of channel-service configuration and integrated interactions (Sousa and Voss, 2006), customer experience should be determined by these two characteristics

Channel-service configuration reflects the structure of available channels and flexible combinations across all channels provided by omnichannel retailers (Lee et al., 2019) A good configuration of channel integration exhibits a high degree to which customers can choose alternative channels for a given service and can accomplish the preferred tasks of a service through certain channels of their own choice (Shen et al., 2018) According to Sousa and Voss (2006), with a broad number

of available channels that retailers offer to their customers, it is convenient for them

to shop flexibly with alternative channels In addition, customers can enjoy free choice at all shopping stages and freely switch among available channels according to their preferences; operating as such, the chosen service or shopping combinations are the best fit to fulfill their needs (Lee and Kim, 2010) As a result, customers will experience positive emotions like pleasure, encouragement and satisfaction through their shopping journey with these broad-choice omnichannel retailers

hassle-In addition to the wide range of alternative channels, the transparency of similarities and differences of alternative channels and combination options will provide rich information and round comprehensiveness to customers (Shen et al., 2018) Customers are well-informed and feel certainty during their shopping journey with a good channel-service configuration retailer (Lee et al., 2019) Indeed, they offer a valued experience for their customers compared to omnichannel retailers who

do not provide such wide breadth of choices and transparency of channel-service configuration Thus, we hypothesize:

H 1a Channel-service configuration is positively associated with the customer

experience

Integrated interactions refer to the consistency and uniformity of a retailer’s content and process attributes through different channels (Lee et al., 2019; Sousa and Voss, 2006) The more retailers offer consistent content (e.g., price, product information, promotion) across all available channels, the less their customers feel doubtful or confused during their shopping journey In the context of omnichannel retailers, a large assortment of products and wide range of pricing are usually the case; thus, consistent content will help remove barriers towards purchases by reducing the time spent and eliminating the hassle of comparing products and prices, which can in turn improve customer experience (c.f., Li et al., 2018) Furthermore, the uniformity in process attributes (e.g., the feel, image, and delivery speed of services) can offer customers a frictionless purchase journey through different channels, consequently resulting in their satisfaction with the shopping experience Recently, shoppers have been able to interact with omnichannel retailers to get consistent content via a number of channels, such as calling a call center or communicating online through live chat systems (Rae, 2017) With online live chat systems, omnichannel retailers provide online-based synchronous media with a human service representative who provides answers through such media (McLean and Osei-Frimpong, 2017) Customers are served in real-time, much like the way a store’s staff communicate in brick-and-mortar locations, leading to a high level of customer satisfaction (Rae, 2017) In addition, virtual and augmented reality technologies can help omnichannel retailers ameliorate the limitations of natural boundaries and provide a consistent feeling of services between online-offline channels by allowing customers to see and touch merchandise virtually (Brynjolfsson

et al., 2013; Pilkington, 2019) Previous empirical evidence shows that process consistency between online and offline channels of land-based retailers positively impact online perceived value (Wu and Chang, 2016) Li et al (2018) also identified that the integrated information and functions of multiple channels significantly enhances identity attractiveness while diminishing retailer uncertainty In the same

vein, we posit that omnichannel retailers with a high level of integrated interactions can bring a better experience to their customers

H 1b Integrated interactions are positively associated with the customer

As noted by Lemon and Verhoef (2016), as human beings are continually trying

to pursue autonomy, customer empowerment is thus deemed an important driver of their perceived experience Prior empirical studies also confirm that customer empowerment will enhance customers’ perception of a satisfactory experience (Castillo, 2018, 2017; Hunter and Garnefeld, 2008) Retailers that focus on customer

empowerment will try to provide more personalized services and customized options that make customers feel like the retailers offer them exactly what they need The high level of control can give rise to close matching between customer demand and the offerings of retailers (Zhang et al., 2018) This fit can leave customers with positive emotions and satisfied shopping outcomes, endowing the shopping journey with an overall positive experience

Taken all together, we posit that omnichannel retailers with a higher level of CIQ can provide customers with greater empowerment, which in turn leads to a higher level of positive customer experience Thus, the next hypothesis is stated as follows:

H 2 Customer empowerment mediates the influences of CIQ (consisting of (a) channel-service configuration and (b) integrated interactions) on the customer

experience

2.5.4 The moderating effect of internet usage

Internet usage is understood here as the length of time customers spend online (Park and Jun, 2003) The knowledge and experience customers have with the internet might depend on their use of internet To date, internet experience has typically been studied as a moderator in different contexts such as website shopping behavior (Chang and Chen, 2008), and online/offline channel preference and usage during a customer’s shopping journey (Frambach et al., 2007) Compared to customers who spend less time online, those with a larger amount of online time may accumulate more online experiences, manifesting different perceptions as well as judgements pertaining to online and offline marketing channels accordingly (cf Chang and Chen, 2008) Internet usage, therefore, can be a potential moderating variable in studies focusing on the evaluation of omnichannel retailers

According to Daunt and Harris (2017), customers with less frequent internet usage are likely to feel low confidence with regard to their ability to navigate the alternative channels of omnichannel retailers In contrast, customers who have had a

longer time exposure to interactive interfaces and various touchpoints provided by omnichannel retailers can better understand the availability and possible combinations of the salient features, functions, and attributes of various online and physical channels This will increase customers’ ability to take advantage of the omnichannel integration so as to fit their own needs (i.e., a given shopping task) Internet experienced customers will feel comfortable and fully in control during the interaction and communication processes with omnichannel retailers (Frambach et al., 2007) As a result, they will value the benefits that the high omnichannel integration quality bring to them and become satisfied with their omnichannel retailer experiences Based on the above arguments, internet usage is expected to positively moderate the effects of CIQ, itself comprised of channel-service configuration and integrated interactions as well as customer empowerment regarding customer experience in the context of omnichannel retailers Thus, we propose the following hypothesis:

H 3 Customer internet usage strengthens the positive influence of (a) service configuration, (b) integrated interactions, and (c) customer empowerment

channel-regarding the customer experience

2.5.5 The influence of the customer experience on patronage intention

According to the SOR framework, customers’ internal states (i.e., customer experience) could result in their response to omnichannel retailers (i.e., patronage intention) Previous studies demonstrate that experiential values positively affect website patronage intentions in the e-retailing context (Shobeiri et al., 2015), while overall customer experience significantly enhances the frequency of using retailers’ mobile apps in m-retailing (McLean et al., 2018) As mentioned above, the current study defines customer experience as a second-order construct of two dimensions: satisfaction with the experience and positive emotions A number of supportive arguments and extensive empirical evidence are found for the positive impacts of these two dimensions on the behavioral intentions of customers For example,

Anderson and Sullivan (1993) argue that a higher level of satisfaction will lead to a higher level of customer retention This view is also confirmed by Ranaweera and Prabhu (2003) who declare that satisfaction significantly enhances customer retention Similarly, several studies have shown that satisfaction is an important antecedent of customer repurchase behavior (Fang et al., 2011; Lee et al., 2009; Olsen, 2002) In the retailing industry, a large number of research projects have been conducted to confirm the positive impact of satisfaction on patronage intention (Chang et al., 2015; Grace and O’Cass, 2005; Wang, 2009) With respect to another component of customer experience, positive emotions, according to Grace and O’Cass (2005), consumption feelings/emotions such as pleasure or excitement in physical store retailing have a significant positive effect on patronage intentions Similarly, Wang (2009) confirms that a positive attitude will lead to customer patronage intentions In an e-retailing context, data from the research of Kim et al (2007) indicate that a higher level of shopping enjoyment will lead to a higher level

of patronage intention Based on the aforementioned arguments and evidence, we posit that the greater the degree to which customers experience satisfaction and positive emotions, the higher their intention to patronize an omnichannel retailer Overall, we hypothesize:

H 4 The customer experience is positively associated with patronage intention

Figure 2.6 Research framework and hypotheses

Channel-Satisfaction

w exp

Positive emotion Transparency

of

channel-service

configuration

Internet usage

Customer empwerment

Customer experience

Patronage intention

H 4

Content

consistency

Integrated interaction Process

be concerned with the method used for the current thesis