A Changing Retail Landscape: Introduction to Special Issue
Retailing is changing dramatically. We briefly identify several major trends and next discuss how each of the papers in this issue of the Journal of Association of Consumer Research relates to these trends. These papers mainly focus on omnichannel retailing, technological changes, and vertical integration. Future research can build on these studies, as well as study other trends, such as digital online retail giants and big data analytics in retailing. Introduction The retailing industry is going through a major shift (Kahn 2018) It is not an exaggeration to say that the retailing shopping experience is undergoing the most radical transformation since the U.S. Postal Service began delivering packages in 1913 (paving the way for the explosion of the mail order business) or the invention of the shopping cart in 1937. The physical changes in the industry are hard to ignore; in 2018, more than 8000 stores closed (Green and Harney 2017) in addition more retailers than ever are filing for bankruptcy protection. For example, traditional strong retailers like Toys' R Us, Rue21, Gander Mountain, Radio Shack and Circuit City have not been able to survive. This massive disruption has been caused by a confluence of many factors that have resulted in a change in the competitive environment, a change in the physical manifestations of retailing, and importantly, given our role as consumer researchers, in a fundamental change in consumer experience. Building on the seven trends identified in Kahn (2018) and the changes in the shopping landscape noted by Lee et. al. (2018) we note the following macro trends that are accelerating major shifts in consumer behavior and the resulting disruption in the retailing industry: (1) Behemoths in e commerce: The emergence of powerful, dominating e retailers such as Amazon, Alibaba, and JD.com have fundamentally altered customers' expectations for convenience in shopping and have changed the competitive retail landscape dramatically. Amazon's acquisition of Wholefoods in 2017 and their opening of their own stores provide an important signal that these powerful retailers will expand to offline as well as to other retail and service sectors. (2) Omnichannel shopping: The customer journey is no longer a linear experience described by a purchase funnel model; rather, it is a 24/7, multi channel, non linear social customer experience (Lemon Verhoef, 2016) This implies that consumers are now becoming multi channel customers. Across and within these channels, firms should provide a strong seamless experience in order to attract and create loyal customers (Verhoef, Kannan and Inman 2015) (3) Technological changes: The internet, social media, mobile commerce, in store sensors and cameras that record every movement, and the Internet of Things (IoT) have radically advanced the ability of researchers to capture data about how people shop (Inman Nikolova 2017; Verhoef et al. 2017) Most importantly, this has allowed retailers to increase the frequency in touchpoints with the consumer. The explosive growth of social media has also provided consumers with platforms to seamlessly converse with and influence other consumers. (4) The Era of Big Data: Advances in artificial intelligence and machine learning have allowed retailers to develop sophisticated algorithms that can provide consumers with personalized, customized retail offerings at key touchpoints (Verhoef, Kooge and Walk 2016) (5) Digitally native consumers: The new generations of consumers from the Millennials to Generation Z have grown up in a digital world and that has fundamentally affected the way they shop. These new consumers have also pressured retailers to care more about consumers holistically and to be mindful of sustainable retailing practices and strategies to improve their health and welfare. (6) Vertical integration: Products can now go directly from the factory to the consumer, eliminating layers from the distribution channels. This also allows retailers to offer broad assortments more easily and efficiently to cater to the long tail (e.g. Anderson 2006) of customers' preferences. Research is required to understand these tectonic shifts in the retail landscape that are affecting individual consumers, manufacturers, retailers and society. That is the genesis of this issue of the Journal of Association of Consumers Research devoted to the changing retail landscape theme. The Baker Retailing Center, Marketing Science Institute and AMA Consumer Behavior Special Interest Group co sponsored a conference in June 2017 at The Wharton School, University of Pennsylvania. We received 60 submissions to present at this conference. This ultimately resulted in this special issue with 12 articles. We next discuss each of the accepted papers and link them to the above mentioned changes in the retail landscape. Omnichannel Shopping This issue includes multiple papers related to research on omnichannel shopping and its implications for online and offline retailers alike. These articles focus on drivers of omnichannel shopping and consequences, as well as understanding the customer journey in shopping, and retail strategies for channel integration. One of the major changes in retailing involves the ability of consumers to shop across multiple online/offline channels 24/7, and as a result retailers are able to have multiple touchpoints with shoppers. All of this results in changes in the shopping journey. Lee et al. (2018) develop a theory based model of the new shopper journey, taking into account the evolving retailing landscape characterized by significant knowledge, lifestyle, technological, and structural changes. The authors also identify several shopper journey archetypes representing paths that consumers commonly follow. They then present exploratory empirical studies assessing the stages of the archetypes and mapping the archetypes onto dimensions of shopping motivations. They close with several propositions that map a research agenda on this foundational topic in marketing and consumer research. The notion of omnichannel shopping also suggests that today's consumers may use multiple channels in different phases in the customer journey. In the purchase phase, consumers may choose between online and offline channels depending on the context, consumers' needs, their experience as well as their shopping attitudes (e.g. shopping enjoyment) The use of multiple channels may also affect purchase outcomes, because customers who have shopping experiences across different channels may become more loyal to the retailer. Bezawada, Kumar and Trivedi (2018) study the antecedents of multi channel shopping and its consequences. Their results clearly show that different factors (i.e. technology attitudes, shopping enjoyment, experience) impact multi channel shopping and that multi channel shoppers are more frequent shoppers, spend more and are more profitable confirming prior research of for example Montaguti, Neslin and Neslin (2015) Mobile gains a stronger prominence in the consumers' shopping journey as well. Retailers have introduced mobile websites as well as mobile apps to increase consumer convenience and experience and create a stronger lock in. In addition to retailer apps, there are apps associated with loyalty programs that provide tiered benefits related to status. Wang, Krishnamurthi and Malthouse (2018) investigate the impact of such an app on the saving behavior within a coalition loyalty program. Accounting for self selection effects, they show that app usage is beneficial for the program because it increases member participation and engagement. In particular, app usage fosters loyalty at retailers offering frequently purchased goods such as groceries and gas. This research not only contributes to the literature on omnichannel shopping, but also to the literature on technology effects in loyalty programs (Bijmolt and Verhoef 2017) Retailers continue to pursue cross channel integration in order to create a more seamless consumer experience. Prior research has focused on integration of the retail mix, such as assortment integration, price integration and design integration. Kleinkercher et al. (2018) examine the effects of information integration by considering the retailers' online website as an information hub in which information is communicated about the store. They study how this integration positively affects channel switching to the store and that these effects depend on the type of information cues. This implies that in order to move more customers from the online website to the physical store, firms should strongly communicate about multiple aspects of the store on their website. Simply providing an address is insufficient; retailers should also provide information on assortments, prices, services, etc. Given the importance of the omnichannel trend, we asked two practitioners to write commentaries on the omnichannel focused papers. Specifically, Gordon Wyner, MSI research director, and Ewald Hoppen, Senior Digital Analyst at the Dutch online retailer Wehkamp.NL, contributed two very thoughtful commentaries. Digitally Native Consumers The new generations of consumers are increasingly holding retailers accountable for improving the welfare of their consumers and for addressing important societal and environmental issues. One particular focus has been on pressuring retailers and manufacturers to address the growing obesity issue in the US and to provide more healthy options. Liu and her colleagues (2018) conduct a field experiment that examines how in store displays can affect purchase decisions both on the featured options as well as other options in the store. Specifically, they examine whether featuring healthy or indulgent products has spillover effects on the sales of the non featured product types elsewhere in the store. The findings not only replicate prior research showing that featuring items in an endcap increases fe