We investigate the role of the physical store in today’s multichannel environment. We posit that one benefit of the store to the retailer is to enhance customer value by providing the physical engagement needed to purchase deep products – products that require ample inspection in order for customers to make an informed decision. Using a multi-method approach involving a Hidden Markov Model (HMM) of transaction data and two experiments, we find that buying deep products in the physical store transitions customers to the high-value state more than other product/channel combinations. Findings confirm the hypotheses derived from experiential learning theory (ELT). A moderated serial mediation test supports the ELT-based mechanism for translating physical engagement into customer value: Customers purchase a deep product from the physical store. They reflect on this physical engagement experience, which, because it is tangible, concrete, and multi-sensory, enables them to develop strong learnings about the retailer. This experiential knowledge precipitates repatronage and generalizes to future online purchases online in the same category and in adjacent categories, thus contributing to higher customer value. This research suggests multichannel retailers use a combination of right-channel and right-product strategies for customer development and provides implications for experiential retail designs.
An Empirical Study on the Customer Value of the Bundled Products in the Telecommunication Industry