THE PENNSYLVANIA STATE UNIVERSITY
SCHREYER HONORS COLLEGE
THE SAM AND IRENE BLACK SCHOOL OF BUSINESS
SHOPPING EXPERIENCE AND OMNICHANNEL STRATEGY: A STUDY OF
CONSUMER SHOPPING BEHAVIORS IN RELATION TO THE OMNICHANNEL SUPPLY
CHAIN STRUCTURE
CHELSEA CZERWINSKI
FALL 2016
A thesis
submitted in partial fulfillment
of the requirements
for a baccalaureate degree
in Project and Supply Chain Management
with honors in Project and Supply Chain Management
Reviewed and approved* by the following:
Dr. Ozgun C. Demirag
Associate Professor of Operations & Supply Chain Management
Thesis Supervisor
Dr. Michael Brown
Professor of Management
Honors Advisor
* Signatures are on file in the Schreyer Honors College.
i
ABSTRACT
As technology continues to advance, consumers are increasingly demanding to communicate and
transact with corporations in more efficient and convenient ways during their shopping. This has
led the companies in various industries to develop and offer sophisticated distribution strategies.
The omnichannel supply chain structure is one example where corporations strive to offer a
seamless shopping experience to customers across multiple retail channels.
Since its introduction, the omnichannel supply chain structure has continued to evolve and
enhance the consumer shopping experience by improving the consistency and convenience
across retail channels. This has been possible primarily due to the advances in technology and
demands from the customers. However, implementing the omnichannel structure requires a large
investment and high workforce flexibility in order to operate effectively. In some cases, the costs
might not be justified; therefore, it is important for the companies to understand whether an
omnichannel retail strategy would be a profitable investment for their specific business.
This research aims to provide insights for the companies to assist in their omnichannel retail
strategy implementation. Research questions posed in this project are focused on consumers’
shopping behavior characteristics in relation to the omnichannel distribution strategy. In what
specific retail sector are the customers demanding the capabilities of the omnichannel structure?
Would the size of a corporation make an impact on the consumers’ expectations of omnichannel
capabilities? What kind of path does the average customer take when transacting with a
corporation and what omnichannel service and capabilities are deemed most important by the
shoppers? This exploratory research attempts to explain and answer these questions from the
ii
results obtained from a consumer shopping behavior survey that was created and distributed to
students at Penn State Behrend for the purpose of this research.
The survey results have shown that consumers rely on multiple retail channels throughout their
purchase making decision process; however most of the consumers tend to make their final
purchase in-store or online. In particular, an overwhelming majority of the consumers who
participated in this research claimed that they prefer to make their transactions in-store, but due
to limited financial abilities these consumers are willing to use other channels if they can save
money. The survey results have also revealed that consumers are more demanding of the
omnichannel services from corporations, especially those that operate national retail chains.
These services include being able to transact across multiple channels and having the flexibility
in making returns and in order fulfillment. All of these expectations require data to be transparent
across the various retail channels and necessitate reconfigurations in the supply chain structure.
Given the large investments needed to both implement and operate an omnichannel structure,
this research has focused on trying to gain a deeper understanding of consumers’ needs,
expectations, preferences, shopping paths, next steps after finding a product of interest, and the
consumer’s price sensitivity. The results and discussions shed light on the importance of the
omnichannel retail strategy for corporations to meet customer needs in some industries.
iii
TABLE OF CONTENTS
LIST OF FIGURES ..................................................................................................... iv
LIST OF TABLES ....................................................................................................... v
ACKNOWLEDGEMENTS ......................................................................................... vi
Chapter 1 Introduction ................................................................................................. 7
Chapter 2 Omnichannel Structure ................................................................................ 10
Chapter 3 Literature Review ........................................................................................ 16
Chapter 4 Research Questions ..................................................................................... 28
Chapter 5 Methodology ............................................................................................... 31
Chapter 6 Discussion of Results .................................................................................. 35
Chapter 7 Conclusion ................................................................................................... 61
Appendix A .................................................................................................................. 65
Appendix B .................................................................................................................. 66
Appendix C ................................................................................................................. 79
BIBLIOGRAPHY ........................................................................................................ 80
iv
LIST OF FIGURES
Figure 1. Evolution of Omnichannel Retailing ............................................................ 8
Figure 2. Omnichannel Retail Supply Chain ............................................................... 11
Figure 3. Global Omnichannel Retail Index Industry Leaders .................................... 24
Figure 4. Consumer Generations ................................................................................. 36
Figure 5. Baby Boomer Initial Interaction Channel..................................................... 39
Figure 6. Generation X Initial Interaction Channel ..................................................... 41
Figure 7. Millennial Initial Interaction Channel .......................................................... 42
Figure 8. Centennial Initial Interaction Channel.......................................................... 43
Figure 9. Next Steps After Finding the Laptop In-store .............................................. 50
Figure 10. Consumer Channel Interaction in Purchase Decision Making Process...... 55
Figure 11. Purchasing Channel for $50 Product .......................................................... 58
Figure 12. Purchasing Channel for $500 Product ........................................................ 59
v
LIST OF TABLES
Table 1. Highest Costs of Fulfilling Orders Identified by JDA Survey Respondents . 13
Table 2. Tips to Realizing the Omnichannel Opportunity .......................................... 14
Table 3. Retail Channel Models................................................................................... 18
Table 4. Criteria Used in Omnichannel Index Rating .................................................. 23
Table 5. Retail Channel Definitions............................................................................. 38
Table 6. Importance of Seeing the Product in Person Before Purchase ...................... 44
Table 7. Importance of Touching the Product Before Purchase .................................. 45
Table 8. Importance of Demoing the Product Before Purchase .................................. 47
Table 9. The #1 Ranked Retail Channels Not Used by Consumers ............................ 49
Table 10. Consumer Expectations ............................................................................... 51
Table 11. Consumer Purchasing Preferences............................................................... 57
vi
ACKNOWLEDGEMENTS
I would like to express my deepest gratitude to my thesis supervisor, Dr. Ozgun Demirag.
Throughout the research process, the generation of the consumer buying behavior survey, and
the writing of my thesis, Dr. Demirag has offered me many suggestions and ideas that have
improved the quality of my work. Her support and flexibility over the past year are some of the
key factors that have enabled me to find success in completing this thesis. I have truly valued all
of her suggestions, wisdom, and research experience. Therefore, I would like to thank Dr.
Demirag for her endless support throughout all the stages involved in and leading up to the
completion of this thesis.
In addition, I would like to extend appreciation to Dr. Gupta, Dr. Sarkar, and Dr. Zhi for their
help in reviewing and distributing my survey. They have provided me with constructive feedback
that has allowed me to improve the clarity of my survey questions for participants to answer.
Finally, I would like to thank my fellow classmates at Penn State Behrend for taking the time to
complete my consumer shopping behavior survey. I would not have been able to complete this
thesis with the most current and relevant data without their contribution.
7
Chapter 1
Introduction
Retail distribution channels have progressed over time from a single channel, to multi-channel,
cross-channel, and now to an omnichannel. See Figure 1 for an illustration. The omnichannel
structure has become widely used across corporations in various industries. The goal of the
omnichannel structure is to provide a seamless experience for customers when they transact and
communicate across various channels within a company’s structure (Deloitte Omnichannel
Report, 2015). The Deloitte report further states that, “Omnichannel retailing means being
available at any time anywhere, making it convenient for the customer.” The evolution of the
omnichannel has sprouted primarily from technological advancements that have allowed
corporations to expand the channels in which consumers can communicate and transact with
their company.
Corporations are feeling pressure to implement the omnichannel structure to keep up with the
competition. However, there are many challenges that corporations are facing both during and
after implementation. With an increase in the number of channels that must be managed, some
corporations are finding it hard to meet customer expectations while still being able to increase
profitability at the same time (Iaquinto, 2015). In 2014, JDA distributed a survey to over 400
CEOs of retail and consumer goods companies and reported that only 16% of the companies
surveyed are able to profitably fulfill the demands of the omnichannel structure. Very few
companies can operate an omnichannel structure profitably due to the high costs. According to
8 the National Retail Federation, some of the highest costs with the omnichannel structure branch
from shipping to the store for customer pickup, shipping directly to customers, and handling
returns from online and in-store orders (Hoffman, 2016).
Figure 1. Evolution of Omnichannel Retailing
Source: Wilson Perumal & Company, 2015
As corporations offer easier ways for consumers to transact and communicate with them,
consumers continue to increase their expectations. For instance, since consumers are able to find
products quickly across various transaction mediums, they begin to assume that products will be
delivered to them just as fast as they were able to purchase them, which is unrealistic (Aero
Fulfillment, 2015). Consumers often do not realize the complexity of operating an omnichannel.
Implementing the omnichannel structure requires more than just adding the capability for
consumers to purchase products online or from a mobile application (mobile app). In order to
provide a seamless shopping experience for consumers, corporations often have to invest in
adding new distribution centers, warehouses, and shipping options in addition to restructuring
9 current processes and procedures (Aero Fulfillment, 2015). Consumers are demanding shipping
options such as next-day delivery, crowd-sourced delivery1, and the option to check on the
availability of a product both in-store and online (Iaquinto, 2015).
As more corporations begin to implement the omnichannel structure, there are a few questions
that need to be answered in order to provide insights for profitable operations. In what industries
are consumers most demanding of the capabilities that an omnichannel structure provides? And,
what information and services are consumers relying on during their purchasing decisions that
can best be supported through omnichannel implementation? The focus of this research will be
centered around the omnichannel structure, consumer shopping behaviors in relation to the
omnichannel structure, and the industries in which consumers demand the capabilities of the
omnichannel structure.
1 Crowd-sourced delivery is an option given to customers that involves retailers asking certified
commuters to help with the delivery of their products to customers. The drivers are paid a small
fee and are given deliveries that are along their normal routes (Everard, 2015).
10
Chapter 2
Omnichannel Structure
The omnichannel structure is comprised of multiple retail channels in which consumers are able
to transact and communicate with a corporation. Given the complexity of the omnichannel
structure, corporations must adjust their organizational structure and strategies to fit with the
operation needs. The omnichannel structure often gives customers the option to shop in-store,
online, on the company’s mobile app, and on an in-store or centrally located kiosk in a shopping
center. The goal is to provide a customer-centered, flexible, and seamless shopping experience
regardless of where a customer chooses to transact with a corporation (The Omnichannel
Opportunity, 2014).
For instance, a consumer who is shopping at a store that has implemented the omnichannel
structure such as Home Depot has the ability to shop in-store, online, on the Home Depot mobile
app, and the in-store kiosk (Giannopoulos, 2013). While in-store, customers can shop the
inventory located in the visited store, shop on the in-store kiosk, or request an associate to
complete an online order for a product that is not in-stock at the visited store. Customers also
have the option to order online which can be completed at home, work, or on the go by using a
computer, tablet, or smart-phone. With the online channel, customers have the option to have
their order shipped to home, to a local Home Depot store, or to have the order fulfilled at the
local store if products are in inventory and are ready for pickup. Lastly, the mobile app can be
used to transact with Home Depot. Customers using the mobile app have very similar options for
their transactions as they do on the online channel, but the mobile app can only be accessed on
smartphones and tablets. In addition, customers can use the mobile app to locate products in-
11 store. As stated by the Retail Information Systems News, the product locator will display a store
map, the exact aisle location for the given product, and share the current inventory available for
the items in the given store location that has been selected (Giannopoulos, 2013). Home Depot
has made significant investment in their omnichannel implementation and in doing so they have
been able to build-in additional features to support customers that are transacting across their
various channels. For instance, Home Depot has built-in the capability for customers to, buy
online and return in-store, buy online and pickup in-store, and buy online and ship to store.
Figure 2 presents a visual picture of the complexity of the omnichannel structure.
Figure 2. Omnichannel Retail Supply Chain
Source: Wilson Perumal & Company Blog (Wilson Perumal & Company, Inc., 2015)
With the complexity of a multiple retail channel structure, corporations are faced with many
challenges. As revealed by the Global Retail & Consumer Goods CEO Survey, one of the
biggest challenges is trying to meet customer expectations across the channels in the most
12 efficient and profitable way. Other challenges include “keeping pace with technological
innovations, managing costs of serving customers while fulfilling omnichannel expectations,
breaking apart departmental silos to support multiple channels, and inventory management”
(Global Retail & Consumer Goods CEO Survey, 2014).
Omnichannels require corporations to invest heavily across many areas of their business in order
to offer a seamless shopping experience to customers across all retail channels. Omnichannel
fulfillment calls for the addition of distribution centers, warehouses, and shipping options to
meet customer needs and expectations. In addition to adding fulfillment centers, staff must be
added to manage the centers and software must be upgraded to track the movement of goods
across the entire distribution network (Iaquinto, 2015). Upgrading software also involves
significant investment in training the employees about the capabilities and uses of the system.
Given the rising costs of implementing an omnichannel structure, many corporations are
struggling to be profitable. According to JDA Software’s Global Retail & Consumer Goods CEO
survey, only 16% of companies claim that they can fulfill omnichannel demands profitably;
whereas 67% of the respondents declare that the costs of operating with an omnichannel
structure increase as they focus on selling across multiple channels. Table 1 lists the top five
ranked costs of operating an omnichannel based from the responses of the CEOs in the JDA
survey.
13
Table 1. Highest Costs of Fulfilling Orders Identified by JDA Survey Respondents
Source: Global Retail & Consumer Goods CEO Survey by JDA Software, 2014
In order to operate efficiently and keep fulfillment costs low, corporations are faced with many
supply chain management challenges. For instance, when a customer places an order online,
from the mobile app, or a kiosk, the corporation must first locate the inventory to fulfill the order
and then determine the most convenient location to ship the order from. As mentioned by
Iaquinto (2015), some of the options are to “pull the product from a local store, send it from a
centralized warehouse or ship it directly from the supplier.” However, many corporations lack
the technology that can track the logistics and inventory data needed to help determine the
location of the inventory that is most convenient to the customer (Iaquinto, 2015). A lack of
organized and easy-to-access logistics and inventory data results in inefficiency and increased
fulfillment costs. In fact, 88% of the CEOs who were surveyed by JDA have stated that attention
needs to be placed on managing logistic processes and 85% have also mentioned that inventory
availability across the supply chain needs to be improved. Forecasting demand is another aspect
that can help corporations distribute their products across their locations to help improve delivery
time and cost efficiency. Kevin Iaquinto, Chief Marketing Officer at JDA claims that “having
products available, then finding the most profitable way to deliver them are critical activities that
lie at the heart of supply chain excellence” (2015).
14 When a corporation can successfully meet the omnichannel needs, some potential benefits
include “stronger brand identity/recognition, higher response rates, revenue and profit growth,
expanded customer base, higher customer lifetime value, higher customer satisfaction, and
competitive differentiation” (Erikson, 2013). In order to achieve these benefits, corporations
often have to reconfigure current processes, departments, and strategies to fit the omnichannel
needs. In support, Deloitte explored the omnichannel opportunities that corporations such as
Ebay can realize if the company is configured to aid the needs of the omnichannel. In an industry
report, Deloitte shares tips in the following areas to help corporations realize the omnichannel
opportunities: Pursuing a customer-centered omnichannel strategy, taking a holistic view,
integrating channels, streamlining logistics, refining the store, enabling cross-border trade, and
embracing the emerging enablers (The Omnichannel Opportunity, 2014). Table 2 explains each
of the omnichannel opportunity tips in greater detail.
Table 2. Tips to Realizing the Omnichannel Opportunity
Pursuing a customer-centered omnichannel strategy Understand the consumer shopping behaviors in the omnichannel structure
Encourage consumers to shop across the channels so that they can experience the
flexibility and the ease of use for each channel
Offer as many channels as the corporation can manage (stores, online website, mobile
app, and social media) to expand the customer base
Taking a holistic view The company culture and strategic plan needs to support omnichannel retailing
Company operations need to be adjusted to fit the needs of the omnichannel structure
Integrating channels Information and prices should be consistent across all channels
IT platform integration is often suggested to help manage the channels
Streamlining logistics Retailers should offer multiple fulfillment options to promote flexibility and convenience
to customers
15
Redefining the store Retailers need to evaluate their retail sites and determine how they can get the stores as
involved as possible in the omnichannel processes to improve efficiency
Enabling cross-border trade By adding alternative payment methods retailers can extend their omnichannel to fit the
needs of customers across the world
Adding partnerships with third parties internationally can also help to expand a
corporation’s global presence, reduce the costs to market, and help to manage the supply
chain.
Embracing the emerging enablers Retailers should monitor customers as they adopt to new technologies and find ways to
capture customers through the new technologies.
Source: The Omnichannel Opportunity (Deloitte, 2014)
16
Chapter 3
Literature Review
Multiple sources of literature have been reviewed in this chapter to explore the omnichannel
supply chain structure. This literature review has been organized into four sections focusing on
the theory of the omnichannel supply chain structure, the omnichannel operations, presence
across industries, and omnichannel shoppers. These areas of focus on the omnichannel structure
have been addressed to support the topics studied in this research.
Theory of the Omnichannel structure
As technology advances, more retail channels continue to emerge. Many corporations that have
always operated a brick-and-mortar store have added an online channel to their business.
According to the International Journal of Electronic Commerce (2014), there has become a blur
between the online and physical retail channels which has enabled the omnichannel structure to
evolve. The omnichannel structure demands corporations to get out of their functional silos and
enable transparent communication of business processes throughout the corporation. Peter
Sobotta, the founder and CEO of Return Logic states, “Large retailers are plagued by operating
in silos, information silos, whereby the left hand doesn’t know what the right hand is doing,
thinking or saying.” Functional silos do not fit the omnichannel retail structure as they result in
inefficiency, which leaves less time for corporations to work with their customers.
The theory of the omnichannel structure has been studied by numerous scholars to determine the
underlying purpose, goals, strategies, and objectives to run a profitable omnichannel structure.
17 Five primary objectives for a corporation to work towards when they implement the
omnichannel structure have been defined as follows: (1) help customers avoid products that
don’t work for them, (2) educate customers by combining offline and online experiences, (3)
restock and reship product returns in a highly efficient manner, (4) have a unified inventory and
customer database, and (5) share information easily across departments, channels and functional
areas (Sobotta, 2014).
Carrying out these objectives can only be done when a corporation aligns the omnichannel
structure with their strategic plan and involves all functional silos in the process of restructuring
the current supply chain and business processes. The omnichannel structure requires the support
of numerous business functions and adjustments to current systems. For instance, a new
distribution system is often required to serve customers efficiently and effectively when a
corporation implements the omnichannel structure (Hübner, 2016). James Rowell, a lecturer in
Operations and Supply Chain Management at the University of Buckingham has studied multiple
areas of omnichannel retailing. In his studies, he has developed a table that defines some of the
retail channel models. Each model lists where the consumer can browse prior to completing a
transaction, the type of transactions a consumer can choose from, how the order is processed,
where the order can be delivered, and what choices a retailer has for picking a delivery method.
Table 3 lists a sample of seven different retail channel models.
18
Table 3. Retail Channel Models
Source: Omni-Channel Retailing (Rowell, 2013)
There has been a great deal of research on the various retail supply chain structures. For instance,
many papers talk about how the omnichannel structure was developed due to the lack of a
seamless shopping experience for customers in the multi-channel structure. Prior to the
omnichannel structure, corporations were operating in a multi-channel structure which involved
having multiple retail channels for consumers to transact and communicate over. Each of the
channels in the multi-channel structure were acting as their own separate entity even though they
were for the same corporation. This meant that there was a lack of unity, given that the
corporations could offer different products and prices across their retail channels (Loy,
19 2015). However, there appears to be a lack of research completed on the path that consumers
take across the channels when they are shopping for products in various industries. This research
fills in this gap. Are consumers actually using all of the retail channels that corporations have
implemented during their decision making process, or are they only using the channel that they
are completing transactions on? If consumers are not using multiple channels during their
decision making process, then is switching to the omnichannel structure worthwhile for
corporations across all industries? These questions have been explored further using the data
received from the consumer shopping behavior survey that was created in support of this
research.
Omnichannel Supply Chain Structure: Operations
As e-commerce continues to advance and more retail channels need to be managed, it has
become critical for corporations to assess their current business processes to determine how they
can efficiently and profitably fulfill the needs of the omnichannel structure. Verhoef et al. (2015)
state that the press is suggesting retailers to move from the multi-channel to an omnichannel
retailing model to fit the growing demands of customers:
“In the past, brick-and-mortar retail stores were unique in allowing customers to touch
and feel merchandise and provide instant gratification. Internet retailers, meanwhile,
tried to woo shoppers with wide product selection, low prices and content such as
product reviews and ratings. As the retailing industry evolves toward a seamless
“omnichannel retailing” experience, the distinctions between the physical and online
channels will vanish turning the world into a showroom without walls.”
20 As more channels are added to corporations’ supply chain structure, there is strong evidence that
the consumer demand for brick-and-mortar stores is not going away. In fact, Hübner et al. (2016)
state that distance retailers such as purely online retailers are “establishing physical brick-and-
mortar stores to expand their service offerings.” The research conducted for this paper can also
attest that consumers, especially Millennials and Centennials rely heavily on brick-and-mortar
stores to check out and demo the products during their decision making process. These
consumers prefer to transact in-store, but due to price sensitivity, they are not always loyal to
their preferred retail channel. These generations appear to have a tight budget and are willing to
transact across another channel if they can save some money.
On the contrary, many researchers such as Fred Gilbert, the author of the Brick and Mortar No
More Blog, and Davide Savenije, a senior editor at Industry Dive are claiming that brick-and-
mortar stores are phasing out. Fred Gilbert states that in order for corporations to maintain a
brick-and-mortar store, they are going to have to, “evolve the store to better match the purchase
behaviors of the much sought after Millennials, consumers between the ages of 20 and 35”
(2016). According to a survey conducted by MMGY Global, six out of ten Millennials would
rather spend their money on experiences than they would on things (Gilbert, 2016). In result,
department stores such as Macy’s and Sears are struggling to stay open, while stores like Ross
and Marshalls who sell stores’ excess inventory at a discount are flourishing. Many consumers
today would rather shop the clearance and sale items so that they can spend their excess money
on other leisurely activities. Therefore, as Gilbert has claimed, if corporations want to be able to
keep their brick-and-mortar stores open for consumers, they are going to have to make some
adjustments.
21 With operating an omnichannel structure comes many challenges. Bell et al. (2014) claim that
one of the greatest challenges that omnichannel retailers face is how to provide consumers across
all retail channels with the information they need to determine which products best suit their
needs. To be profitable, corporations need to develop a framework to provide customers with
detailed information across all retail channels to eliminate initial uncertainties and barriers to
purchase. In addition, corporations need to develop fulfillment options that allow retailers to
deliver products to customers in the most cost efficient and convenient manner (Bell et al.,
2014). The Modern Materials Handling magazine published in April 2015 has also shared the
results from a survey that was created by PricewaterhouseCoopers (PwC)2 to determine the top
challenges that corporations face with the omnichannel supply chain structure. Based on their
results the top three challenges have been identified as failing to meet customer expectations
across channels, failing to realign the business to meet the omnichannel needs, and failing to
manage the increased costs of fulfilling the omnichannel expectations (Modern Materials
Handling, 2015).
In addition to the challenges, the CEOs from the PwC survey have indicated that there are three
primary factors in retailing that absorb a great deal of profits. 71% of the CEOs claim that they
incur the greatest costs from the return of online and in-store orders (Modern Materials
Handling, 2015). Some of the costs involved in returns include shipping and handling,
restocking, and holding costs. However, Bell et al. (2014) claim that retailers can reduce the
amount of returns by offering detailed information about the products to customers across all
retail channels. Also, corporations can attempt to minimize returns by putting evaluative
2 PricewaterhouseCoopers (PwC) is a professional services network headquartered in London
that focuses on the assurance, tax, and advisory needs of its clients.
22 processes into place such as, “damage research activities and returns report cards which can be
effective measures for minimizing returns” (Kelly, 2016). Lastly, the other top two costs
identified by the CEO participants include shipping directly to customers from distribution
centers or warehouses (67%) and shipping goods to store for pick-up (59%) (Modern Materials
Handling, 2015).
Presence of Omnichannel: Across industries
Corporations are feeling pressure to implement the omnichannel structure in order to offer a
seamless shopping experience. The Consumer Goods Forum along with many other research
institutions are informing corporations about the growth potential in result of implementing the
omnichannel structure (Phillips et al., 2015). With an omnichannel corporation, consumers can
choose the way they want to transact with that corporation (in-store, online, mobile app, kiosk,
etc.) which offers consumers the flexibility and convenience they are demanding throughout
their shopping experience.
An example of some of the current research that has been published about omnichannels across
industries comes from PwC Strategy3. PwC Strategy has constructed the Global Omnichannel
Retail Index to review the readiness of corporations to implement the omnichannel structure
across nine retail segments that fall within the 19 different countries that were analyzed in the
study (Bovensiepen, 2015). Each country was given a rating between 1 and 100 based on
consumer behavior, degree of digitization, omnichannel potential, and infrastructure. Table 4
3 PwC Strategy consists of a global strategists team that focuses on assisting corporations in
undertaking complicated or risky change.
23 further defines each of the four criteria that are analyzed in giving a country their omnichannel
index rating.
Table 4. Criteria Used in Omnichannel Index Rating
Source: PwC Strategy, 2015
After PwC analyzed each of the 19 countries using the above criteria, the countries were ranked
from highest to lowest in the following order, United States, United Kingdom, Australia,
Denmark, Canada, China, Belgium, Japan, Middle East, France, Italy, Germany, Russia,
Switzerland, Chile, Turkey, India, South Africa, and Brazil (Bovensiepen, 2015). Within each of
the given countries the index assessed nine industries which included, “consumer electronics and
appliances, apparel and footwear, media products, housewares and home furnishings, personal
accessories and eyewear, do-it-yourself and home improvement, grocery, traditional toys and
games, and beauty and personal care” (Bovensiepen, 2015). The US and the UK ended up at the
top due to having a high mobile presence across retailers throughout their country. PwC survey
24 has also found that consumer demands have not only expanded, but that they have been openly
shared with retailers especially over social media. The top demands identified in the study
include being offered deals/attractive prices, convenience, quality customer service, and quick
fulfillment of their needs. Figure 3 shows the countries that stand as a global omnichannel retail
index industry leader.
Figure 3. Global Omnichannel Retail Index Industry Leaders
Source: PwC Strategy, 2015
Therefore, research has been conducted to determine which countries and industries are a good
fit for the omnichannel structure. As mentioned above, to determine if the omnichannel structure
25 is a good fit, researchers from PwC developed the omnichannel index (Bovensiepen, 2015).
However, there has been little research on which industries customers are demanding the
capabilities of the omnichannel structure the most. Even further, research has not explored the
demands and expectations that each generation has for corporations across the industries. By
collecting such data, corporations can gain a better understanding of which consumers are using
each channel so that they can focus their investments wisely across the channels. For instance,
corporations could refocus their advertising to be more personalized if they know who is actually
using each of the channels throughout their shopping experience. This research contributes to
this area by providing insights on the expectations and channel choice of the different
generations of consumers.
Omnichannel Shoppers
The way in which consumers are engaging with corporations continues to change as more retail
channels and communication capabilities are introduced. Recently researchers have primarily
been focusing their studies on the on mobile shopping channel. Facebook IQ 4and Marketing
Land 5have been two of the many contributors in this area. Facebook IQ conducted a study using
more than 2,400 adult omnichannel shoppers and found that 45% of all shopping trips involve
interaction with a mobile device (2016). The omnichannel shopper was defined as someone who
researched and shopped for products such as clothing, electronics, appliances, home goods, and
beauty supplies using a variety of channels (Facebook IQ, 2016). The study also revealed that
4 Facebook IQ consists of a team of researchers of data analyzers that use their expertise to help
provide marketers with accurate data to help them understand who their people are, what they
do, and why they do it (Facebook IQ, 2016). 5 Marketing Land is a publication company that publishes articles daily about the digital
marketing industry (Third Door Media Inc., 2016).
26 56% of shoppers have made a mobile purchase due to the convenience and 55% of shoppers
have made a mobile purchase due to the flexibility of being able to shop from anywhere at any
time (Facebook IQ, 2016).
In addition, Market Land has found from a survey that 42% of shoppers complete all their
product research from their mobile device (Sterling, 2013). This shows that mobile devices and
mobile-commerce capabilities play a vital role in the success across all retail channels. The
convenience of mobile device helps consumers to answer their questions and clear up any
uncertainties before making a purchase. The study also claims that 77% of consumers who start
their shopping on their mobile device actually end up making their purchase in-store (Sterling,
2013). Finally, according to Market Land 53% of shoppers begin their shopping experience on
their smartphone and only 21% of consumers actually end up making their final transaction on
their smartphone (2013).
According to Google Retail Director, Julie Krueger, “a corporation’s most important customer is
the omnichannel shopper.” In order for corporations to find success in marketing today, they
need to be able to reach customers wherever and whenever they are accessing a retail channel.
The data that Google collected in the 2014 holiday season shows that shoppers are “no longer
discriminating between mobile and desktop when it comes to shopping” (Krueger, 2015).
Shoppers are using their smartphones in-store to research and assist themselves in making their
purchasing decision. Corporations such as Banana Republic have realized how often consumers
are bouncing from one channel to another throughout their shopping experience. In response,
Banana Republic has realized that they must focus on adjusting their marketing strategies to
allow shoppers to move across the retail channels. Corporations that are able to offer seamless
27 marketing strategies across their retail channels are in a better position for supporting their most
valuable customers. Some retailers are finding that their omnichannel customers who use
multiple channels during their shopping experience are spending five times more than customers
who only use one channel to transact with a company (Noble, 2015). A corporation’s most
valued customer is someone who buys both in-store and online (Krueger, 2015). Shoppers who
use more than one channel have been found to have a 30% higher lifetime value than shoppers
using only one channel (Krueger, 2015).
Therefore, it is important for corporations to not only understand what channels omnichannel
shoppers are transacting on, but also what channels the shoppers are using prior to transaction.
As stated by many researchers, consumers rely heavily on their smartphones to provide them
with the information they need for reassurance about their potential purchase. Researchers have
continued to develop more surveys to get a stronger understanding of the omnichannel shoppers.
However, there seems to be a lack of research on the steps that shoppers from different
generations tend to take as they interact across the various retail channels. Developing a deeper
understanding of information what shoppers are looking for along their shopping path can assist
corporations in improving the efficiency of the consumer shopping path. Given that time is a
scarce resource, any way a corporation can save a consumer time is extremely valuable to them.
The survey created for this research has focused on identifying the additional steps that
consumers take as they move along their shopping path toward a final purchasing decision. By
using the demographic information about the respondents, the survey also sheds light on the
differences in the shopping paths of consumers from different generations.
28
Chapter 4
Research Questions
The literature review confirms that with advances in technology and more retail channels
emerging, the omnichannel supply chain structure is necessary for efficient retail channel
management. Many corporations such as Apple and Home Depot have decided to implement the
omnichannel structure and adjust their strategic plan accordingly to fit this customer focused
approach. Each retail channel offers unique capabilities and formats that must be managed
accordingly to create a seamless shopping experience for consumers as they navigate from one
retail channel to another. A report by Deloitte claims, “As omnichannel shopping becomes
pervasive, embracing these trends effectively and promptly while continuing to adapt to
technology-enabled changes in consumer behavior can enhance retailers’ competitive positions”
(2014). As competition rises, it is even more important for corporations to improve their business
strategies to be customer focused just as the omnichannel supply chain structure has been
designed.
Current research has explored the omnichannel structure from more of a macro perspective.
Scholars have studied the evolution of the omnichannel, the operations of the omnichannel, the
industries that are best fit for the omnichannel structure, and the consumers who are engaging in
the capabilities offered by the omnichannel structure. However, there are some missing links in
current research of the omnichannel structure. For instance, the omnichannel structure has been
created to keep consumers as the primary focus, yet most researchers have not asked consumers
29 about their shopping path toward buying products across various industries. This lack in research
means that retailers are not fully aware of what channels their customers rely on during their
purchase decision making and research process. To fill in the gaps of current research, the
following research questions were developed:
i. What kind of path does the average customer take when transacting with a corporation?
ii. What information and services are customers relying on during their purchasing
decisions that can best be supported through omnichannel implementation?
Implementing the omnichannel structure requires a large investment, realignment of company
strategies, and a culture that supports unity. According to Market Wired’s evaluation of the 3rd
Annual Future of Stores EKN Research Study (2015), retail channels need to understand that the
omnichannel structure could require up to 25% more labor hours. More resources are needed to
manage the omnichannel operations and consumer inquires in order to offer a seamless shopping
experience across all retail channels. Retailers also need to realize that consumers are not
demanding the omnichannel benefits from corporations across all industries. Research has
remained at a macro level on this topic, not focusing on consumer shopping preferences and
expectations across the industries. Without such research, corporations that might not be
demanded of the omnichannel capabilities could unnecessarily decide to make the large
investment to implement the omnichannel structure. To further analyze the need for omnichannel
implementation across industries, the following research questions have been formulated:
iii. Does the size of a corporation affect the expectations a customer has for transacting
with the corporation?
iv. In what industries are consumers from different generations demanding of the capabilities
that an omnichannel structure provides?
30
With the continuous advancements in technology giving rise to more retail channel capabilities,
it is crucial for corporations to know who is shopping in each of the retail channels. Each
generation of shoppers has a different comfort level with technology which impacts the type of
the retail channels they are likely to use. In knowing which channels each generation uses,
corporations can focus their advertisements and communications with customers in a more
personalized manner. For instance, Daniel Newman, Principal Analyst of Futurum Research and
CEO of Broadsuite Media Group claims that Millennials are the hardest to advertise to because
they do not want to be talked at. However, Millennials are the easiest to incentivize (Newman,
2015). Given that research lacks the data to know which generations use each retail channel
across a variety of industries the following research questions have been created to fill in the
gaps.
v. How do customer purchasing behaviors affect the implementation of omnichannels?
vi. What is a customer looking for in terms of how a product/service is communicated and
made available to them for purchase?
31
Chapter 5
Methodology
The omnichannel supply chain structure has continued to evolve and become integrated in
corporations across multiple industries. The purpose of this research is to gain a deeper
understanding of consumer shopping behaviors in relation to the omnichannel structure.
Exploratory research was conducted to thoroughly explore the omnichannel structure, operations,
presence across industries, and customer-focus. In addition, a survey was developed to collect
data on the consumer's shopping path, frequency of interaction across the retail channels, and the
expectations that consumers have for different corporations across varying industries.
Survey Development
In order to develop a better understanding of consumer shopping behaviors in relation to the
omnichannel supply chain structure a survey was generated. Qualtrics survey software was used
to build and distribute the survey. The Qualtrics software offered a professional survey structure,
the ability to distribute the survey online, and a storage of results that updated as each survey is
submitted. The survey consisted of five sections that explored different consumer shopping
situations to get a better understanding of the participants’ shopping behavior under various
conditions.
The first section of the survey was focused on general questions to get to know who is taking the
survey. Some of the questions in this section asked about the participants’ financial position
which would be used to find correlations between the participants’ shopping behaviors and their
32 relative financial state. The second section then asks participants about the path they would take
to purchase a given set of goods. The idea with these questions is to determine which channels
the participant uses when they are looking for goods across various industries. The third section
focuses on asking questions related to the next steps the participant would take if they found a
product (laptop was chosen as an example) that they wanted to purchase across various retail
channels. The purpose of these questions is to generate data on consumers’ shopping behavior
for a relatively high priced item. These questions will help to determine if the participant is a
convenience shopper where they would rather have the product as soon as possible regardless of
price or if the participant is a price shopper. A price shopper is someone who likes to save and is
willing to take the time to look around for deals and often other potential options that might be of
a lower price but comparable in product quality. The fourth section then focuses on questions
that ask where the participant prefers to purchase a given set of items. In addition, questions are
asked in regards to the expectations the participant has on large retail chains and smaller locally
owned businesses in terms of omnichannel offerings and capabilities. The final section then asks
a few questions to determine the threshold at which a participant would choose to buy a product
online instead of in-store if he/she could save the desired amount.
The survey questions were developed with the research questions in mind. A mapping between
the survey and research questions was utilized to ensure that each research question was
thoroughly explored while avoiding any redundant questions to be asked in the survey.
Throughout the survey a variety of formats were used to help provide clarity, simplicity, and
efficiency for participants completing the survey. Some of the question formats included
multiple choice, pick, group and rank, matrix table, and side by side. There was a total of twenty-
seven questions asked in the survey. All of the questions had multiple options for the participant
33 to choose from and many of the questions also included an “other” option where the participant
could write in their answer. Since participants were able to write in their answer if it was not
listed in the given options, the survey should have been answered in accordance to the
participant’s true answer. The participants should have never been in a situation where their
answer to the question was not an option. To view the questions asked in the survey, refer to
Appendix B.
Participants
This research does not have a specific requirement as to who can and cannot participate in the
survey other than the fact that participants must be at least 18 years of age or older. The survey
accommodates for participants of all genders, ages, and financial standings. In order to get an
accurate representation of the consumer shopping behaviors among participants, at least 50
responses to the survey will be needed.
Survey Distribution
Before this survey was distributed to participants, it was distributed to professors with expertise
in supply chain management for review. These professors are part of the Project and Supply
Chain Management department in the Sam and Irene Black School of Business at Penn State
Behrend and they have many years of research experience. In each review, multiple suggestions
and comments were provided on the content and structure of the survey. Most suggestions given
were in regards to clarification needed on survey questions and answer options. After each
review, revisions were made to the survey and the updated survey was redistributed to all three
professors once again. The review process served as an important step in the survey development
process by helping to prevent confusion in the final version of the survey to be distributed.
34 The survey was shared with three Penn State Behrend professors to distribute to their students.
The population of focus for this research has been narrowed down to be students at Penn State
Behrend over the age of 18 which includes freshmen through seniors. Survey distribution was
completed through Penn State Webmail, an email interface that is only accessed by students,
faculty, and staff of The Pennsylvania State University and The Pennsylvania State University
branch campuses. To distribute the survey, a detailed email was written to explain the research
topic and the importance of the survey for the completion of this honors thesis. Included in the
email was a direct link to the survey that took the participant to the survey stored in Qualtrics.
Refer to Appendix C to view the email sent for survey distribution.
The Consumer Shopping Behavior and Omnichannel survey was opened on Monday, October
10, 2016 and closed on Monday, October 24, 2016. This gave students two weeks to complete
the survey. Throughout the two-week period, the survey distributors gave the students both
verbal and written email reminders to complete the survey. The survey was distributed to a total
of 288 students. Of the 288 students, 127 students completed the survey. The overall response
rate for this survey was 44%.
35
Chapter 6
Discussion of Results
This survey was created to generate the data needed to answer the posed research questions (see
Chapter 4). There were twenty-seven questions asked in the survey which can be found in
Appendix B. The results of the survey have been analyzed and are organized into four sections
throughout this chapter. The sections include consumer demographics, consumer shopping path,
consumer expectations of corporations, and consumer shopping behaviors.
Consumer Demographics
To gain an understanding of the consumers who participated in the survey, data was collected to
determine the generation the consumer belongs to, their gender, job status, and relative financial
position. The survey results show that the majority of the consumers who took the survey were
males (68%) belonged to the Centennial (born after 1995) and Millennial (born between 1981-
1995) generations. The breakdown of the results for the generations can be found in Figure 4.
36
Figure 4. Consumer Generations
Next, the consumers were asked about their job status, current payments, and discretionary
income. The purpose of asking questions in regards to these topics is to gain a stronger
understanding of the financial position of the consumers. Based on the consumers’ proposed
financial standings, the data was analyzed to find correlations in the consumer shopping
behaviors. Most consumers claimed to have either a part-time job (51%) or no job at all (40%).
The most common expenses for the consumers consisted primarily of food, tuition/school
supplies, housing, and transportation. Discretionary income can be defined as disposable income
that is left over after all necessary payments and taxes have been taken out. The majority of the
consumers had a monthly disposable income of $50-$100. Given that the survey population
consisted primarily of a student population with high expenses and little time to work, it is not
surprising to find that they had a small discretionary income.
37
Consumer Shopping Path
Since the omnichannel supply chain structure focuses on offering a seamless shopping
experience across all retail channels, questions were developed in the survey to explore the
consumer shopping path. Through analyzing the consumer shopping path, the most frequently
visited channels can be identified. This gives corporations an idea of what channels they should
invest in frequently to maintain a smooth shopping experience and what channels corporations
should focus marketing efforts on to inform customers of the least visited channels. The channels
that consumer were given to choose from include in-store, online, mobile app, kiosk, and other.
Only one respondent chose the option other and wrote in their answer. The written in response
for other option was an online auction such as eBay.
The survey respondents were also given a definition for each of the retail channels prior to
answering the questions regarding the path they take when shopping for the given products. This
helped to provide clarity and make sure that all survey respondents were thinking along the same
lines for the channel options that were provided. Table 5 shares the definitions that were
presented in the survey.
38
Table 5. Retail Channel Definitions
The survey provided a list of products that are relevant to what students would be likely to
purchase given that the sample consisted primarily of students. The products explored include a
computer, furniture, clothing, shoes, sporting goods/fitness products, school supplies, and
bedding. The respondents were asked to group and rank the listed channels that they would use
along the way to purchase each of the given products.
The survey results show that consumers from all four generations prefer to initiate their overall
shopping in-store before interacting with the other channels. Each generation's responses to the
consumer shopping path questions are shown below. To keep the data in alignment, the graphs
show the number of consumers that would initiate their shopping experience in each of the given
channels. The total consumers for each generation varied. There were 4 Baby Boomers, 6
generation-X consumers, 45 Millennials, and 72 Centennials who completed this survey. Figure
39 5 shows the first channel that each Baby Boomer claims they would first interact with when they
are shopping for each of the given products.
Figure 5. Baby Boomer Initial Interaction Channel
When analyzing Figure 5, it can be concluded that the product the consumer is purchasing plays
a large role in where the consumer initiates their shopping. For instance, when shopping for a
computer, 50% of the Baby Boomers would start shopping in-store and 50% would start
shopping online. As for clothing, 75% of the consumers would start shopping for clothing online
before looking in store. Then, for bedding 100% of the consumers claim that they would initiate
their shopping in-store before going across any of the other retail channels. Therefore, even
though there were only a few Baby Boomers who completed the survey, they have made it clear
that the shopping path they take depends primarily on what the type of product they are looking
to purchase.
40 Next, the data for the Generation X consumers was analyzed to determine the shopping paths
that this generation tends to take. The responses shown in Figure 6 show that this generation
typically starts their shopping using either the in-store or online retail channel. When considering
purchasing a computer, sporting goods/fitness products, and bedding, 50% of the respondents
would start shopping in-store and 50% online. For products that are worn such as clothing and
shoes, 67% of consumers claim that they would want to look in-store first. This finding supports
the data displayed in Table 6, 7, and 8 which claim that at least 50% of Generation X wants to
see, touch, and demo the products before purchase with an exception of sports equipment/fitness
products and school supplies. In addition, this generation wants to look in-store for furniture
before shopping on any other retail channels. Furniture is generally a high ticket priced item that
is not replaced frequently which is why it is not surprising to see this generation along with the
others prefer to see the furniture in-store first.
41
Figure 6. Generation X Initial Interaction Channel
The results for the Millennial generation are shown in Figure 7. The primary channels used by
Millennials are also the in-store and online channels. However, a few consumers have also used
the mobile app as their initial start for shopping for shoes. The closest gap between the in-store
and online channel was found when consumers were shopping for a computer. 56% of the
Millennials claim that they would first look in-store for a computer while 44% would first look
online. The farthest gap would then be found in analyzing the initial channel visited when
shopping for furniture. 89% of Millennials would look for furniture first in-store, while 11%
would first look online.
42
Figure 7. Millennial Initial Interaction Channel
Lastly, the Centennial generation was analyzed and the results are shown in Figure 8. There were
72 Centennials that participated in the survey. The results show that these consumers would
much rather start their shopping for all the given products in-store. This data supports some of
the findings in research completed by other scholars on brick-and-mortar stores. Scholars such as
Fred Gilbert, an author from Performance Team (2016), has claimed that consumers are not
necessarily coming into the brick-and-mortar stores less frequently. Instead, these consumers are
just transacting less in them because they can easily purchase the products at their convenience
and possibly save money using another retail channel. The decreasing number of transactions
made in-store is what is leading to many brick-and-mortar store closings. Stores just cannot
afford to stay open to enable consumers to look at and demo their products without making a
purchase. However, the results in this survey are claiming how many consumers rely on the in-
43 store channel during their shopping path. Without the availability of brick-and-mortar stores,
consumers would be more likely to switch to a competitor who is still operating a store.
Figure 8. Centennial Initial Interaction Channel
Given the responses that were received to the survey question asking participants to rank the
importance of seeing, touching, and demoing the product in person before making a purchase, it
makes sense as to why most consumers would start their shopping path in-store. For instance, the
majority of the consumers claimed that they would need to see, touch, and demo a computer,
furniture, shoes, and bedding in-store before they would consider making a purchase either in-
store or over any of the other retail channels. A computer is a high priced item that consumers do
not buy often. In order to ensure that the consumer likes the computer and it will fit their needs,
they would want to interact with the computer in-store. As for furniture and bedding, the colors,
texture, and design could appear different when looking at the products on a screen. By seeing
these products in person, consumers can make an easier purchasing decision, especially with a
44 large ticket price item such as a piece of furniture. Finally, consumers claim that they would like
to see shoes in-store before purchasing them. Shoes run different in sizes between brands and
models which makes it hard for a consumer to determine if the shoes will fit, suit their needs, and
feel comfortable enough. By seeing, touching, and demoing these products, consumers are far
less likely to return the items than those consumers who were only able to view the items on a
screen. Table 6 shows the number of consumers in each generation that would want to see the
given set of products in person before making a purchase decision.
Table 6. Importance of Seeing the Product in Person Before Purchase
According to Table 6, at least 50% of consumers in each generation want to see the computer
and bedding they are interested in before making a purchase. As for furniture, 75% or more of all
consumers across the generations claim that seeing furniture in person is always important to
them in the purchase decision making process. Generation X, Millennials, and Centennials also
find it important to be able to see clothing and shoes. As for the sports equipment/fitness
45 products and school supplies, the results were varied among four levels of importance to see the
products.
Next, Table 7 shows the results for the importance of being able to touch each of the given
products prior to purchase. It appears that the results are extremely similar to those found in
Table 6 which shows the importance of seeing the product. This means that consumers do not
only want to be able to see the product through a showcase, but they always want to be able to
touch and hold the products that they are considering to purchase. Therefore, the consumers who
participated in this survey appear to find it important to use many of their senses when they shop.
Table 7. Importance of Touching the Product Before Purchase
Lastly, Table 8 displays the results for how important demoing each product is before making a
purchase. Consumers from all four generations with the exception of the Baby Boomers claim
that it is always important to be able to demo a computer and furniture before making a purchase.
46 These are most often high ticket priced items and so it makes sense why consumers would want
to make sure the products are a good fit for their needs. Surprisingly less than 50% of consumers
across all the generations studied with one exception did not find it necessary to demo/try-on
clothing or shoes before purchase. 58% of Centennials claimed it was important to try on shoes
before purchase. Before reviewing the survey results, one might have thought that more
consumers would find it important to try on clothing and shoes before making a purchase. Every
brand, style, and model often runs differently in size. However, the results could support the
reasoning behind why corporations are faced with a growing number of returns. Consumers seem
to be more than willing to make a purchase across any retail chain if they know there is an option
for them to make a return, but extremely costly for the corporation. Returns require inventory
updates, inspections, restocking, and hold costs just to name a few both costly and lengthy
processes.
47
Table 8. Importance of Demoing the Product Before Purchase
Consumers were also asked to rank any channels that they would not interact with along their
shopping path. The channel that the majority of consumers claimed they would not engage with
was split between the mobile app and the kiosk. As it was explained in the survey, a kiosk is a
computer or booth that consumers can access in shopping centers to look for and/or buy
products. For the purposes of this research, participants were asked to only consider the
computer version of a kiosk. The primary retail channel that Baby Boomers claim they are not
interested in using is the mobile app. Over 75% of the Baby Boomer participants have also
claimed they would not use the mobile app. As for Generation X, there were a few three way
splits for the primary channel that would not be used by each of the consumers for the given
products. When shopping for furniture and school supplies 33% of the consumers in Generation
X would not shop online, on the mobile app, or kiosk. For the other products, this generation
claimed that they would not consider using the kiosk when searching for products or making a
48 purchase. Next, most of the Millennials and Centennials would choose to not use the kiosk and
mobile app during their shopping.
Given the limited number of kiosks present in shopping centers and the chance that a consumer
might have to wait their turn to use the kiosk, it is not surprising to find that the majority of
consumers would not consider using a kiosk throughout their shopping path. The Millennials and
Centennials who were the majority of the participants in this survey have been raised in a fast
paced environment. These consumers find convenience to be important and the kiosk is not one
of the most convenient retail channels for them which matches the survey results.
The second channel that most customers do not use is the mobile app. There are many reasons
why consumers do not consider using the mobile app for shopping. The mobile app requires time
to download, space to store the app, and data or wifi to download the app. If the consumer does
not have a lot of space on their smartphone or has limited data/wifi access then this could prevent
them from being able to download a store’s mobile app. Another reason why consumers might
turn away from shopping on a mobile app is due to the setup of the mobile app and the limited
functions available. The mobile app is not always user friendly when it comes to browsing the
store inventory and trying to filter a search. This can make the mobile app shopping experience
inconvenient and frustrating. Also, retailers are limited to the information that they can provide
on the products they are selling on the mobile app, making it more difficult for consumers to
determine if the product is what they are looking for. Table 9 shows the channels that the
consumers have claimed they would not use when shopping for the given products.
49
Table 9. The #1 Ranked Retail Channels Not Used by Consumers
After asking consumers about the path that they would take to shop for the given list of products,
they were asked a series of questions in regards to their shopping action plan. By assessing
consumers’ shopping plans, corporations can work on improving the features that they offer
customers in their retail channels. To determine some of the steps the consumer would take, they
were given a specific scenario as follows: “Suppose you are in the market to buy a laptop. The
first place you find the laptop during your search is in-store (online, mobile app, kiosk, other).
Assuming you do not have an extremely urgent need, what are your next steps?”
50 The survey has found that 88% of consumers research the laptop for reviews before making a
purchase decision. If corporations start providing convenient product reviews in their retail
channels, then consumers will not have to look elsewhere. In addition, 85% of consumers claim
that they will price shop across the various retail channels before they make their purchasing
decision. Corporations can help keep shoppers from looking further by providing the prices that
other competitors are charging for the same product in their retail channels. The omnichannel
structure focuses on making the shopping process seamless across all channels and adding these
features can improve the convenience and ease of shopping for consumers. Figure 9 further
emphasizes what steps a consumer takes next after finding the laptop they are looking for in-
store.
Figure 9. Next Steps After Finding the Laptop In-store
Consumer Expectations of Corporations
Many scholarly articles discussing how corporations can successfully implement the
omnichannel retail structure mention that understanding the perspective of consumers is the
51 foundation to success. To further understand the consumer’s perspective and expectations of
corporations, the survey asked questions about local and national retail chain stores. Consumers
were given six different stores and were asked to share their expectations in transacting with
each of the stores. Table 10 lists the stores and summarizes the results. The numbers found in the
table represent the number of survey participants that expect each features to be offered by the
given stores. The colored highlights represent the top three expectations that consumers have for
each of the given companies.
Table 10. Consumer Expectations
52 The results show that the majority of consumers who took this survey expect companies to have
brick-and-mortar stores for them to shop at. Therefore, given that the majority of the consumers
start their shopping in-store, it is essential for companies to have physical store locations for
consumers to see, touch, and try on or demo their products. The second expectation that most
consumers had was the ability to purchase products from the stores’ online channels. The online
channel would give consumers the convenience of shopping from home or on the go. They
would also be able to avoid the crowds and waiting time in line to make a purchase. Then, the
third highest expectation of consumers is to have the ability to purchase the products online and
have them ready for pick-up in-store. This option would save consumers time, given that they
would not have to navigate around the store to find the products they would like to purchase.
Consumers can easily navigate on the store’s website to determine what products are available.
However, there could be a few drawbacks to this option. If the store does not have an inventory
management system that updates in real-time, consumers might be able to place an order online
and later find out that the order cannot be filled. Also, if the orders are not picked in a timely
manner, the stock could run out from in-store shoppers purchasing the same products. This could
lead to inconvenience and frustration to the consumer. Given that these are the top three
expectations for consumers across most of the given stores, it would be in the best interest of the
stores to do everything possible to give consumers a seamless shopping experience across the in-
store and online channels.
Consumers had slightly different expectations for the local and national grocery chain stores. For
instance, consumers claimed that they would expect the deals to be the same across all channels
that the grocery stores operate. Given the nature of the grocery store industry, it is not surprising
to see that consumers would expect consistency across all channels a grocery store chooses to
53 operate. The prices of grocery items are relatively stable. Prices do not vary much over time or
by competitors in the industry. On the contrary, very few consumers expected grocery stores to
offer the ability to shop online or through a mobile app. There are a few reasons why consumers
would not expect grocery stores to offer these channels. Consumers like to see the food they are
purchasing before they buy it. Consumers like to read labels, check dates, and make sure the
packaging has not been tampered with before purchasing the products. They would not be able to
do this when ordering online or through a mobile app. Also, grocery items can be very fragile
(e.g., bread, tomatoes, bananas) and temperature sensitive (e.g., ice cream, milk, raw meat)
which would make it difficult for the orders to be packaged and delivered in time without
damaging the products or having them spoil. For the grocery store, the cost to fulfill these orders
would be high given that they would require special packaging and refrigeration to keep the
products at their proper temperature.
Overall, consumers claim to have fewer expectations for local stores than they do for the national
retail chain stores. Based on the results, consumers appear to understand that mom-and-pop
shops do not always have the resources or ability to implement the newest technologies that
would be needed to efficiently and cost effectively offer all of the given options to their
customers. On the contrary, consumers expect the national office supply and clothing stores to
provide more features and abilities than the national grocery stores. For the national office
supply and clothing stores, the majority of consumers expect to have the ability to buy in-store,
online, and over the mobile app. In addition, many consumers expect the national chain stores to
offer additional features to them such as the ability buy online and pick up in-store, return online
purchases either in-store or online, and the ability to buy products at another location and return
them to their home location. Lastly, consumers expect the deals to be the same across all
54 channels and for there to be free shipping to either home or the local store. Given the above
expectations, it appears that consumers are demanding national office supply and clothing chain
stores to implement an omnichannel retail structure.
Consumer Shopping Behaviors
To gain an understanding of the consumer shopping behaviors, the survey asked general
consumer shopping behavior questions along with specific questions in regards to a variety of
products. Consumers were asked to select all channels (in-store, online, mobile app, and kiosk)
that they would interact with during their purchasing decision process for buying the given
products (computer, furniture, clothing, shoes, sporting goods/fitness products, school supplies,
and bedding). The results show that consumers are demanding the omnichannel retail structure
capabilities. While most of the consumers shop around in-store, many of them also relied on the
online, mobile app, and kiosk channels during their decision making process. For instance, when
analyzing the channels used in the decision making process for purchasing a computer, 95% of
consumers would look in-store, 70% online, 17% on the mobile app, and 6% on the kiosk.
Therefore, most consumers are using multiple channels when making a decision on a product to
purchase. This means that consumers are demanding companies across multiple industries to
implement the omnichannel supply chain structure to fit their shopping needs. Figure 10 shows a
detailed view of the number of consumers that would use each of the retail channels throughout
their purchase decision making process. Some consumers will only use one channel while others
will use several channels throughout their purchase decision making process.
55
Figure 10. Consumer Channel Interaction in Purchase Decision Making Process
Consumers were also asked what channel they preferred to make their final purchase for each of
the products. The results shown in Table 11 were organized by generation to determine if there is
a difference in shopping preference across the generations. With the exception of the Baby
Boomers, an overwhelming majority of consumers across the generations claim that they prefer
to purchase the given set of products in-store. The Baby Boomers were split 50% in-store and
50% online for all products except for bedding and furniture where 75% of them would want to
purchase these products in-store. The product with the highest in-store preference was furniture.
75% of Baby Boomers, 100% of Generation X consumers, 98% of Millennials, and 96% of
Centennials would prefer to purchase furniture in-store. As for clothing, the majority of
consumers have claimed that they would like to purchase clothing in-store which makes sense
given that these consumers also claimed that it was important to see, touch, and try on clothing
56 in-store before purchase. Therefore, given that most of the consumers started their shopping path
in-store and claimed it was important to see the products in-store before making a purchase
decision, it is not surprising that they would also prefer to purchase the products in-store. When a
consumer purchases a product in-store, he/she can take the product home the same day. Whereas,
if the consumer orders products online, over the mobile app, or on the kiosk, he/she would have
to wait for the order to be processed, filled, shipped, and delivered. In today’s fast paced world,
time is extremely limited and efficiency is very important. Brick-and-mortar stores can provide
consumers with a variety of products that are convenient to fit their needs. Table 11 shows the
breakdown of the consumers’ preferred retail channel for purchasing each of the products.
57
Table 11. Consumer Purchasing Preferences
After asking consumers which retail channel they prefer to purchase each of the given products,
they were asked a series of questions to determine their loyalty to the preferences they provided.
To assess the loyalty a consumer has for purchasing a given product in the channel they prefer,
the consumers were given the following scenario. “Suppose you are considering buying a
product that you would typically prefer to buy in-store. The price of the product in-store is $50.
58 Assuming you don't have an extremely urgent need, under which of the following conditions
would you buy online or buy in-store?” Figure 11 represents the threshold of when consumers
would decide to switch from their preferred purchasing channel to the online channel where they
can receive a discount on the $50 product.
Figure 11. Purchasing Channel for $50 Product
When the product was available for $0.50 less online, 91% of consumers claim they would still
buy the product in-store. If the product is $0.50-$2 less online, than 88% of consumers would
still make their purchase in-store. The point of equilibrium where many consumers would choose
to purchase the product online due to cost savings falls in between the $2-$5 and $5-$10 price
thresholds. When the product price is between $2-$5 less online, 36% of consumers would
purchase the product online and 64% would still purchase the product in-store. Then, when the
price is $5-$10 less online, 69% of consumers would purchase the product online and only 31%
would still purchase the product in-store. Therefore, the point at which 50% of consumers switch
59 from buying in-store to buying online is when they can save about $7. This means that
consumers are relatively sensitive to changes to price and the majority of consumers will remain
loyal to their in-store preference until they are given a 14% discount on a $50 product.
Next, the consumers were asked to consider the same situation only this time with a product that
costs $500 as opposed to $50. “Suppose you are considering buying a product that you would
typically prefer to buy in-store. The price of the product in-store is $500. Assuming you don't
have an extremely urgent need, under which of the following conditions would you buy online or
buy in-store?” Figure 12 represents the threshold of when consumers would decide to switch
from their preferred purchasing channel to the online channel where they can receive a discount
on the $500 product.
Figure 12. Purchasing Channel for $500 Product
60 When consumers can find the $500 product online for $3 less than in-store, 86% of consumers
will still purchase the product in-store. Not until the product is about $13-$14 less online will
half of the consumers switch over from their channel of preference to purchase the product
online. As the price becomes lower online, more consumers claim they would purchase the
product online. For instance, once the product price is more than $30 less online, 92% of the
consumers would switch over to the online channel to make their purchase.
Given that the majority of the survey respondents were students who have a relatively low
income, it makes sense that they are price sensitive. When the respondents were asked if they
have a job, most of them either had a part-time job or no job at all. Most had to pay for their
housing, meals, tuition, and transportation costs on the little to no income they were receiving,
often leaving a very small discretionary monthly income of $50-100. With such a small
discretionary income, it appears that these consumers try to save money wherever they can. This
goes to show that the Millennials and Centennials especially are not loyal to a particular channel
when it comes to cost savings.
61
Chapter 7
Conclusion
This study has focused on shopping behaviors of consumers from different generations in
relation to the omnichannel supply chain structure. To analyze the omnichannel structure and
how consumers play a role, exploratory research was completed to gain a deeper understanding
of the current findings and a survey was created to fill in the research gaps. The survey responses
primarily came from students born in the Millennial and Centennials generations. These
consumers have a strong in-store shopping preference, but are willing to transact across other
channels if they can save some money. With an average monthly discretionary income of $50-
$100, these consumers are not always loyal to their preferred in-store shopping channel.
However, based on consumer shopping path data collected in the survey, consumers still want to
at least see, touch, and demo products no matter the cost before completing a transaction in-store
or over another channel. The importance of experiencing the product in person did not become
more important to consumers on just the high ticket price items, but it was important on all
products included in the survey except for school supplies.
With the Millennial and Centennial generations growing up with advanced technology, it is
surprising to find that at least 68% of them still claim the in-store channel to be their preferred
retail channel for all of the products provided in this research. Given that convenience is
extremely important for these two generations, one would think that these consumers would
prefer to shop online or on the mobile app where they can shop at anytime from anywhere. These
62 consumers expect most retailers to offer the ability to shop in-store or online and to maintain
consistency in the deals across the retail channels.
Overall, it can be found that consumers are demanding the capabilities and services that the
omnichannel structure can help a corporation to provide. By understanding who the consumers
are and what shopping paths they typically take can help corporations determine where they need
to focus their time and investments. Having this data can enable corporations to make more
informed business decisions and get the most out of their scarce resources.
This paper studied the consumer shopping behaviors from a generational standpoint which
current research was lacking. A few of the contributions particularly made in this paper include,
gathering data on consumer shopping paths by using a set of products that were relevant to the
expected survey participants, gaining a deeper understanding of the expectations a consumer has
for corporations of different sizes and in various industries, gathering consumer shopping
preferences to be able to compare to the consumers actions, and determining what steps a
consumer takes after finding a product of interest before completing a transaction. Through
gathering data to give further insights on these areas of study, corporations can gain a stronger
understanding of exactly what consumers are doing and demanding. Without knowing what
consumers are doing behind the scene, corporations might think it is economical to shut down a
particular retail channel that they believe is not being visited when in fact consumers are heavily
relying on the channel throughout their purchase making decision process.
In addition, there are many ways that this research can be further developed. One is by surveying
more consumers from the Greatest Generation, Baby Boomer, and Generation X populations. It
63 was hard to draw conclusions on these generations’ shopping behaviors given their lack of
participation in the survey. By expanding the survey population, additional trends and linkages
can be identified across the generations. Understanding each generation’s needs, trends, and
thought process throughout their shopping experience can help corporations to cater specifically
to each generation. In addition, the survey could be updated to present a wider product list that is
relevant to all generations or create a separate product list for each of the generations. The
product list could even be divided by gender making it even easier for the participant to relate to.
This would enable the research to not only be focused on generation findings, but also
differences in shopping behaviors between genders.
Further research could also be done on the consumers’ financial position. Consumer finances
were only briefly touched on in this research, but collecting additional data on finances could
answer questions related to why consumers are transacting in the ways that they are. While
completing the literature review, one scholar claimed that consumers are more interested in
spending money on experiences than they are things. However, there wasn’t a lot of data to
support this claim. It would be valuable to ask the survey participants about what they are willing
to spend their money on. For instance, some consumers with a relatively strong financials might
choose to shop clearance and spend their money on family vacations or other hobbies that they
enjoy. Whereas, consumers with a tight budget might find their appearance important and are
willing to sacrifice other things just so they can have the best clothing and accessories. Research
is lacking this detailed data which is extremely important for corporations to be aware of. For
instance, it might be helpful to ask consumers, “Are you willing to pay full price for products? or
Are you always looking out for coupons and deals or shopping clearance?” Having this data can
64 help to determine which consumers are willing to spend the extra time to shop around to save
money and which consumers are just about getting what they need and leaving. When
corporations are aware of their consumers’ shopping habits, they can more efficiently use their
resources to cater to the needs and demands of consumers. Therefore, by expanding the
population sample, gaining a deeper understanding of the consumer financial positions, and
determining the consumers’ willingness to spend money on a given set of products, corporations
can make educated business decisions to improve their efficiency and potential success of their
investments.
79
Appendix C
Good Morning,
My name is Chelsea Czerwinski and I am a senior majoring in Project and Supply Chain
Management at Penn State Behrend. I am currently conducting research on consumer shopping
behaviors in relation to the omnichannel supply chain strategy for my Schreyer’s Honors Thesis.
In order to answer my research questions, I have formulated a short, ten to fifteen-minute survey.
To access my survey please follow the link below:
Consumer Shopping Behavior and Omnichannel Retail Strategy Survey
Once you have completed all of the questions, your answers will automatically be saved within
Qualtrics (a web-based survey tool), without using identifiers. All information will be kept
confidential and it will only be evaluated for the use of this thesis. This survey will close on
Monday, October 24th.
Participation is voluntary, but I would greatly appreciate your help by participating in this
research.
Thank you in advance!
Best Regards,
Chelsea Czerwinski
Penn State Erie, The Behrend College
Project & Supply Chain Management Major
President, National Society of Leadership and Success
80
BIBLIOGRAPHY
Bell, David, Santiago Gallino, and Antonio Moreno. “How to Win in an Omnichannel World.”
MIT Sloan Management Review. Massachusetts Institute of Technology, 2014. Web. 16
Mar 2016.
Bovensiepen, Gerd, Benedikt Schmaus, and Birger Maekelburger. “The 2015 Global
Omnichannel Retail Index: The future of shopping has arrived.” PwC. PwC Strategy&,
2015.
Brickey, Chris. “Achieving Omni-channel Nirvana.” Wilson Perumal & Company Inc.
Brickey, 2016. Web. 08 June 2016.
Erikson, David. “Omnichannel Marketing Benefits.” e-Strategy Trends, 2013. Web. 12 Feb
2016.
Everard, Matt. “5 International Startups Shaking up Crowdsourced Shipping.” Tech.Co. Tech
Startup News, Events & Resources, 8 May 2015. Web. 10 Oct 2016.
Giannopoulos, Nicole. “Home Depot Bridges Gap Between Online and In-Store.” Retail Info
Systems News. EnsembleIQ, 2016. Web. 20 Oct 2016.
Gilbert, Fred. “Brick and Mortar No More?” Performance Team. Blog, 2016. Web. 4 Nov
2016.
“Global Retail & Consumer Goods CEO Survey: The Omni-Channel Fulfillment Imperative.”
JDA Software. JDA, 2014. Web. 12 Jan 2016.
Hoffman, Tom, “Omnichannel: A Quasi State of Readiness.” TeleTech, 2016. Web. 10 July
2016.
“How Omni-channel challenges impact costs, revenues, and responsibilities.” Peerless Media
LLC. Modern Materials Handling, 2015. Web. 14 Sept 2016.
Hübner, Alexander, Andreas Holzapfel, and Hinrich Kuhn. “Distribution systems in omni-
channel retailing.” Business Research (2016) 9: 255-296.
Iaquinto, Kevin. “Retailers Investing Heavily in Omni-Channel Selling-But Where Are the
Profits?” JDA Software Group Inc. JDA, 2015. Web. 11 Feb 2016.
81 Kelly, Ryan. “Three Returns Strategies for Improving Omni-channel Retail.” Thomas
Publishing Company. Inbound Logistics, 2016. Web. 4 Nov 2016.
Krueger, Julie, “Omni-Channel Shoppers: An Emerging Retail Reality.” Google. Think with
Google, March 2015. Web. 19 Jan 2016.
Loy, Beth, PhD. “Multichannel Retailing: Definition, Benefits & Challenges.” Study.com.
2015. Web. 21 Jan 2015.
Newman, Daniel. “Research Shows Millennials Don't Respond To Ads.” Forbes. Forbes,
2015. Web. 25 Oct 2016.
Noble, Andrew, James Anderson and Sam Thakarar. “Three Rules for Building the Modern
Retail Organization.” Bain & Company. Insights, 2015. Web. 13 Apr 2016.
“Omnichannel Retail A Deloitte Point of View.” Deloitte AB. Deloitte, 2015. Web. 21 Jan
2016.
Piotrowicz, Wojciech and Richard, Cuthbertson. “Introduction to the Special Issue
Information Technology in Retail: Toward Omnichannel Retailing.” International
Journal of Electronic Commerce 18 (2014): 5. Taylor Francis Online. 14 Apr 2016.
Phillips, John, David Jones, and Andrew Caveney. “Re-engineering the supply chain for the
omni-channel of tomorrow.” The Consumer Goods Forum. Global consumer goods
and retail omni-channel supply chain survey, 2015. Web. 28 Jan 2016.
Savenije, Davide. “NRF 2016: Why brick-and-mortar retail faces a shakeout.” Industry Dive.
Retail Dive, 2016. Web. 4 Nov 2016.
Sobotta, Peter. “Finding a ‘Theory of Everything’ for Retail.” Entrepreneur Media, Inc.
Entrepreneur, 2014. Web. 28 Oct 2016.
Sterling, Greg. “Study: 77 Percent Of Smartphone-Driven Retail Purchases Happen In
Stores.” Third Door Media Inc. Marketing Land, 2013.Web. 14 Sept 2016.
“The M-Factor for Today’s Omni-Channel Shoppers.” Facebook IQ. Wordpress, 2016. Web. 1
Nov 2016.
“The Omnichannel Opportunity, Unlocking the Power of the Connected Customer.” Deloitte
LLP. Deloitte, 2014. Web. 12 Jan 2016.
Vahie, Sam and Franciso Soto. “Can 97% of retailers be wrong about omni-channel
commerce?” Wilson Perumal & Company Inc. Vahie, 2015. Web. 08 June 2016.
Verhoef, Peter, P.K. Kannan, and J. Jeffrey Inman. “From Multi-Channel Retailing to Omni-
82 Channel Retailing Introduction to the Special Issue on Multi-Channel Retailing.”
Journal of Retailing 91 (2, 2015) 174-181. Web. 16 Apr 2016.
Weinand, Dave. “Do the Costs of Omnichannel Store Initiatives Outweigh the Benefits?”
Nasdaq, Inc. Market Wired, 2015. Web. 17 Feb 2016.
ACADEMIC VITA
Chelsea A. Czerwinski [email protected]
EDUCATION
The Pennsylvania State University- Erie, The Behrend College Graduation- December 2016
B.S. Project & Supply Chain Management
Economics (Minor)
SAP/Enterprise Resource Planning (Certificate) Dean’s List 2013-2016
Schreyer Honors College Scholar Ranked #1 in Major
RELEVANT WORK EXPERIENCE
Global Regulatory Compliance SAP Intern, LORD Corporation
May 2016-Present
Satisfied customer and departmental requests through data extraction in the EH&S module of
SAP
Updated rules in SAP to revise current data linked to an external data base
Regenerated and distributed safety data sheets in multiple languages to locations across the world
Membership Service/Operations (Part-time), Widget Financial August 2015-May 2016
Managed deceased member accounts; dormant/escheated accounts
Provided support to members through completing telephone teller transactions and courtesy calls
IT Intern, Widget Financial June 2015-August 2015
Created and updated departmental reports in MS SQL Report Builder
Assisted co-workers at all 5 Widget Financial branches with IT issues when they called the IT
helpline
Generated tickets to explain the IT issues/requests and to keep them in order of importance
LEADERSHIP
National Society of Leadership and Success
Advisory Council Member, National Board Spring 2016-Present
President, Penn State Behrend Chapter Spring 2015- Present
Secretary, Penn State Behrend Chapter Fall 2014- Spring
2015
Beta Gamma Sigma Spring 2016-Present
Highest recognition for business students accredited by AACSB
Chi Alpha Sigma (National College Athlete Honors Society) Spring 2016-Present
Omicron Delta Kappa (Service Honors Society) Spring 2015-Present
Lambda Sigma (Honors Society) Fall 2014-Spring 2015
Community Service Chair
Penn State Behrend Women’s Tennis Team Fall 2013-Present
Captain, All Conference and All Academic Player; AMCC Champion 2013, 2015