Written by: Tanya Gergova
Source: http://texasluxury.com/luxury-shopping-in-dallas/
ABSTRACT
This article aims to examine the role of the internet technologies and the digitalization on the consumers’ shopping behavior. The focus is on how the IT revolution influences the consumers’ choice for online or offline shopping. It is believed that the driving forces could be divided into two parts – the economic and emotional ones. The traditional brick-and-mortar shopping is related to a specific shopping experience. However, according to some researchers consumers who choose to shop online are not seeking that particular shopping experience (Hu, 2015). Furthermore, it is considered cheaper to buy online. It is also important to take into consideration the significance of the product categories. The research is limited to the luxury goods and define the influence of the IT on this branch.
INTRODUCTION
The last decades the interest in the consumer behavior is growing with the speed the IT is developing. Many researchers are investigating the consumer activity and the driving forces behind consumers’ choice. With the IT revolution, some authors put an emphasis on online buying (Dittmar et al., 2004; Garbarino and Strahilevitz, 2004) while others are looking for the impulse in the buying behavior (Bayley and Nancarrow, 1998; Hausman, 2000). The forces could be divided into two major parts – the economic drivers and emotional ones. It is considered cheaper to buy online. However, for some customers, the mall is a destination for other activities rather that shopping. The shopping is an emotional experience and a unique activity that has nothing to do with surfing in the net.
It is believed that consumers who dislike or are neutral to the shopping activities are fond of the convenience and of the economic shopping. They approach the retail store at a time- or money-saving point of view (Bellenger and Korgaonkar, 1980), because shopping is not an experience rather than a hard work (Babin et al., 1994; Miller, 1998). However, for the other major group of customers, the in-store shopping is considered as an enjoyable leisure time activity. It is connected with pleasure and funny moments (Nicholls et al., 2002). Among the everyday activities connected with the home, work and/or school, the malls are considered as a favorite place for all ages (Guiry, 1999).
To broad the picture, digitalization influences our everyday life. Contemporary consumer is an office worker using a desktop or laptop computer, even while commuting, dining or shopping relies on the smartphone or a tablet. With the globalization and unlimited access to information, branding becomes even more important. Marketing specialists and consultants attempt to distinguish their products from those of their global competitors.
All these aspects are viewed through the prism of the luxury goods. The consumers of luxury goods are a specific target group, to which general conclusions about buying behavior are not valid. For example, for this segment are not applicable statements like: low prices stimulate the demand, and consumers shop for functional use. However, luxury companies are facing the same challenges like others – severe competition, unlimited access to information and constantly changing consumers’ preferences.
REVIEW OF LITERATURE
The research is based on authors who investigate the two groups of customers. Holbrook and Hirschman (1982) have a theory that fantasies, feelings, and fun define the experiential consumption. For Tauber (1995) visiting the malls is preferred as bringing social interaction and enjoyment. The author also uses five categories of the driving forces of the consumers’ choice. He believes that it is a social experience outside the home (1), used as a communication with others (2), who most probably have similar interests. The individual is considered as belonging to a certain group (3), having the same status and authority (4). Last but not least is the pleasure of bargaining (5). For Dholakia et al. (2005) the uniqueness of the brick-and-mortar shopping is in the ability for one to inspect goods. Some customers according Zhang et al. (2010) still go to the shopping malls because they prefer to pay in cash and to have their goods immediately.
Some of these factors for the channel choice have been identified as crucial by Internet sellers. Many online retailers already offer the service of returning/changing the goods. They also have tried to copy the features of the community shopping experience by using message boards and live chats for a greater social interactions and entertainment. The customers have the impression that are part of a group and can communicate with each other (Reardon and McCorkle, 2002). Going deeper into this phenomenon, it could be linked to the needs in Maslow’s hierarchy (1954) – belonging and esteem, which again proves that the shopping is an emotional experience.
On the other hand, online shopping has its fans as well. Researchers like Palmer (1997), and Degeratu et al. (2000) agree that people with high level of price sensitivity will continue to do the shopping online. According to Kukar-Kinney et al, (2009) customers feel freer sitting behind the screen. He believes that “the Internet offers the opportunity to buy frequently, at any time, and unobserved” (p. 298). For those with compulsive buying habits, offline shopping is not an exceptional experience.
Online communications are a part of the online shopping. The dramatic growth of social media has impacted business processes and models in a way that completely changed the rules of the game. Since the goods cannot be touched, smelled or experienced, consumers seek other means to substitute the lack of this type of information. Before making a purchase online, people search for comments from other consumers and a feedback from experienced users. Once they gather enough information, either pro- or contra-, they are willing to multiply it, no matter if it is proven empirically by them or not. (Labrecque et al., 2013)
RESULTS AND FINDINGS
Today, customers are moving from the multi-channel to the omnichannel marketing. They can decide for themselves which way of shopping suits them best. However, whether it is the old traditional brick-and-mortar shopping or from catalogs, it is still influenced by the development of the IT and the digitalization. According to the data, the increase of internet sales in 2013 is almost double compared to 2006 (Merrick, 2014). This includes also a large part of the offline sales which were influenced by an online research in advance.
Most customers recognize malls as a destination for their purchases. However, online retail sites have effectively reduced the mall traffic. This made it possible to distinguish two major consumer groups divided by their motives behind the decision-making process. We agree that consumers make trips to malls seeking entertainment and a sense of community. The most important value for them is the social interaction and a communal atmosphere. In order to strengthen the “shopping experience” marketers organize a wide range of activities in order to implement more experiential value for their customers, not only monetary. The uniqueness of the mall helps increase the share of purchases. It is believed that doing the shopping in the mall is an escape from the ordinary (Hu and Jasper, 2007).
One other aspect, contributing to the extraordinary experience, is the purchase of luxury goods. Nowadays, with the growing purchasing power and the hedonistic lifestyle luxury goods have become an important driver of the economic development. The category of luxury brands has been a frequent issue of research in the consumer literature (Maehle, Otnes C. and Supphellen, 2011, De Barnier, Falcy, and Valette-Florence, 2012; Kristensen, Gabrielsen, and Zaichkowsky, 2012; Debevec, Schewe, Madden, and Diamond, 2013). It is believed that luxury brands represent categories of exclusive, high-priced, and extravagant goods and services. And due to the fact, they are more likely to be purchased by upper-income individuals (Vickers and Renand, 2003; Phau and Teah, 2009). Famous and precious brands are believed to contribute to a better life of the consumers. They also refer to the top branded consumer products which are beyond the living needs of the ordinary people.
When it comes to luxury goods’ consumers, browsing the stores is fun and unique. However, it is proven empirically that expensive events may increase traffic but may not lead to the increase of mall shoppers’ spend. (Trocchia et al, 2015) For the luxury goods’ customers shopping is to make a statement, to show off their personality or to boost their self-esteem. According to psychologists, the purchases are made as a reward, to satisfy psychological needs or to make customers feel good. In that case, customers are not rational creatures making decisions. On the contrary, the driving forces that have an influence in this situation are most probably feelings, but also could be motivation, income, lifestyle, opinions, culture, personality etc.
Furthermore, luxury shoppers most probably would not buy expensive things online. They would always opt for the personalized customer service and unique shopping experience that mono-brand brick-and-mortar stores provide. But still, luxury brands are not sole players on the market. And the companies have taken into consideration the important role of the Internet in the purchasing decisions. In a recent research among luxury shoppers, they admit that around 40 percent of the offline purchases are influenced by online information. (Dauriz et al, 2014) They use different social networks for different reasons. For example, Twitter is mainly to learn about the product, the brand or to comment; on Facebook, they find information on promotions or discount. Blogs and forums are considered as an in-store experiences or specific products platform. There is no a golden rule, but the more social and stronger as a mobile presence the brand is, the better.
In addition, every new generation is more social savvy and grows up with the digital technologies. Even more, they are used to the fact that IT companies every year launch a new product – smaller and smarter. It is a natural habit when people need something first to search the net, to google information or use an application. Brands with easy-to-navigate sites optimized for mobile devices are more likely to drive more in-store traffic and thus more purchases. Companies with detailed, useful and informative apps usually stand out the competitors.
CONCLUSIONS
We are living in a digital era, but a decade ago few have suspected what influence it would have on our life. Now it can be admitted that every industry is affected. One out of seven persons on our planet is currently an active member of Facebook. And this is only one of the whole varieties of platforms for sharing, liking, commenting etc. Branding and marketing are not the same anymore. It was predicted that with the time the consumers will gain more power and will take the leading role in the consumer-firm relationship. (Levine et al. 2000; Shipman 2001; Deighton and Kornfeld 2009). With the digitalization the consumers have an unlimited access to information and thus influence the companies, the sales, and the whole marketplace. With mobile devices and the social media the single individual could create content and amplify his/her opinion across the globe to everyone willing to listen.
Although luxury and internet were considered as contradictory in many ways, the luxury goods sector is revolutionized as all other rapidly growing industries. Trends are in support of the fact that this change will continue in future as well. There is an empirical data showing the transition from the offline shopping to the online one. In order to be up-to-date to the modern world, the branch should consider strong media presence to ensure offline sales. The recommendation for the companies is not to ignore the digitalization and globalization as factors.
In addition, the customers are those who set the rules of the game. Many companies believe that they are experts in offline distribution which give them a competitive advantage in the online channels. However, success on the internet is based on completely different business model and strategies, on new competences. The customers value new variants of experience, long for exciting content and interactive community elements. If the luxury goods companies do not follow their requirements, they risk falling behind.
REFERENCES
Babin, B. J., Darden, W. R. and Griffin, M. (1994) Work and/or fun: measuring hedonic and utilitarian shopping value, Journal of Consumer Research, 20, pp. 644–656.
Bayley, G. and Nancarrow, C. (1998) Impulse purchasing: a qualitative exploration of the phenomenon, Qualitative Market Research: An International Journal, 1(2), pp. 99–114.
Bellenger, D. N. and Korgaonkar, P. K. (1980) Profiling the recreational shopper, Journal of Retailing, 56, pp. 77–91.
De Barnier, V., Falcy, S. and Valette-Florence P. (2012) Do consumers perceive three levels of luxury? A comparison of accessible, intermediate and inaccessible luxury brands. Journal of Brand Management 19, 623-636.
Debevec K., Schewe C., Madden T., and Diamond, W. (2013) Are today’s Millennials splintering into a new generational cohort? Maybe! Journal of Consumer Behavior 12(1), 20–31.
Dauriz, L., Remy, N. and Sandri, N (2014) Luxury shopping in the digital age, McKinsey and Company
Deighton, J., Kornfeld, L. (2009) Interactivity's Unanticipated Consequences for Marketers and Marketing, Journal of Interactive Marketing, 23, 1, 4–10.
Degeratu, A.M., Rangaswamy, A. and Wu, J. (2000). Consumer choice behavior in online and traditional supermarkets: the effects of brand name, price, and other search attributes. International Journal of Research in Marketing, 17(1), 55-78.
Dholakia, R.R., Zhao, M. and Dholakia, N. (2005) Multichannel retailing: a case study of early experiences. Journal of Interactive Marketing, 19(2), 63-74.
Dittmar, H., Long, K. and Meek, R. (2004) Buying on the internet: gender differences in online and conventional buying motivations, Sex Roles, 50(5–6), pp. 423–444.
Garbarino, E. and Strahilevitz, M. (2004) Gender differences in the perceived risk of buying online and the effects of receiving a site recommendation, Journal of Business Research, 57(7), pp. 768–775.
Guiry, M. (1999) The meaning and self-significance of recreational shopping. Doctoral dissertation presented to the Graduate School of the University of Florida.
Hausman, A. (2000) A multi-method investigation on consumer motivations in impulse buying behavior, Journal of Consumer Marketing, 17(5), pp. 403–419.
Holbrook, M.B. and Hirschman, E.C. (1982) The experiential aspects of consumption: consumer fantasies, feelings, and fun. Journal of Consumer Research, 9(2), 132-140.
Hu, H. and Jasper, C. R. (2007) Consumer Shopping Experience in the mall: conceptualization and measurement. Academy of Marketing Science Annual Conference, Florida, May 23-26
Hu, H. (2015) The impact of consumer shopping experience on consumer channel decision. Academy of Marketing Studies Journal, Volume 19, Number 1, 2015
Kristensen, T., Gabrielsen, G., and Zaichkowsky, J.L. (2012) How valuable is a well-crafted design and name brand?: Recognition and willingness to pay. Journal of Consumer Behavior 11 (1), 44–55.
Kukar-Kinney, M., Ridgway, N.M., and Monroe, K.B. (2009) The relationship between consumers’ tendencies to buy compulsively and their motivations to shop and buy on the Internet. Journal of Retailing, 85(3), 298-307.
Labrecque, L., Jonas vor dem Esche, Mathwick, C., Novak, T., and Hofacker, C. (2013) Consumer Power: Evolution in the Digital Age, Journal of Interactive Marketing, 27, 4, 257–69
Levine, R., Locke, C., Searls, D., and Weinberger, D. (2000), The Cluetrain Manifesto: The End of Business as Usual. New York: Perseus Books.
Maslow, A. H. (1954) Motivation and Personality. New York: Harper and Row.
Maehle N., Otnes C., and Supphellen M. (2011) Consumers’ perceptions of the dimensions of brand personality. Journal of Consumer Behavior 10, 290-303.
Merrick, A. (2014) Are Malls Over?, The New Yorker, Available Online: http://www.newyorker.com/business/currency/are-malls-over Accessed [2 Feb 2016]
Miller, D. (1998) A Theory of Shopping. New York: Cornell University Press.
Nicholls, J. A. F., Li, F., Kranendonk, C. J. and Roslow, S. (2002) The seven year itch? Mall shoppers across time, Journal of Consumer Marketing, 19(2), pp. 149–165.
Palmer, J.W. (1997) Electronic commerce in retailing: differences across retail formats. The Information Society: An International Journal, 13(1), 75-91.
Phau, I. and Teah, M. (2009) Devil wears (counterfeit) Prada: a study of antecedents and outcomes of attitudes towards counterfeits of luxury brands, Journal of Consumer Marketing, 26 (1), pp 15-27
Reardon, R. and McCorkle, D.E. (2002) A consumer model for channel switching behavior. Journal of Retail and Distribution Management, 30(4), 179-185.
Shipman, A. (2001) Privatized Production, Socialized Consumption? Old Producer Power Behind the New Consumer Sovereignty, Review of Social Economy, 59, 3, 331–52.
Tauber, E.M. (1995). Why do people shop? Marketing Management, 4(2), 58-60.
Trocchia, J.P., Saine, R. and Luckett, M. (2015) I’ve wanted a BMW since I was a kid: An exploratory analysis of the aspirational brand, The Journal of Applied Business Research, Vol. 31, N 1
Vickers, J. and Renand, F (2003) The marketing of luxury goods: An exploratory study – three conceptual dimensions, The Marketing Review, 3 (4), pp 459-78
Zhang, J., Farris, P.W., Irvin, J.W., Kushwaha, T., Steenburgh T.J. and Weitz, B.A. (2010) Crafting integrated multichannel retailing strategies. Journal of Interactive Marketing, 24(2), 168-180.