How to Develop Retail Customer Experience in the Physical Specialty Store

Abstract

This research-oriented thesis investigated the factors influencing customers’ desire to visit the retail space. The overall purpose of the research was to contribute to the development of the retail customer experience with a review of the essential elements and development areas in the customer experience of the physical specialty store. The landscape of retail has changed during the past years due to changing customer shopping behaviour and expectations, digitalization, and the coronavirus. Specialty stores are competing for customers in the omnichannel environment, and companies with physical retail spaces still need to attract visitors regardless that actual shopping is perhaps done online. The declining customer satisfaction and the number of visits at Company X created the need to study the factors affecting customers’ willingness to visit the store, focusing the research on customers who had not made purchases in the previous twelve months.

The theory part of this thesis discusses customer experience and customer experience management, the role of the physical store, and brand loyalty. The research for this thesis was implemented as a multi-method qualitative study. Data collection was conducted with desktop research for the collection of secondary data from literature and commissioning company, together with collection of primary data with semi-structured interviews among a customer segment that had not made purchases in the last twelve months. The goal was to interview ten customers but eventually, five interviews were conducted. Interview data was studied using thematic analysis and compared to themes discovered from literature review and commissioning company’s data.

Even if an ever-larger part of purchases will be made online in the future, physical stores will have a role to play as they provide unique, engaging experiences, function as a showroom for products, and enable connection with the brand. Both this thesis and prior research in the field indicates that customers appreciate the ideas and inspiration offered by the physical store. Experientiality and interaction are key factors for a successful customer experience in the physical specialty store. Key findings show that the most significant factors influencing positively to customers' desire to visit the retail space are interaction with staff, store layout, display of products, product selection, prices, and atmosphere, followed by inspiration, sustainability, and product availability. The impact of changing shopping behaviour in general must also be considered when looking at the factors that affect the interest in visiting a store.

Company X is recommended to improve the availability of products, waiting times, cleanliness, and atmosphere. Furthermore, the author suggests the company to strengthen the communication of the loyalty program benefits. Customer awareness of online shopping and different transaction options in an omnichannel environment could also be promoted. This development could solve the obstacle of customers not being able to visit the physical store, however enabling customer satisfaction, engagement, and contribution to the overall turnover. In general, the company is recommended to monitor even weak signals to ensure a proactive approach to problems that may arise in the customer experience.