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.

65

Appendix A

66

Appendix B

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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

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2016.

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2016.

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ACADEMIC VITA

Chelsea A. Czerwinski chelsea.czerwinski@gmail.com

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