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MTKG1183

retail as the third space
by

ADDIE onicas

on 1 October 2013

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Transcript of MTKG1183

Some stats -
online versus in store
Critical Evaluation
MTKG1183
Anna, Ombretta, Adelina & Kezia
RETAIL AS THE THIRD SPACE:
The New Experience
Theory
Utilitarian
Emotional Effect on In-Store Consumer Behaviour
Introduction
Bibliography
Arnold, Mark J., and Kristy E. Reynolds. "Hedonic shopping motivations." Journal of retailing 79.2 (2003): 77-95.

Augustin, S. (2009) Place Advantage: Applied Psychology for Interior Architecture, John Wiley & Sons, Inc. Hoboken, New Jersey.

Carter T., & Gilovich T. (2010). ‘The relative relativity of experiential and material purchases’, Journal of Personality and Social Psychology, Vol. 98, pp. 146 −159.

Chilers, T. L., Carr, C. L., Peck, J., & Carson, S. (2002). Hedonic and utilitarian motivations for online retail shopping behavior. Journal of retailing, 77(4), 511-535.

Dunn E.W., Gilbert D & Wilson T (2011) ‘If money doesn’t make you happy, then you probably aren’t spending it right’, Journal of Consumer Psychology, Vol. 21, No. 2, pp. 115-125.

HREF1, MarketingCharts 2012, 'Customer Experience Better In-Store Than Online, Say Mobile-Toting Shoppers', accessed 15 September 2013, http://www.marketingcharts.com/wp/interactive/customer-experience-better-in-store-than-online-say-mobile-toting-shoppers-25447/.

HREF 2, PwC 2012, 'Record levels of online shopping causing retailers to rethink strategy', accessed 15 September 2013, http://www.pwc.com.au/media-centre/2012/online-shopping-strategy-jul12.htm.

Kwek G 2013, 'Australian online shoppers go global', Sydney Morning Herald, 26 July, http://www.smh.com.au/business/australian-online-shoppers-go-global-20130726-2qoll.html.

Levy, M. and Weitz, B.A. (2004), Retailing Management, McGraw-Hill, New York, NY.

Mehrabian, A. and Russell, J.A. (1974), An Approach to Environmental Psychology, Massachusetts Institute of Technology, Cambridge, MA.

Morrin, M. and Chebat, J-C. (2005), “Person-place congruency: the interactive effects of shopper style and atmospherics on consumer expenditures”, Journal of Service Research, Vol. 8, No. 2, pp. 181-91.

Overby, J. W., & Lee, E. J. (2006). The effects of utilitarian and hedonic online shopping value on consumer preference and intentions. Journal of Business Research, 59(10), 1160-1166.

Rivkin J 2011, ‘A future in store: new platforms drive innovation, opportunity in retail engagement’, Beverage Industry, vol. 102, no. 6, p42-46.

Roy Morgan 2013a, 'The ASOS effect: online fashion sales on the rise', 8 May, http://www.roymorgan.com/findings/the-asos-effect-201305080112.

Roy Morgan 2013b, 'State of the Nation’s $24billion online retail trade: Internet shopping becomes the new Australian norm', 4 June, http://www.roymorgan.com/findings/state-of-the-nation-online-shopping-march-2013-201306032337.

Speedy B 2013, 'Retail trends show lure of online shopping', The Australian, 8 January, http://www.theaustralian.com.au/business/companies/retail-trends-show-lure-of-online-shopping/story-fn91v9q3-1226549159437#.

Steenkamp, J-B. and Baumgartner, H. (1992), “The role of optimum stimulation level in exploratory consumer behavior”, Journal of Consumer Research, Vol. 19, pp. 434-48.

Wirtz, J., Mattila, A.S. and Tan, R.L.P. (2000), “The moderating role of target-arousal on the impact of affect on satisfaction – an examination in the context of service experience”, Journal of Retailing, Vol. 76 No. 3, pp. 347-65.

Yoo, C et al. 1998. 'Effects of Store Characteristics and In-Store Emotional Experiences on Store Attitude'. Journal of Business Research.
PROS
in-store/offline is where a brand can best create an immersive experience for the consumer - and feed the 'experience' junkie
brand-centric (no 'noise')
emotional and sensory processing attracts customers & stimulates strong, lasting impressions
Retail as the third space - the new experience
Context and statistics
Theory and examples
Critique and discussion
Projections
53% of Australians over 15 now shop online (PwC 2012)

Offshore shopping increased by 20% between 2010/11 and 2011/12, and represents 45% of Australia’s online shopping spend (PwC 2012)

23% of online shoppers now go to stores less often, compared to 10% in 2003 (PwC 2012)


Some more stats...
Retail as the "Third Space"
and experiential retailing
"It’s the sights, sounds and experiences that capture the emotive qualities of a brand. Stores are living, breathing entities that capture the sprit as well as the mind. None of that is easily replicated online.” Joseph Bona, CBX

Oldenburg defines the "third space" as a public place where people can gather to put aside the concerns of home (the first place) and work (the second place)—a place to connect with others and exchange ideas.

“We have evolved to a place where people are interacting with screens as much as with other people. So does this make the idea of a physical third space even more necessary?” Professor Ray Oldenburg
Hedonic consumption: the facets of behavior that relate to the multi-sensory, fantasy, and emotive aspects of consumption.
Consumption is driven by the fun a consumer has in using the product, and the criteria for “success” are essentially aesthetic in nature.
The “task” is concerned with hedonic fulfillment, such as experiencing fun, amusement, fantasy, and sensory stimulation.
Types of Hedonic Shopping
Adventure shopping
Social shopping
Gratification shopping
Idea shopping
Role shopping
Value shopping

(Arnolds & Reynolds, 2003)
Hedonic vs. Utilitarian
Shoppers in
Brick-and-mortar vs. Pureplay
business models
Hedonic shoppers often shop for an appreciation of the experience rather than simply for task completion. As such, they tend to prefer the brick-and-motar business model.

On the other hand, utilitarian shoppers are more prone to purchase from pureplay business models than their counterparts are. Utilitarian value incorporates more cognitive aspects of attitude, such as economic “value for the money”.
source: Yoo C et al. (1998) Effects of Store Characteristics and In-Store Emotional Experiences on Store Attitude
The Use of Music and Scent
The use of music and scent are two examples of in-store experience that affects emotional state behavior.
Music and scent enhance consumers affective states such as mood and arousal as well as spending behavior.
Fast tempo and high volume VS low tempo low volume music
Warm colors VS cool colors
Ambient scents: use of leather, citrus and baby powder scents.
What Arousal and Pleasure do?
Meharabian and Russell’s model is strongly supported in environmental psychology and it is the most widely applied model of affect in the context of service environments.

Hedonic Shopping
Utilitarian aspects of the shopping experience, has been characterized as task-related and rational and related closely to whether or not a product acquisition “mission” was accomplished.
CONS
requires over-digitised lifestyles
not suitable for all brands or products
Digital wont be abandoned - the offline must complement the online
Evaluating a successful experience
New competitors
Experience Culture
Shift from owing to experiencing
57% of respondents said an experience they purchased gave them more happiness than a product (Carter & Gilovich 2010)
Experiential purchases
Emotional and cognitive responses to a product/brand is affected by the feelings generated by our senses (Augustin 2009)
Brands can enhance real-world sensory experiences through retail spaces
Truvia Voyage
Bompas & Parr
Selfridges Rooftop
Rooftop Bakewell Mini-Golf
Bompas & Parr
Selfridges Rooftop
Conclusions & Projections
Retail as a third space is an opportunity for retailers to bring shoppers back to in-store environment. They should think about their customer motivations and brand to determine whether they can use emotional or experiential approaches to engage consumers. Knowing one's shopper segment is useful for constructing marketing communication strategies and design for a store itself.
Adventure Shopping
Louis Vuitton Flagship Store Singapore
Full transcript