How Brick-and-Mortar Fashion Retailers Can Maximize Revenues with Positively Deviant Customer Experiences – A Case Study of a Small Finnish Fashion Retailer
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Journal Title
Journal ISSN
Volume Title
School of Business |
Master's thesis
Author
Date
2020
Department
Major/Subject
Mcode
Degree programme
Strategy
Language
en
Pages
48 + 16
Series
Abstract
This thesis studies how brick-and-mortar fashion retailers can grow their revenues by controlling the antecedents to customer experience. The topic is an important one to study, because online retail is, increasingly, taking over the fashion retail market. While contemporary academic studies in the field of fashion are focusing on digital platforms, circular economy business models, and ethical businessmaking, the small, brick-and-mortar company is struggling to survive. The study creates a model for explaining variations in customer experience, and finds that customer experience can be explained moderately well as a function of how easy it is to for a customer to find what they are looking for in the store, how attractive customers find the store to be, as well as by the level of customer service the customers receive. The study finds, then, that positively deviant customer experiences have an association with whether a customer makes a purchase or not, and with whether a customer is likely to return to the store. Customer experience, however, does not appear to have an effect on the basket sizes of those customers who made a purchase. It is suggested that brick-and-mortar fashion retailers should make commitments to customer insights in order to be able to cater to customer needs in an optimal fashion. Furthermore, fashion retailers should try to convert positive customer experiences into larger shopping baskets by up-selling and cross-selling sales items, a process that the case company has yet to perfect. As the philosophical basis for the research, an objectivist ontological outlook and a critical realist epistemological perspective were chosen. The theoretical framework for the thesis emerged from studying of the existing literature regarding the linkage between customer experience and profitability, as well as the literature on how customer experience forms in a physical retail setting. Nine hypotheses were developed on the basis of the literature. To test the hypotheses, a customer survey was conducted in the case company studied. Additionally, case company sales data was analyzed and linked to the survey data. The survey generated 234 completed answers from customers who visit the store in the span of seven months. The sales data consisted of 220 092 receipts from purchases made in the span of eight years. In order to create a view on how customer experience is formed, a multiple regression analysis model was formed on the basis of the customer survey data. A linkage between customer experience results and their monetary impact was built by having the survey respondents provide their receipt numbers. The resulting linkage was studied by conducting simple linear regression analyses. The findings of this study call for additional research to be directed into customer level time series purchase analysis, as well as into research that looks at customer experience formation in all of the touchpoints in the fashion retail customer journey.Description
Thesis advisor
Schildt, HenriKeywords
fashion retail, customer experience, net promoter score, revenue, Finland
