How Physical Stores Enhance Customer Value: The Importance of Product Inspection Depth

The authors investigate the role of the physical store in today’s multichannel environment. They posit that one benefit of the store to the retailer is to enhance customer value by providing the physical engagement needed to purchase deep products—products that require ample inspection for customers to make an informed decision. Using a multimethod approach involving a hidden Markov model of transaction data and two experiments, the authors find that buying deep products in the physical store transitions customers to the high-value state more than other product/channel combinations. Findings confirm the hypotheses derived from experiential learning theory . A moderated serial mediation test supports the experiential learning theory–based mechanism for translating physical engagement into customer value: Customers purchase a deep product from the physical store. They reflect on this physical engagement experience, and because it is tangible, concrete, and multisensory, it enables them to develop strong learning about the retailer. This experiential knowledge precipitates repatronage and generalizes to future online purchases in the same category and in adjacent categories, thus contributing to higher customer value. This research suggests that multichannel retailers use a combination of right-channel and right-product strategies for customer development and provides implications for experiential retail designs.