Connect with us

BizNews

Is there a good reason online retailers should invest in physical stores?

By directing new customers to purchase a “deep product in-store” as their first purchase from a new retailer, they are more likely to: 1) buy deep products in the future online, indicating that they generalize trust across channels; and 2) buy adjacent categories online, indicating that they generalize trust across categories.

Published

on

Photo by Clay Banks from Unsplash.com

Researchers from Colorado State University, Amazon, and Dartmouth College published a paper that examines the role of physical stores for selling “deep” products.

The study, forthcoming in the Journal of Marketing, is titled “How Physical Stores Enhance Customer Value: The Importance of Product Inspection Depth” and is authored by Jonathan Zhang, Chunwei Chang, and Scott Neslin.

While some traditional offline retailers are struggling and are closing stores (e.g., Macy’s, Walgreens), online retailers are opening them (e.g. Amazon, Warby Parker). This conflicting trend raises the question, what is the physical store’s role in today’s multichannel environment?

The research team posits that products differ in the inspection depth – “deep” or “shallow” – customers require to purchase them. Deep products require ample inspection in order for the customer to make an informed decision. We propose that physical stores provide the physical engagement opportunity customers need to purchase deep products.

To test this thesis, the researchers conducted three studies. The first used transaction data from a national multichannel outdoor-product retailer. Two lab experiments demonstrated the same effect.

The large-scale transactional data involving 50,000 customers show that by using a “deep products in-store” promotional strategy to migrate new customers from a “low-value state” to a “high-value state,” average spending per trip increases by 40%, long-term sales increases by 20%, and profitability increases by 22%.

The lab experiments show that:

  • By onboarding new customers to purchase a “deep product in-store” as their first purchase from a new retailer, their re-patronage intention for this retailer increases by 12% compared to all other product/channel combinations.
  • By directing new customers to purchase a “deep product in-store” as their first purchase from a new retailer, they are more likely to: 1) buy deep products in the future online, indicating that they generalize trust across channels; and 2) buy adjacent categories online, indicating that they generalize trust across categories.

The last decade has witnessed a marked increase in the opening of physical stores by online retailers, despite myriad changes in the retailing environment. This attests that these findings are not ephemeral. Zhang says “The general lesson of our research is for retailers to create a concrete, tangible, and multi-sensory experience for customers buying products that require this physical engagement. This sets the stage for favorable experiential learning and increased customer value.” Retailers can do this in numerous ways:

First, when retailers find that a customer is buying deep products online but their spending is decreasing in value, they can provide a promotion for deep products in-store. This can increase customer value.

Second, retailers need to enhance physical engagement for deep products through merchandising and training sales personnel to walk customers through the engagement – e.g., by helping customers try and use deep products in-store.

Third, retailers cannot infer product inspection depth solely from predefined product categories because there is much variation in inspection depth within a particular category. Rather, management should infer inspection depth using the proposed measures, or expert, independent judges.

Fourth, retailers should use a deep/offline onboarding strategy for new customers. That is, they should use acquisition channels that encourage the first purchase to be deep/offline.

Zhang adds that “We also discuss related issues such as using stores versus showrooms; fielding full or limited staff; selling private label goods; designing loyalty and buy online, pickup in-store (BOPIS) programs; and leveraging technology to create physical engagement in online settings.”

BizNews

Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Published

on

Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

Continue Reading

BizNews

Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

Published

on

A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

Continue Reading

BizNews

Profit alone is a poor measure of success, study shows companies can look efficient while harming the planet

Firms that appear highly efficient at generating revenue can perform far worse when their environmental footprint are included in the calculation.  

Published

on

Companies celebrated for strong financial performance may actually be inefficient once their environmental impact is taken into account, according to new research from the University of Surrey. 

The study, published in the European Journal of Operational Research, shows that firms that appear highly efficient at generating revenue can perform far worse when their environmental footprint are included in the calculation.  

To tackle this problem, researchers developed a new way to measure “sustainable corporate efficiency”, combining traditional financial metrics with environmental data such as energy consumption, carbon emissions and revenues generated from environmentally friendly products and services.  

Dr Menelaos Tasiou, co-author of the study and Senior Lecturer in Finance at the University of Surrey, said: “Businesses have long been judged on how efficiently they turn resources into profit. But if those profits come with large environmental costs, the picture changes completely. What we show is that true efficiency means generating revenue while also reducing the environmental damage caused by production. In other words, profitability alone can mask how wasteful a business really is when environmental costs are considered.  

The research analysed more than 2,800 publicly listed companies across 61 countries between 2010 and 2022, creating one of the largest global datasets measuring how sustainable companies are, when both financial performance and environmental impact are assessed together.  

The team combined company financial records, in alignment with the green economy (defined as a low carbon, resource efficient and socially inclusive economy), with environmental disclosures such as energy use and greenhouse gas emissions. They then applied a machine learning technique known as Convexified Efficiency Analysis Trees (CEAT) to estimate how efficiently companies convert resources into revenue while minimising pollution.  

Unlike older approaches, the method models the reality that production creates both desirable outputs, such as revenue, and undesirable ones, such as emissions. This allows companies to be compared on how well they balance profit with environmental performance.  

The results found a moderate link between financial efficiency and environmental efficiency, meaning many firms that are strong financially are not necessarily good at managing their environmental impact.  

The study also found large differences across industries and countries. Firms operating in sectors with high emissions, such as manufacturing and energy, often lagged behind leaders that were better at reducing carbon intensity while maintaining revenue.  

Dr Tasiou continued: “Measuring efficiency in this broader way can help investors, regulators and policymakers identify companies that are genuinely prepared for a low carbon economy. Stronger management capability plays a key role. Firms with more capable management teams were more likely to balance profitability with environmental responsibility, suggesting that leadership decisions can strongly influence sustainable performance.  

“As governments push towards net zero and investors scrutinise environmental performance more closely, companies that fail to integrate sustainability into their operations risk falling behind.” 

Continue Reading
Advertisement
Advertisement

Like us on Facebook

Trending