THE INFLUENCE OF INTERNET OF THINGS ON CUSTOMER EXPERIENCE IN RETAIL

Аннотация
Introduction 7
Chapter 1. The role of Internet of Things in customer experience 9
1.1. Internet of things 9
1.1.1. Concept of Internet of Things 9
1.1.2. Internet of things in retail 12
1.2. Customer experience 13
1.2.1. Customer experience concept 13
1.2.2. Customer experience dimensions 14
1.2.3. Customer experience in retail 16
1.3. Concepts integration 17
1.3.1. Hypothesis formulation 18
1.4. Research gap 19
Chapter 2. Framework elaboration 20
2.1. Research design 20
2.2. Framework 20
2.3. Measurement 22
2.4. In-store IoT devices 24
2.4.1. Smart carts 24
2.4.2. Contactless self-service checkouts 25
2.4.3. Digital price tags 26
2.4.4. Digital stands with shop navigation and digital signages 27
2.4.5. Smart shelves 27
2.4.6. Mobile app 28
2.5. Questionnaire creating 29
2.6. The choice of statistical methods 29
Chapter 3. Application of the developed framework 31
3.1. Data collection process 31
3.2. Analysis of the data 31
3.2.1. Mean comparison 32
3.2.2. Exploratory Factor Analysis 33
3.2.3. SEM. Confirmatory Factor Analysis 34
3.2.4. SEM. Path Analysis 36
3.3. Ranking of the IoT devices 38
3.4. Hypotheses testing 39
3.5. Theoretical and practical contributions of the work 39
3.5.1. Theoretical contributions 39
3.5.2. Practical contributions 40
3.6. Limitations and opportunities for further research 40
Conclusion 42
List of references 43
Appendices 47
Appendix. Questionnaire content 47
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In recent years, the environment in which companies compete is changing faster and stronger than ever before. The competition between retailers is growing and attracting customers is becoming increasingly expensive. In such conditions, the most modern and environmentally friendly way to stand out in the market is to improve the experience that customers have when they interact with the business. Customer will have experience with or without companies, but it is better for business to start worrying about how it fits in customers lives.
Most of the articles where the customer experience was studied mentioned loyalty as a result of improved customer experience. Loyalty is the widespread and very quality indicator that companies seek to monetize today. Long-term and mutually beneficial relationships with customers are the key to business stability during the period of economic transformation. However, according to the McKinsey study, up to 70% of loyalty programs do not achieve their goals. Thus, companies should seek for replacements for the traditional loyalty programs and create loyalty using other instruments.
Internet of Things (further can be reduced to IoT) is a developing concept that is in great demand now and will be even more in demand in the future. At the same time, in the rapidly evolving retail landscape, consumers’ needs still drive their purchase decisions. Yet new technologies such as IoT, newer business models, and big data/predictive analysis suggest that the shopping process is going to change drastically in the nearest future (Grewal et al., 2017).
The big reason to pay attention to the Internet of Things were market indicators. Globally the IoT market in retail in 2020 was estimated at 35,63 billion dollars, the predicted size of the market in 2026 is estimated at 67,60 billion dollars (Karin, 2021). We can see that the market is waiting for significant development.
The IoT have been already widely used in manufacturing and in logistics, where it has already proved its usefulness. In academic articles, Internet of Things is considered mostly from the perspective of implementation in supply chain management and inventory management. The role of this technology in creating experiences for customers and in direct contact while shop clients make their shopping is understudied. But at the same time, I suppose, it has great potential and may change people’s daily habits in shopping. I was inspired by Amazon Go shops, that were opened for the staff of the company in 2016. By 2020 Amazon had already opened 26 stores in different cities across the United States of America. This is an example of one of the approaches to the question of how the grocery industry will change in the future.
The retail industry is currently changing. When I was choosing the topic, the main driver was COVID-19 pandemic. However, I would like to mention that even the direct effects of pandemic were diminished and government regulations had been loosened, customers had changed their habits and they will not change them back to the pre-pandemic state. One of the main changes is how companies interact with their customers in pandemic and post-pandemic era. Retail companies change the way they operate. Such turbulence periods are the high time to make innovations to attract and retain clients. Loyal customers help business stay resilient during such tough conditions brought by crisis periods. In order to increase the number of such clients, a company should improve customer experience. Digitalization and Internet of Things would be useful tools for such purposes.
Besides considering customer experience and Internet of Things, I would also like to pay attention to the brand loyalty, its nature and its connection with customer experience. I already mentioned that customer experience has an influence on attraction and retention of customers. It is mostly based on the common sense and in this work, I will study the mechanism a bit deeper.
Above I mentioned, to my point of view, main points in support of relevance of the considered topic. In the following parts I will describe all these topics in more detail with an analysis of relevant academic papers on this topic.
Additionally, I have studied smart devices that are used in the IoT assemblages, that would be used in the interconnection with the customer. Most often the Internet of things is used imperceptibly for the buyer, and the buyer receives the results. However, the IoT devices might be obvious for the customers and serve as a marketing competitive advantage.
The main goal of this research is to identify the influence of Internet of Things on the customer experience and customer loyalty and their interconnections in retail. Brand loyalty here is presented as a specific competitive advantage that a company receives if it enhances customer experience. It is expressed by the specific actions that a customer does that creates benefits for the company. Additionally, as a practical thing I would like to specify the IoT devices that customers perceive as an additional value
In order to achieve the formulated goal, the following task were completed. Firstly, the theoretical framework for each concept was identified and described based on the corresponding academic literature. Secondly, the relations between customer experience and customer loyalty were identified. Based on these connections the visual model was created. Thirdly, the online questionnaire was created and distributed mostly among students via student chats. Additionally, IoT smart devices were identified and ranged based on the customers’ opinion.
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