Q: How much online competition do you face?

A: Online-only competitors such as Alibaba and JD.com are potent market forces. They can offer lower prices and wider assortments. But our physical stores have a long-term, trusted reputation, and our in-store customers can try on clothes, smell perfumes, listen to electronics, and play entertainment systems before purchasing. This helps us fend off online competition.

Q: Were you surprised by the conclusions in the research?

A: We expected that home-to-store distance would be an important variable in offline shopping, because faraway customers incur higher travel costs to visit our stores. But we were quite surprised by how much distance affected channel migration. The research changed how we think about promotional coupons within and across channels.

Q: What do you do differently?

A: We now recognise that promotional money can be wasted if we’re just mindlessly sending discounts to customers regardless of their initial channel preference. We’ve also learned that it’s a mistake to try to get customers to migrate from physical stores to online. The study shows the importance of conducting rigorous research – beyond simple A/B testing – to assess individual customer values before, during, and after coupon and other marketing interventions. We also realise that if we reduce the pain points of shopping offline (such as travel costs and product returns), we can enhance long-term customer value and loyaltybased repeated purchases.