Consumer Research

Keep Shopping: Why The Wayfair Ruling Won’t Hurt Sales

In a move that promises to put billions of dollars back into state coffers, the U.S. Supreme Court has ruled that online retailers must collect sales taxes even in states where they have no physical presence. The decision in South Dakota v. Wayfair Inc. reverses a 1992 ruling that banned states from forcing e-commerce sites to collect taxes unless the business had a brick-and-mortar establishment within the state.

In the 5-4 opinion, Justice Anthony Kennedy wrote that the previous decision cost states about $33 billion in lost revenue. While Amazon and other online retailers have been voluntarily charging sales taxes for years, the court’s decision is a game-changer for retailers both online and offline. Physical stores for years have decried the competitive advantage given to online sites that don’t have to collect sales taxes. In a tweet, President Donald Trump praised the change as a victory for consumers and retailers.

The Knowledge@Wharton radio show, which airs on Wharton Business Radio on SiriusXM channel 111, asked several experts to analyze the decision and what it means for online shopping. Katja Seim, business economics and public policy professor at Wharton; Mark Cohen, director of retail studies at Columbia Business School and former CEO of Sears Canada, and Richard Pomp, law professor at the University of Connecticut, discussed the case.

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Influencing The Influencers: Using Social Media To Find Top Customers

Social media offers an almost endless stream of data for businesses to collect on their customers. But what good is data without a smart way to apply it? The latest research from Gad Allon, Wharton professor of operations, information and decisions, offers a lifeline for firms drowning in the deep waters of social networks.

Allon and his team devised an analytics model that can help businesses identify high-value customers. The paper, “Managing Service Systems in the Presence of Social Networks,” was co-authored with Washington University professor Dennis J. Zhang. He talked with Knowledge@Wharton about the process.

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Why Customer Retention Lies At The Heart Of Corporate Valuation

New research from Wharton is changing the way investors are looking at the valuation of businesses by taking a closer look at the worth of those firms’ customers. Wharton marketing professor Peter Fader and Dan McCarthy, a professor at Emory University who earned his Ph.D. at Wharton, are behind this new method that has recently received a lot of attention for the insights it generated about the value of businesses including meal delivery services Blue Apron and Hello Fresh, and online furniture retailers Wayfair and Overstock. The professors joined Knowledge@Wharton to discuss their research and its potential effect on transparency. They previously talked with K@W about how they developed this method for valuing subscription-based and non-subscription-based businesses. The research was partially funded by Wharton’s Baker Retailing Center.

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Separating Better Data From Big Data: Where Analytics Is Headed

Ten years ago, the most forward-thinking companies were just starting to dive into the potential of data and analytics. Since then, brands have moved from using analytics to answer what customers are doing to exploring the how and why, and also to figure out what they will do in the future.

The Wharton Customer Analytics Initiative (WCAI) is celebrating its 10thanniversary this year and has seen every step of that evolution. Knowledge@Wharton recently sat down with Wharton marketing professors Eric BradlowPeter Fader and Raghuram Iyengar to discuss how the field has developed over time, and what they expect to be the key trends over the next decade. Bradlow and Fader are the founding directors of WCAI, and Bradlow and Iyengar are the current co-directors.

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How Will Targeted Ads Fare In An Era Of Data Protection

The General Data Protection Regulation (GDPR) went into effect last month, granting individuals a greater degree of control over how firms gather, store and use their personal data. The GDPR was crafted by and for members of the European Union, but because commerce and data move freely across international borders, many firms in the U.S. and across the globe have decided to conform to its guidelines.

What exactly will it mean in the U.S.? Even the federal government appears to be unsure. “GDPR’s implementation could significantly interrupt transatlantic cooperation and create unnecessary barriers to trade, not only for the U.S. but for everyone outside the E.U.,” wrote U.S. commerce secretary Wilbur Ross in the Financial Times. “We do not have a clear understanding of what is required to comply.”

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How To Turn Data Into A Pricing Strategy That Works

If you’re a frequent online shopper, you already know you’re being watched. Companies collect reams of data based on your browsing and purchasing patterns. There’s so much data, in fact, that it’s easy to get lost in the numbers. That’s where Ken Moon comes in. A professor of operations, information and decisions at Wharton, Moon is researching how retailers can use online data to create effective pricing policies. He visited with Knowledge@Wharton to discuss his paper, “Randomized Markdowns and Online Monitoring,” which was co-authored with Kostas Bimpikis and Haim Mendelson of Stanford University’s Graduate School of Business.

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Does Being Willing To Pay Mean You Like What You Buy?

New research from Alice Moon, Wharton professor of operations, information and decisions, shows that willingness to pay isn’t always a clear indicator of preference. The paper is titled, “The Uncertain Value of Uncertainty: When Consumers are Unwilling to Pay for What They Like,” and was coauthored with Leif D. Nelson from the University of California, Berkeley. She spoke to Knowledge@Wharton about other factors that should be taken into consideration when marketers are trying to price their products. Measuring enjoyment will more likely get at what people feel about a product, whereas willingness to pay is dominated by other factors, such as what price the market is setting for that product.

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Want To Stop Showrooming? Start Training Your Staff

It’s obvious that customers will prefer to deal with sales associates who know what they’re talking about when it comes to the products they’re hawking. But what has been less obvious is just how much of a difference knowledgeability makes to the bottom line. To find that answer, Marshall L. Fisher, professor of operations, information and decisions at Wharton, and his colleagues, INSEAD professor Serguei Netessine and then-Wharton doctoral candidate Santiago Galino (who is now a professor at Dartmouth’s Tuck School of Business), studied data from 63,500 salespeople at 330 stores. The resulting report, titled “Do Online Training Work in Retail? Improving Store Execution through Online Learning,” quantifies the answer by the metric that matters most in retail: sales. In this interview with Knowledge@Wharton, Fisher explains what they learned, and what the implications are for businesses across the board.

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Top-line Detox And Strategic, Small Shifts: Lessons From Successful Retailers

Successful retailers can grow quickly in their early years simply by opening new stores. But eventually they run out of real estate, and then they need the discipline to stop opening new stores and focus instead on driving more sales through their existing stores. They can boost sales and profits dramatically by making changes in the way they run their existing stores, such as with help from analytics and the use of technology. In fact, several such small changes brought in profits that helped 17 retailers outperform the stock performance of the S&P 500 index, according to a new study titled “Curing the Addiction to Growth” published in the Harvard Business Review by Marshall Fisher, Wharton professor of operations, information and decisions, along with his co-authors, Vishal Gaur (who has a PhD from the Wharton School and now is a professor at Cornell’s Johnson School) and Herb Kleinberger (who has an MBA from Wharton and for many years led PWC’s retail practice).

The study covered a 22-year period, ending in 2015, at 37 companies. This group began the 22-year period with double digit top-line growth, which inevitably slowed to the low single digits during 2011-2015 as the retailers reached the maturity stage of their life cycle. Some winners, such as footwear retailer Foot Locker, saw their stock market returns grow 33% a year over this period, or nearly triple the S&P 500 average. Others that witnessed handsome stock market gains include Home Depot and McDonald’s. The lesson for the laggards is to pause, acknowledge the slowing growth, and look for solutions other than opening new stores. Fisher says retailers, as they mature, must break their “addiction” to top-line growth and adjust their strategies to the changed realities. He sees that maxim play out also with companies outside the retail industry. That approach could apply even to countries as they shift gears, he says, citing China’s efforts to move away from low-end contract manufacturing for the rest of the world to building its own brands for its domestic market. Fisher spoke about the chief takeaways from his research in a video interview with Knowledge@Wharton. (An edited transcript of that interview appears below.) He and HBR editor Steve Prokesch also discussed it on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to a podcast of that conversation below.)

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How Millennials, Gen’xers And Baby Bookers Shop Differently

By gathering and examining data that was more detailed than what retailers have been able to access before, research group NPD and Wharton’s Jay H. Baker Retailing Center have unearthed a host of new information about generational differences in buying behavior. Baker Center research director Denise Dahlhoff and Andrew Mantis, executive vice president of checkout tracking at NPD Group, appeared on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111, to talk about what they’ve discovered about our retail proclivities.

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Words Matter: How Lyrics Help Songs Top The Charts

New research from Wharton marketing professor Jonah Berger and co-author Grant Packard, a marketing professor at Wilfrid Laurier University, used natural language processing to study hundreds of songs and their lyrics to see what made some catch on while others failed to climb the charts. Berger recently spoke to Knowledge@Wharton about his findings, which are outlined in the paper, “Are Atypical Songs More Popular?”

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From Back To Rock: How Music Preferences Predict Behavior

If the aggressive rap of Eminem is an auditory assault that sends you searching for smooth jazz, you’re probably a person with a high level of openness. That’s one interpretation from a study that looks at the link between music and personality. The study, by Wharton marketing professor Gideon Nave, has wide-ranging implications in our data-driven world. Companies that collect data to tailor product offerings, for example, can gain more insight by looking at their customers’ online playlists. Nave joined Knowledge@Wharton to discuss the paper, “Musical Preferences Predict Personality: Evidence from Active Listening and Facebook Likes.” The paper was co-authored with Juri Minxha of the California Institute of Technology, Michal Kosinski of Stanford University, and David M. Greenberg, Jason Rentfrow and David Stillwell of the University of Cambridge.

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How Stress Influences Decision-making

Wharton marketing professor Gideon Nave wants to know what makes people tick. Specifically, he studies the relationship between biology and decision-making. He latest research focuses on how hormones and stress alter the way people think, and he found some interesting results.

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Boosting Testosterone Makes Men Prefer Higher-status Products

The findings by Wharton marketing professor Gideon Nave and his co-authors coauthors were Amos Nadler of Western University, David Dubois and Hilke Plassmann of INSEAD, David Zava of ZRT Laboratory, and Colin Camerer of the California Institute of Technology align with examples from the animal kingdom and could help explain and predict patterns in consumer behavior.

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‘Invisible Influence’: What Really Shapes Our Decisions

In his new book, Invisible Influence: The Hidden Forces That Shape Behavior, Wharton marketing professor Jonah Berger takes us inside the conscious and unconscious ways that social influences shape our decisions. Knowledge@Wharton recently had an opportunity to talk with Berger about his book. An edited transcript of the conversation appears below.

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The Science Of Gifting: How To Pick A Better Present

Special occasions can evoke a mild sense of panic for many gift givers who struggle with what to buy. Another trinket for grandma on her birthday or sweater for the husband on Christmas seems so been there, done that. Wharton marketing professor Cassie Mogilner has a better idea. Her research finds that while people enjoy receiving material things, such as an expensive watch or a scented candle, they really seem to relish gifts that give them an experience. Mogilner, who recently discussed the paper, “Experiential Gifts Are More Socially Connecting than Material Gifts,” on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM Channel 111, finds that experiential gifts resonate at a deeper level, forging a stronger emotional connection between the giver and recipient. The paper was co-authored with Cindy Chan, a professor at the Rotman School of Management at the University of Toronto Scarborough. Concert tickets for the music fan in your life, or a gift certificate to a French restaurant for the Francophile in your office can have an impact even long after the experience is consumed, the researchers find. So go ahead and think outside of the ribbon-wrapped box — Mogilner thinks the payoff could be priceless.

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When Customers Browse Store Shelves, Perception Is Reality

Whether it’s a gift for the holidays or a present to yourself, every purchase is the result of myriad choices on the part of the shopper — what color, which size, how big or how fast. While these are often conscious decisions, there are also numerous external factors at play every time you visit the mall or log on to Amazon. In a recent paper, Wharton marketing professor Barbara Kahn examines the impact of one of those potential influencers: Display design and how it affects our perceptions of variety.  The research, “A ‘Wide’ Variety: Effects of Horizontal Versus Vertical Display on Assortment Processing, Perceived Variety and Choice,” was co-authored with Ohio State University professor Xiaoyan Deng, University of California, Davis professor H. Rao Unnava and Hyojin Lee, a professor at San Jose State University.

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How Anticipating Future Variety Curbs Consumer Boredom

If your favorite chocolate brownie ice cream were on sale, then surely buying a few containers to stock in your freezer would makes sense, right? Surprisingly, the answer may be no, according to recent research from Wharton marketing professor Barbara Kahn, who also serves as director of the school’s Jay H. Baker Retailing Center. In a paper titled “Anticipation of Future Variety Reduces Satiation from Current Experiences,” Kahn and her co-authors — Julio Sevilla from the University of Georgia and Jiao Zhang from the University of Oregon — debunk the notion that consumers respond positively to an endless supply of the exact same product. Through controlled lab experiments, Kahn and her team found that when consumers are offered more variety for future consumption, their perception of present satisfaction changes. The paper was published in the Journal of Marketing Research. Kahn spoke with Knowledge@Wharton about what the research means for marketers.

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The Smartphone As A Security Blanket: What It Means For Marketers

Go ahead and play with your smartphone. The latest research from Wharton marketing professor Shiri Melumad shows that interfacing with a mobile device provides some emotional benefits for stressed-out adults, and that in turn has implications for marketers trying to reach an on-the-go audience. Melumad spoke to Knowledge@Wharton about her research and why we shouldn’t feel so bad about spending time staring down at our phones.

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Pwc Total Retail Survey 2017

PwC’s annual study about global shopping and consumer trends, with contribution from the Baker Retailing Center, February 2017
Overview »

Study Report: 10 Retailer Investments for an Uncertain Future »

Cross-generational Buying Behavior

(in collaboration with The NPD Group)
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Gift Cards’ Appeal To Millenials

Retailing Today, Feb 19, 2016
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Who Shops Where And How? Depends On The Age

Philadelphia Inquirer, Mar 27, 2016
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Pwc Total Retail Survey 2016

PwC’s annual study about global shopping and consumer trends, with contribution from the Baker Retailing Center, February 2016
Overview »

Study Report: They Say They Want a Revolution »

Cultivating A Multi-channel Shopping Experience

Fall 2011
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Discovering “wow” – A Study Of Great Retail Shopping Experiences In North America

Spring 2009
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The Shopping Mall: A Study On Customer Experience

Fall 2008

He Buys, She Shops: A Study Of Gender Differences In The Retail Experience

Fall 2007
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Shoppers At Risk: An Annual Study Of Retail Dissatisfaction

Spring 2007
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