The value of experience-centric stores in omnichannel retail: a multi-method approach at the category level

Abstract

For omnichannel multi-brand retailers, store openings are consequential strategic decisions. Beyond whether to open a store, firms must choose a format, select product categories, and decide how to support them in-store. To inform these decisions, we study the openings of two large experience-centric stores and one small convenience-centric store operated by an omnichannel consumer electronics retailer. Using a staggered difference-in-differences model, we estimate the impact of store openings on retailer performance while accounting for product-category heterogeneity. We find that all three openings reduce online net revenue (online purchases minus returns), contrary to halo-effect expectations. However, only the large experience-centric stores offset these losses, increasing total net revenue (online plus in-store purchases, net of returns) by 21% to 23% in the short term, with effects that grow over time. The small convenience-centric store does not generate such gains. Total net revenue uplift also varies substantially across product categories within experience-centric stores. To explain this heterogeneity, we combine category-level sales data with survey-based measures of perceived in-store utility across three customer journey stages: information search, fulfillment, and returns. Using the retailer's classification, we distinguish between destination categories—higher-priced, complex products that motivate store visits (e.g., TVs)—and accessory categories—lower-priced complementary products (e.g., earbuds). For destination categories, variation in perceived in-store utility, especially at the information-search and fulfillment stages, explains differences in total net revenue uplift. For accessory categories, such variation is not statistically associated with revenue gains. These findings show that store format alone is not sufficient: the effectiveness of store openings depends on how well in-store capabilities align with category-specific customer needs across the customer journey, highlighting the importance of prioritizing destination categories while reconsidering the role of physical stores for accessory categories.