Retail image and its effects on the consumer-

A comparative study of the retail environment

Anna Catani

Department of Marketing

Hanken School of Economics

Helsinki

2014

HANKEN SCHOOL OF ECONOMICS

Department of: Marketing Type of work: Thesis

Author: Anna Isabelle Catani Date: 30.9.2014

Title of thesis: Retail image and its effects on the consumer- A

comparative study of the retail environment

Abstract: Researchers state that the consumers do not only react to the physical product but to the total package, of which the place where the product is bought is most influential. Several studies prove that the retail environment can largely affect the consumers. Furthermore, studies have shown that the image a retail setting portrays has a critical bearing on consumers’ opinions, and even behaviour. The image a retail environment portrays is not as easily match or duplicated as product, price, promotion or location. A well unique and successful image will differentiate a brand from its competitors.

The aim of the paper is to study the different effects the retail environment and the image it portrays can have on consumer opinions. Moreover, this paper studied the effect of a retail environment portraying a higher and a lower image, and their effect on consumer perceptions and intentions.

The theoretical framework comprises models from previous literature that categorize the different elements in the retail environment. Additionally, previous literature is used to divide the elements of the retail environment that portray a higher image or a lower image.

The data was gathered in May 2013 in the Finnish department store Stockmann’s hard corner in Helsinki, and in the soft corner in Tapiola. A total of 66 responses were featured in this paper’s study. The questionnaire comprised questions measuring consumers’ overall evaluation of various retail elements. The questions also measured the consumers’ price perceptions, quality perceptions and purchase intentions.

The results of the study show that consumers evaluate both ambient and design elements significantly higher in a retail environment that portrays a higher image, than in a retail environment that portrays a lower image. Overall, price perceptions, quality perceptions and purchase intentions are also rated significantly higher in a retail environment portraying a higher

image.

Keywords: Retail environment, higher and lower image, ambient and

design elements, soft and hard corner, price and quality perceptions,

purchase intentions

CONTENTS

1 INTRODUCTION.....................................................................1

1.1 Research problem..............................................................................3

1.2 Aim of the paper................................................................................5

1.3 Delimitations......................................................................................6

1.4 Structure of the paper.......................................................................6

1.5 Main definitions.................................................................................7

2 THE RETAIL ENVIRONMENT...............................................10

2.1 The concept of retail environment and retail atmosphere..............10

2.1.1 Retail environment...................................................10

2.1.2 Retail atmosphere.................................................................11

2.2 Elements of the retail environment.................................................13

2.2.1 Ambient elements.................................................................13

2.2.2 Design elements....................................................................17

2.2.3 Social elements.....................................................................23

3 RETAIL IMAGE......................................................................25

3.1 Higher image and lower image retail environments.......................25

3.1.1 Higher image ambient elements..............................26

3.1.2 Higher image design elements.............................................27

3.2 Retail image and consumer opinions...............................................33

4 METHODOLOGY...................................................................38

4.1 Georg Jensen...................................................................................38

4.2 Research method.............................................................................39

4.3 Research questionnaire...................................................................40

4.4 Data collection.................................................................................41

4.5 Analysis method...............................................................................42

4.5.1 Mann-Whitney U test............................................................42

4.5.2 Multivariate analysis of variance..........................................43

5 RESULTS OF THE EMPIRICAL STUDY................................45

5.1 Background information..................................................................45

5.2 Mann-Whitney U test.......................................................................47

5.2.1 Evaluations of the ambient elements.......................49

5.2.2 Evaluations of the design elements......................................49

5.3 Multivariate analysis of variance.....................................................53

5.3.1 Assumptions for MANOVA.......................................53

5.3.2 Differences in price perceptions between the hard corner and soft corner.............................................................................55

5.3.3 Differences in quality perceptions between the hard corner and soft corner......................................................................58

5.3.4 Differences in purchase intentions between the hard corner and soft corner......................................................................60

5.4 Reliability of scale............................................................................62

6 DSICUSSION.........................................................................64

6.1 Higher and lower image retail environment...................................64

6.2 Theoretical implications..................................................................65

6.3 Managerial implications..................................................................66

6.4 Limitations and suggestions for further research...........................67

6.5 Conclusions......................................................................................68

REFERENCES...........................................................................70

APPENDICES

Appendix 1 Questionnaire in English.......................................................79

Appendix 2 Basic assumptions.................................................................81

Appendix 3 Mann-Whitney U test............................................................82

Appendix 4 Manova price perceptions.....................................................83

Appendix 5 Manova quality perceptions..................................................84

Appendix 6 Manova purchase intentions.................................................85

Appendix 7 Georg Jensen soft corner, Stockmann Tapiola......................86

Appendix 8 Georg Jensen hard corner, Stockmann Helsinki...................87

Appendix 9 Georg jensen hard corner, Stockmann Helsinki...................88

TABLES

FIGURES

1 INTRODUCTION

There was a time not so long ago that retail environments had few

standards to meet. A store should be clean and organized to maximize

sales per square foot. It should also be pretty […]. Today, though, the

retail environment must tie in directly to the brand, and, in fact,

speak the brands’ value propositions. […] Anything can happen in this

booming new frontier. (Green 1997:27)

Retailers spend millions of dollars every year designing and refurbishing

stores. American department store chain Neiman Marcus spent more than

200$ in five years on renovating its stores. In 2012, in the middle of the

recession, the company had redesigned six of its store- within- stores,

resulting in a revenue growth of 7.5% to $ 1.06 billion. As a result, the

company renewed all of its 42 luxury retail stores. (Stynes & Talley 2012)

In 2011 the British department store chain Marks & Spencer spent £ 450

million on renovating its store in High street Kensington. The company

estimates the renovation of the store to boost sales, reaching a total of £

1.5 billion in sales within three years. After the pilot 80 more store where

planned to be redesigned by the first quarter of 2012, with the rest of the

companies 703 store being redesign by the middle of 2012. (Garside 2011)

In 2010 the technology company Apple started an extensive project of

redesigning its stores in order to strengthen the image they wish to

portray, and to enhance its culture of design and excellence (Prunty 2014).

The redesign of Apple’s 220 stores in the USA, a well-known success story

that has been copied by companies such as Disney, Microsoft and Tesla

(Gallo 2012), cost closer to $ 1.9 billion in total, or $ 8.5 million per store

(Dediu 2011). Additionally, Apple recently hired Angela Ahrendts to be

responsible for its retail stores. Ahrendts is most known for her successful

work in transforming the image of the luxury fashion house Burberry. Store

refurbishment has been considered one of the main contributors to the

brands upswing in 2006. (Prunty 2014) These well- known brands have

made extensive redesigns and changes in their stores. The costs are

substantial, but as each case shows the outcome is well worth the cost.

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Philip Kotler explained in 1970 that consumers do not respond only to the

tangible product, but the total product such as service, packaging and

image. Kotler (1970) concluded that the place where a product is bought is

one of the most significant features of the total product. Kotler states that

this place and the atmosphere of this place is “more influential than the

product itself in the purchase decision” (Kotler 1973-1974:43). As the

marketing researchers have come to the realization that consumers are

affected by various elements in the point of purchase (Milliamn & Turley

2000), research in retail environment and the relating effects on consumer

behavior has grown constantly.

The effects of various retail elements such as colour, music and

temperature and their effects on consumer cognition have been studied.

Retail design has been studied in the aspect of consumer cognition, as well

as direct buying behavior, or the relationship between the two. Areni &

Kim (1993) showed that music can have a positive effect on the purchases

of expensive products. Moreover, the findings of the study conducted by

Babin, Hardesty & Suter (2003) show that in a fashion store a blue

coloured interior elicits higher evaluations and increased retail patronage

intentions, compared to an orange coloured interior.

Baker, Grewal & Parasuraman stated in 1994 that “store environment has

[…] been found to be one of several inputs into the consumer’s global store

image” (Baker, Grewal & Parasuraman 1994:328). For their study, the

authors categorized different environmental elements (such as colour,

lighting and layout) that portray a high or discount image retail

environment. The authors found that retail image affected price

perceptions and quality perception positively. Another study using the

same images concurred that the image a high image retail design portrays,

positively affects purchase intentions (Baker, Grewal, Parasuraman & Voss

2002). Store image has also been proven to have a critical bearing on store

patronage (Huston & Nevin 1980). As a result, retailers have focused on

creating influential retail environments that portray a strategic image.

Retailers are facing an increasingly competitive market. It is becoming

more difficult to differentiate stores merely on the basis of product, price,

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promotion and location (Baker et al. 1994). However, the retail setting

itself can offer a unique environment with a unique image that may

influence the consumers. Today, marketing planners use spatial aesthetics

as skillfully and consciously as they used price, advertising, personal

selling, public relations and other marketing tools (Kotler 1973).

Marketers have understood that a consumer can be influenced by the

elements in the retail environment. Hence, creating an influential

atmosphere that portrays a desired image should be an important

marketing strategy for retailers (Kocamaz & Ylaçin 2003). According to

Milliman & Turley (2000), this kind of atmospheric planning can make the

difference between a business success and failure. The atmosphere of a

retail setting is a component of the retail image which is not as easily

matched or duplicated as retail prices, merchandise assortments or sales

promotions. Once a well- defined, unique and successful atmospheric

design has been chosen and implemented, a retailer can expect this to

differentiate it from its competitors. (Chebat & Turley 2002) The image a

retail environment portrays is one key factor for retailers to achieve and

sustain success in the ever increasing competitive marketplace (Baker,

Borin, Grewal & Krishnan 1998).

It is evident that the retail environment induced image has a critical

bearing on both consumer opinions such as price perception and purchase

intentions, as well as on concrete consumer behavior, such as retail

patronage. In today’s competitive markets, where it is becoming

increasingly difficult to gain advantages over competitors by the traditional

marketing tools product, price, promotion or location, retail managers

ought to understand the power of the retail environment and the image it

portrays. This image can have a big effect on consumers.

Everything from a kiosk (Baker, Kim & Runyan 2012) to a shopping mall

(Bearden 1977) and a restaurant (Barnes, Bitner & Ward 1992) can be

considered retail settings with environments portraying a specific image.

This retail image can affect everything from loyalty (Bloemer & de Ruyter

1997) to patronage behavior (Zimmer & Golden 1988) and purchase

intention (Baker et al. 1998). Thus, it is assumed in this paper that a soft

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corner and a hard corner can also be regarded as retail settings. A soft

corner is a brand dedicated area in a retail store next to other brands

merchandise. Meanwhile a hard corner is a brand dedicated area in a retail

store created by the brand, with the authority to decide on most matters. A

hard corner is a so called shop-in-shop. A more detailed explanation is

presented in section 1.5.

In the study of this paper focus will be put on the two retail settings of the

Danish luxury design brand “Georg Jensen”. Georg Jensen’s hard corner

and soft corner in the department store Stockmann’s stores will act as the

retail setting studied in this paper.

1.1 Research problem

The purpose of this paper is to study the different effects the retail

environment and the image it portrays can have on consumer opinions.

Moreover, this paper will identify wheatear a hard corner setting and the

higher image it portrays, will have more positive effect on consumer

opinions compared to that of a soft corner setting and the lower image it

portrays.

Retailers need to acknowledge the potential the retail environment can

present. A unique retail design can portray an image that is very different

from the competitors. A specific and successful image is not easily copied.

Furthermore, the retail image is becoming more important as traditional

promotional techniques are becoming inadequate (Shclosser 1998). The

image a retail environment portrays should be consciously utilized by retail

managers (Chebat & Turley 2002). Not only can a strategic retail design

provide a competitive advantage, but it can also be directly used as a tool

to prompt several desired consumer reactions.

The research in retail design has been extensive. The field of environmental

psychology has been frequently utilized to identify different stimuli i.e.

elements, in the retail environment, and how the retail environment affects

consumers (Donovan & Rossiter 1982; Spangenberg & Yalch 1990; Buckley

1991, Baker, Grewal & Levy 1992; Dick, Jane & Richardson 1996). Retail

4

image has also received quite the extensive academic attention in the retail

environmental literature. The kind of effect environmental elements, such

as colour, lighting scent and layout can have on the consumers, has been

evident in many studies. The combination of the various stimuli in a retail

environment will portray a specific image (Bearden 1977; Chebat & Turley

2002; Lindquist 1974-75). This image has been found to affect several

critical consumer responses such as perceptions (Chiu & Wheatley 1977)

and intentions (Baker et al. 1994).

The majority of the studies investigating the retail environment and the

image it portrays, have been studied in strictly controlled settings. In some

cases the data is gathered by describing a store, or by showing pictures or

video tapes of a store (Gardner & Siomkos 1985; Korgaonkar, Lund & Price

1985; Mazursky & Jacoby 1986; Babini et al. 2003). In other cases data is

gathered in a mock up store environment. Furthermore, if the studies have

been conducted in a real life retail setting, grate attention has been paid to

traditional retail stores (Baker et al 1994; Collins-Dodd & Linley 2003;

Cottet, Lichtle & Plichon 2007). A minority of the studies have investigated

other types of retail settings such as restaurants (Barnes et al. 1992) or

malls (Bearden 1977; Baker et al. 2012). The writer has not found any

existing research that has studied a hard corner and a soft corner as retail

settings. Furthermore, Baker et al. (1994) call for retail settings that are

related but have a different retail environment. The hard and soft corner

studied in this paper belong to the same brand and are located in the same

retailer’s facilities. However, the images that these two retail environments

portray differ greatly.

In 2013 the discount chain Best- buy announced it will install “Samsung

Experience” shops inside its 900 stores, and possibly another 500 later on.

The American clothing store JC Penny did the same thing, adding shops

such as Levi’s and Liz Claibourne to its department stores. The sales of the

JC Penny stores with the brand hard corners increased by 20 % compared

to the rest of the JC Penny stores without the brand hard corners. (Oursler

2013) The idea is to move away from the old sales model that department

stores have used for decades, and instead operate a hard corner (Tuttle

2013). Hard corners can be seen in everything from department stores to

5

airports. In the Finnish department store Stockmann brands such as

Khiel’s, Mac and Gucci have their own dedicated areas, using the brands

own fixtures, furniture, colours, price points, product assortments etc.

(Jerath & Zhang 2010). Therefore, excluding these kinds of brand specific

dedicated areas such as hard and soft corners can be seen as a shortage in

the current retail environmental literature.

Baker et al. (1994) stated that the effects of the environment of traditional

stores and the image it portrays should be explored in other store types,

such as different types of speciality stores. Moreover, the authors stated

that effects of the retail image should also be tested across various product

categories. The authors suggest that more expensive items ought to be

investigated, for example.

This paper will attempt to fill this aforementioned research voids by

studying the different effects retail environment and the image it portrays

can have on consumer, especially consumer opinions. The Danish luxury

design brand Georg Jensen’s soft and hard corner in the department store

Stockmann’s stores will be the research subjects.

1.2 Aim of the paper

The primary aim of the paper is to study the different effects the retail

environment and the image it portrays can have on consumer opinions.

Moreover, this paper compares the overall design of two retail settings:

one with a retail environment portraying a higher image and the other with

a retail environment portraying a lower image, and their effects on

consumer opinions.

1.3 Delimitations

This paper focuses on identifying in which ways the overall design of the

retail environment and the image it portrays can affect consumer opinions.

The elements in the retail environment are classified based on previous

literature into ambient and design elements (Baker 1987). Due to the

6

theory-driven approach of the paper, other possible classifications were not

included in the study.

The image the retail environment portrays is divided into lower and higher

image retail environments. This division is also brought from a

predetermined model by Baker et al. (1994) and is further adapted based

on other literature within the field (Bernman & Evans 2007; Golden &

Zimmerman 1986; Levy & Weitz 2009; Markkanen 2008 etc.). Thus, this

paper does not include other means of dividing a retail image.

Majority of the literature used in this paper stems from the retail

environment literature. However, some theories have used the topic of

store environment. The topic correlates strongly with the concept of retail

environment. Both topics have even been used simultaneously in some of

the literature as the citation by Green (1997) on page one shows.

Moreover, some of the researches in the store environment literature

stems from studies that de facto have been conducted in other retail

settings than stores, such as restaurants (Barnes et al. 1992). Therefore,

store environment literature is also used in this paper in order to identify

the effects the retail environment induced image can have on consumer

opinions.

1.4 Structure of the paper

This paper is built on four major parts, the theoretical framework, the

research method, the empirical study and the results.

There are two chapters that constitute the theoretical framework. The

theoretical framework starts with chapter two. In this chapter the concept

of retail environment is explained. The closely related, and in some

instances overlapping, concept of retail atmosphere is also explained.

Furthermore, the chapter presents the different elements in the retail

environment, and what kind of effects they can have on consumers. The

elements are classified based on a framework used in the previous

literature.

7

Chapter three is the other chapter constituting the theoretical framework.

In this chapter the retail environment and the image it portrays is divided

into two separate images, adapted from previous research (Baker et al.

1994). The overall design of a retail environment can portray either a

higher image or a lower image. The different environmental elements that

constitute either of the two images are brought from previous literature

(Lin & Sternquist 1994; Mattila & Wirtz 2001; Spangenberg & Sprott 2005;

Bernman & Evans 2007 etc.) Ambient elements are elements in the

background of the retail environment which can be apprehended with the

five senses (Baker 1987). Lighting is used as the ambient element in this

paper’s study. Design elements are the functional and aesthetic elements:

flooring, colours, fixtures, display, product presentation, layout and aisles

(Baker 1987). These elements are used as independent variables in this

study.

The aim of the paper is to study the different effects the retail environment

and the image it portrays can have on consumer opinions. Therefore, the

hypotheses of the paper are presented in chapter three. The hypotheses

are based on the findings from previous research.

The methodology chapter begins with a description of the company, and its

two retail settings that are the study subjects of this paper. Next, the

choice of research method is motivated. Furthermore, the type of research

questionnaire used in this paper is explained, as well as the scale used to

measure these questions. Then the data of the study is also described.

The data is described in chapter five and the results of the empirical study

are presented. Finally the findings, managerial and theoretical implications

as well as limitations will be discussed, along with recommendations for

further research. The chapter ends with conclusions of the study.

1.5 Main definitions

Retail image

According to Lindquist (1974-75), the image of a retail setting consists of

everything people associate with that retail setting. It is the consumer’s

8

perceptions of a retail setting based on different attributes (Bloemer & de

Ruyter 1997).

Atmosphere

Kotler (1973-74) defined atmosphere as the air surrounding a sphere, as

the quality of the surrounding. Atmosphere is apprehended through the

five senses (Kotler 1973-74).

Soft Corner

A soft corner is a dedicated area for a specific brand, within a retail store,

see appendix 8. It is a specific area aimed for a specific brand. A brand

sells its products to the retailer, who sells the products to the consumer.

The product range and presentation is decided solely by the retailer. The

fixtures, lighting, flooring etc. are the retailers own, and are the ones that

are being used throughout the whole retail shop. Thus, a brand x can have

a brand dedicated area where the products are collected and presented,

with another brands products lined up directly next to brand x. A brand is

usually allowed to put its own logos and signage, in order to differentiate

the brand products from other brands’ products. (Y. Catani; e-mail

2.9.2014; Managing Director, fashion and design industry)

The soft corner can be altered both in terms of size and location. For

example, if the products of a brand happen to sell well, the soft corner can

be increased. The retailer decides upon everything that has to do with

visual merchandising of the soft corner. Thus, a soft corner follows the

guidelines of a retailer, but it still enables a brand to display its products in

one unified area. This means that Brand x’s whole product range is sold in

the same are, instead of the brand’s candles being sold in the retail store’s

candle section, the brands cutlery being sold in the retail store’s kitchen

section and so on. (Y. Catani; e-mail 2.9.2014; Managing Director, fashion

and design industry)

Hard corner

9

A hard corner is a dedicated area for a specific brand within a retail store,

see appendix 9& 10. The hard corner is a brand’s own area where the

brand itself decides on almost all matters related to the dedicated area.

The brand decides upon the products that are sold in a hard corner, or at

least provides guidelines for the product range. In case of a new product

line, the brand can decide to sell it in a hard corner in order to test how it

is received by the consumer, before the retailer stocks up on the new

product line. The brand also decides upon price points. Hence, a hard

corner can also be called a shop-in-shop. (Y. Catani; e-mail 2.9.2014;

Managing Director, fashion and design industry)

All matters related to visual merchandising are decided by the brand:

product presentation, display, flooring, lighting, signage, logo, fixtures,

layout and more. The visual merchandising follows a brand’s global

guidelines and standards. A brand’s own visual merchandiser visits the

retailer and changes the hard corner visual merchandising whenever

needed. To keep a globally unified look, a hard corner’s visual

merchandising and product range is usually predetermined according to

the square meters of the dedicated area. However, a brand still sells its

products to the retailer, who sells the products to the customer. (Y. Catani;

e-mail 2.9.2014; Managing Director, fashion and design industry)

Stimulus

Stimuli are environmental elements that influence behavior. A stimulus is

elicited when a change in the environment occurs that correlates with a

later response. (Barker, Kreider, Peissig, Sokoloff & Stansfield s.a.)

10

2 THE RETAIL ENVIRONMENT

This chapter is the first of the two chapters that constitute the theoretical

framework of this paper. Section 2.1 explains the different terminology

used by researchers to describe the retail environment that affects

consumer opinions. The chapter will continue by presenting the different

elements that can be found in the retail environment, for it is these

elements that can affect consumer opinions. Various literatures regarding

the categorizations of the different retail environmental elements will be

presented.

2.1 The concept of retail environment and retail atmosphere

In the retail environment literature the concepts of environment and

atmosphere are frequently used. These concepts are even used to describe

the same phenomenon in some of the literature (Bellizzi, Crowley & Hasty

1983; Barnes et al. 1992; Babin et al. 2003; Chebat, Michon & Turley 2005;

Doucé & Janssen 2013). However the two concepts do have some differing

characteristics.

2.1.1 Retail environment

A retail environment can be defined by separating the person from the

physical elements that surround the person. Listing the myriad of elements

in the customers’ environment is an impossible task. (d´Astous 2000) To

tackle this problem researchers have grouped the elements into different

categories. There are various methods of categorizing the elements in a

retail environment.

Baker’s (1987) framework that categorizes the elements in the retail

environment into three critical groups is still one of the most widely used

models in the retail environment literature. Baker divides the elements of a

retail environment into ambient, design and social elements. The Ambient

elements are background conditions in the environment: music, scent,

temperature etc. A customer might not even notice these non-visual factors

until they have surpassed a certain acceptable level, such as when the

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music becomes too loud. The design elements are divided into functional

and design elements. Functional elements and design elements are more

visual in nature compared to ambient elements. Functional elements

include elements such as layout and privacy, while design elements include

elements such as architecture and style. Finally, social elements represent

all the people within the retail environment: the customers and the sales

personnel. (Baker 1987; Baker et al. 1992; Baker et al. 1994) The model by

Baker (1987) will be more thoroughly presented in section 2.2.

2.1.2 Retail atmosphere

According to Kotler (1974), atmosphere is a term used to describe the

quality of a certain surrounding. Berman & Evans (2007) describes a retail

atmosphere as the personality of the retail setting. Atmosphere is

apprehended via the senses: sound, sight, scent, touch and taste. Thus an

atmosphere can be heard, seen, smelled and felt but not tasted in the

traditional sense of the word. Nevertheless, an atmosphere can be

remembered as tasteful. (Kotler 1974) For example, a candy store filled

with candy in every colour of the rainbow and infused with a scent of

marshmallows can be described as having a delicious atmosphere.

According to Broekemeir, Gentry & Marquardt (2008), the atmosphere

incorporates elements such as temperature, scent, brightness, volume,

pitch, scent, and freshness. This definition correlates with that of Kotler’s

(1974), where atmosphere is regarded as everything in the physical

surrounding that can be apprehended with the sense. Fugate & Milliman

(1993:68) continue on this notion by describe the atmosphere as “the

collection of stimuli (atmospheric variables) which impinge upon an

individual's senses effecting the total experience of being in a given place

at a given time”. The retail atmosphere does not include social components

such as sales personnel, or external components such as architecture.

Atmosphere can also be regarded as the physical environment of a retail

setting (Barnes et al. 1992). Barnes et al. (1992) divide the atmosphere into

the external and the internal environment. The external environment is the

part of the retail setting that is visible before entering into the retail area,

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while the internal environment is the part of the retail setting that is visible

from the selling space. Berman & Evans (2007) divide the retail

environment into four different categories. The first one is the external

variables that comprise architectural style; exterior signs; entrance; colour

of building; address and location etc. The second category is the general

interior variables which are elements such as temperature, scents, colour

schemes, music and merchandise. The third category, layout and design

variables, incorporates space design and allocation; placement of

merchandise; placement of cash registers; racks and cases; waiting rooms

etc. Point- of- purchase and decoration variables is the fourth category, and

it comprises elements such as signs and cards; price displays; pictures; and

degrees and certificates.

Milliman & Turley (2000) take the model by Berman & Evans even further.

The authors adds a fifth category, human variables, that incorporates

employee characteristics, customer characteristics, privacy etc. (Milliman

& Turley 2000; Kocamaz & Yalçin 2003) Thus, the categorization by

Berman & Evans (2007) and Milliman & Turley (2000) differ from the

categorization by Baker (1987) as it includes the external factors of a retail

setting such as window display and architecture. Therefore, it is a broader

categorization.

In the retail sense, atmosphere can be described as the designing of a

space in a way that elicits specific consumer behaviour. Atmospherics can

hence be described as “the effort to design buying environments to

produce specific emotional effects in the buyer that enhances his purchase

probability” (Kotler 1974:50). Fugate & Milliman (1993) state that

atmospheric variables are any elements in a person’s perceptual field that

stimulates the person’s senses, affecting the experience of being in a

specific setting. Fugate & Milliman (1993) claim that positive atmospheric

outcomes increase purchase probability. Thus, atmospherics is the study of

these variables and their effect on consumer behaviour.

Despite the term being used, the retail atmosphere is designed to stimulate

customers, prompt the right emotions and ultimately affect purchase

intentions in the retail environment. (Spangenberg & Yalch 1990) The

13

retail environment and the retail atmosphere have the power to affect

several different aspects such as peoples shopping enjoyment (Berman &

Evans 2007), the time customers spent browsing the merchandise (Levy &

Wietz 2009), decrease perceptions of the time spent shopping (Baker et al.

2002), patronage intentions (Herbert & Summers 1999), customers’

willingness to engage with the sales personnel and spending. As these

results and conclusions of the previous literature are valid in a retail

context, it can be assumed that a hard corner and soft corner environment

would yield similar results and conclusions.

Section 2.1 has introduced the different terminology that can be used to

describe the retail environment affecting consumer opinions. The concepts

of retail environment and retail atmosphere have been explained.

2.2 Elements of the retail environment

Researchers have been able to show that certain elements of the retail

environment can directly affect the consumer (Areni & Kim 1994; Herberts

& Summer 2001; Babini et al. 2003; Grohmann et al. 2005). There are

various methods of categorizing the different elements. However,

characterizing the myriad of stimuli in a retail environment is not an easy

task, and some models have been more successful than others (Donovan &

Rossiter 1982 and Milliman & Turley 2000). In the retail environment

literature the model by Baker (1987) can be found in several of them e.g.

Baker et al. (1992); Baker et al. (1994); Baker & Cameron (1996); Lam

(2001) and Baker et al. (2002). Studies have shown that the elements of the

retail environment identified in Baker’s (1987) model can directly affect the

consumers’ opinions such as retail image. The model classifies the retail

environment in variables that retailers can easily control and combine

according to preference (Baker et al. 1992).

Thus, the model by Baker (1987) will also be used in this paper. The

elements in the retail environment are divided into ambient, social and

design elements in accordance with the model. Ambient elements are the

background characteristics of the retail environment, such as music, scent,

noise, temperature, cleanliness and lighting. Design elements include

14

functional and aesthetic elements. Finally, social elements incorporate all

the people in the retail environment such as sales clerks and other

customers. (Baker 1987; Baker et al. 1992; Baker et al. 1994) Research

studying the elements of these three factors is presented in the next

sections.

2.2.1 Ambient elements

A general rule of thumb is that the ambient factors affect the five senses.

However, the factors may be imperceptible, and thus customers might not

be aware of these components. Ambient factors are elements such as

chemicals, infrasound and temperature (Bitner 1992). Several researchers

have studied the effects of ambient factors on the human perception of the

environment, and human behaviour to the environment (Cox 1967 (cited in

Olahut & Plaias 2013); Bellizzi et al. 1983; Gardner & Siomkos 1986; Garg,

Kumar & Rahman 2010). Nevertheless, Baker (1992) posits that ambient

factors might not even have an effect until they surpass an accepted level.

The accepted level might be surpassed if the temperature in the retail

environment is too cold, lighting is too bright, music is too loud etc.

Of all different ambient elements, music has received the largest amount of

attention. Music can affect the pace of the customer flow in the retail

setting, product image, the image of a retail environment, customers’

attention and even purchase behavior.

Customers perceive music played in a service setting to be pleasant in

general. Studies show that pleasant music can affect consumer perceptions

of a retail setting, as well as the shopping experience. For example,

Spangeberg & Yalch (1993) studied how music effects customers’ overall

perceptions of the retail setting. The authors found customers to prefer

specific sections of the retail setting playing specific kinds of music. The

respondents purchased more in the sections that played pleasant music.

Studies have also showcased the importance of the synergy between the

retail atmosphere and music. A study by Belcher & DeNora (2000) showed

that when French music was played in a store the sales of French wines

15

increased. Similarly, the researchers found that the sales of German wines

increased when German music was played in a store. Thus, it seems that if

music is in synergy with the retail atmosphere it can affect consumer

behavior.

The effect of foreground and background music have also been studied.

Background music can affect how in control and aroused a customer feels.

Moreover, it has been found that the feeling of arousal and dominance

directly affect consumers’ purchase intentions. (Belk, Farrag & Sayed

2003)

Lighting has been found to influence customers’ retail image, behavior,

time perceptions and emotions, for example. Lighting can be used to draw

customers’ attention to any desired area. By drawing customers’ attention

to a strategic area, a less attractive area can go unnoticed. (Grag et al.

2010) Despite its prominent assets, lighting has received quite little

attention in the retail atmospherics literature. The most significant studies

have been conducted between the 80s and the 90s e.g. Meer (1985); Butler

& Beaner (1987) & Areni & Kim (1994).

The relation between lighting and consumer behavior has been studied by

Areni & Kim in 1994. The authors studied 171 consumers in a wine store.

The authors varied between using soft lights and bright light in the wine

store. The findings indicate a significant relation between the amount of

wine bottles handled and examined, and bright lighting. The customers

handled and examined significantly more wine bottles during the nights

that the brighter lighting was used in the retail setting, compared to when

the softer light was used. Herbert & Summers (2001) came to similar

conclusions as Areni & kim (1994). The authors conducted a test in both a

hardware store and an apparel store. Additional strong, fluorescent lights

were installed in both stores. The authors studied customers’ behavior

during normal lighting, as well as during stronger lighting. The results

show that customer in both retail settings touched significantly more items

when the stronger light was used. Furthermore, the findings show that

when the stronger light was used customers picked up significantly more

items in both retail settings, than when the normal light was used.

16

Grag et al. (2010) studied the relationship of retail atmospherics and

consumer value. Three kinds of retail settings were examined: multi-brand

stores, exclusive brand stores and discount stores. Customers were asked

to rank the retail atmospherics and the impact on the customers’ perceived

value. Lighting together with color was seen to significantly affect the

customers’ value perceptions.

Farr & Park (2007) studied the relation between color quality of light and

the emotional states of pleasure and arousal, as well as approach-

avoidance intentions. A brighter lighting was perceived significantly more

arousing than a softer lighting. Not surprisingly, the subjects perceived the

brighter lighting as significantly better in terms of visual clarity. However,

subjects found the softer lighting to be more pleasurable than the brighter

lighting. Nevertheless, the results show that the brighter lighting was

perceived more approachable than the softer lighting.

In terms of general retail environmental stimuli, lighting has been found to

affect consumers and their behavior. However, there are discrepancies in

the research findings regarding the brightness of lighting. Brighter lighting

has been shown to result in more products being handled and examined.

Furthermore, brighter lighting has been found to prompt the feeling of

arousal and approach behavior. Nevertheless, a softer lighting has been

perceived as more pleasurable and as enhancing a retail settings high

quality image. Additionally, a softer light has been shown to affect price

fairness perceptions. These discrepancies will be discussed later in this

paper, in section 3.1.1.

Bloch & Gulas (1995:87) describe scents in the environment in the

following way

“Ambient scent is portrayed as an environmental cues that is

compared with scent preferences to influence affective

responses and ultimately approach-avoidance behavior”

The effects of odor and aroma have received relatively little attention until

the 90s. During the last 24 years retailers have increasingly incorporated

scent as a marketing tool. Research in the field has studied the effects of

17

scent that is directly related to a product that is sold, e.g. the smell of

ground coffee in a café. However, more recent studies have focus on scents

that are generally perceived to be pleasant, and which do not necessarily

relate to the products being sold. Studies from the last 20 years have

shown the effect that odor can have on consumer perception, attitudes and

behavior.

Studies indicate that the usage of an inoffensive scent in a retail

environment leads to more positive evaluations of the retail setting; retail

environment; and a specific product as well as the overall merchandise,

than when no scent is utilized (Crowley, Henderson & Spangenberg 1996).

Crowley et al. (1996) found respondents in a retail environment with an

inoffensive scent to express a stronger intent to visit a retail setting and

purchase a specific item, than did respondents in an un-odorized retail

environment. Respondents in the retail environment utilizing an inoffensive

scent did also examine more products. The retail environment with the

inoffensive smell did not attract respondents to stay longer, but the

respondents estimated their stay in the retail setting to be shorter than it

was.

The study conducted by Hirch in 1996 is one of the most cited once in

terms of the relation between scent and consumer behavior. The findings

suggest that respondents were more likely to purchase a pair of sneaker

sold in an odorized room, than an identical pair sold in an odor free room.

(Miller 1991) Cox study from 1967 continues on this notion. The research

findings suggest that scent infused stockings sold more than the pair of un-

odorized stockings. The process of increased sales of the odorized

stockings was due to customers’ quality associations. Customers regarded

the stockings that were infused with a scent to be of higher quality. (Cox

1967 (cited in Olahut & Plaias 2013))

Furthermore, the study by Grochmann, Spangenberg, Spratt & Tracy

(2006) illustrate how congruent/incongruent scents can affect consumer

evaluations. The authors studied congruent versus incongruent scents on

gender-based clothes, and the perceived masculinity or femininity thereof.

The findings illustrate that a scent congruent with gender-based piece of

18

clothing resulted in more favorable merchandise and retail setting

evaluations.

As a conclusion, ambient factors are non-visual background elements in an

environment. These elements affect the five senses, but they can be

imperceptible. Therefore, the consumer might not be aware of the

elements until they have surpassed an acceptable level. These factors can

affect purchase intentions, purchase behavior, value perceptions, retail

patronage intentions and more. Generally speaking, it seems very

important for sensory variables (lightning, scents, music etc.) to be

coherent with retail image to avoid shocking the consumers. (Baker &

Cameron 1996)

The consumer can be affected by the different ambient factors that are

present in a retail environment. Therefore, this paper assumes the same

factors can be found in the environment of a soft corner and hard corner.

However, a brand seldom controls what kind of music or scents are used in

a soft and hard corner environment. The music that can be heard in a soft

and hard corner is usually the one that is played in the retail facility.

Similarly, the scents that are present in a soft and hard corner environment

are usually the once that are present in the whole retail facility. Moreover,

it is uncommon that music or scents would be used in a soft and hard

corner in addition to the one that is used by the retail store. Hence, music

and scent will not be included as measurements in the empirical study of

this paper.

2.2.2 Design elements

While ambient elements are sense orientated, and can largely affect the

consumer unconsciously, design elements are more visual. Baker (1987)

divides the design factors into functional and aesthetic elements.

Functional elements

Layout, display, comfort and privacy constitute the functional elements in a

retail environment (Baker et al. 1994 & Levy & Weitz 2009). Layout and

display are considered to be the main functional elements.

19

The retail layout has the ability to prompt a pleasurable shopping

environment where a customer wants to spend time and can easily find

what they are looking for. Moreover, the right kind of layout utilizes every

square of a retail setting, minimizing so-called dead-spaces. The traffic

pattern should be planned in detail on beforehand. The different elements

in the environment can regulate the desired customer flow. Furniture,

music, light etc. can be used to strategically guide the customers through

the retail setting. (Markkanen 2008)

In accordance with traditional layout theory, layout type can be divided

into grid, racetrack and freeform. In a grid layout displays and aisles are

placed in a rectangular formation. Furthermore, the displays and isles are

usually placed parallel to each other, with merchandise on selves on both

sides of the isles. While the layout is not visually appealing, it enables a

customer to easily move through the retail setting and easily locate their

preferred products. The layout form is both fast and flexible, making it

ideal in e.g. a grocery store where shopping behaviour is planned and a

routine. The advantages of the grid layout is its cost efficiency. The aisles

are usually just big enough for a customer and their carts, effectively

reducing the waste of space. Furthermore, displaying merchandise on

shelves makes it possible to have more products on the sales floor. The

disadvantage is unlimited exposure to all merchandise in the retail setting.

This will especially be an issue in department stores where customers do

not always have a clear image of what they want to buy. Thus, a racetrack

layout would be a more suitable option. (Levy & Weitz 2009)

In a race track layout there is one main aisle that runs around the retail

setting. The track guides customers to multiple departments in the retail

setting, exposing customers to a greater amount of merchandise. As

customers go around the track their attention is caught by more

merchandise than when they walk down a single aisle. Popular

departments are usually placed in the back of a retail setting to entice

customers to walk through the whole setting. The pattern is favoured by

large department stores. (Levy & Weitz 2009)

20

In the free form layout the displays and isles are not organized in any

particular order. Instead, the layout is organized in a free and flowing

manner, with displays and isles in various styles, sizes and shapes.

(Doukidis, O’Keefe, Siomkos & Verchopoulos 2004) The layout creates an

intimate and relaxing environment which makes it suitable for shopping

and browsing. The layout enables the customer to move freely in any

direction. Therefore, it is suitable for departments within large retail

stores. Nevertheless, the layout is costly. Because no well-defined traffic

pattern exists, customers are not lead to walk through the whole retail

setting. Furthermore, creating an enticing and spacious shopping

environment means that the storage and display space are not fully

utilized. (Levy & Weitz 2009)

Merchandise can be displayed in various manners. There are four main

principle types of fixtures that display the merchandise in a retail setting: a

gondola, a rounder, a four-way and wall shelves. In a gondola the products

are stacked on shelves in a longitudinal manner. Gondolas are common in a

retail setting employing a grid layout, such as grocery stores. The

displaying allows for customers to see merchandise on both sides as they

move along aisles between gondolas. On a rounder the merchandise is

displayed in a circular presentation. The merchandise can be hung from

different prongs attached to the rounder, or the display can be more solid.

A rounder is mostly used in apparel stores as it can be easily moved and

display a maximum amount of merchandise (Levy & Weitz 2009). A four

way rack offers a front and side facing presentation of the merchandise.

Wall space is useful for facilitating the general display of the merchandise

being sold. It facilitates a large amount of merchandise as it can be stapled

from floor to roof, whilst providing an easy overview of a large amount of

products. Clothing stores usually embark on this method when displaying

jeans, for example. Varley (2001)

Studies have found displays to have an effect on sales. Curhan (1974)

examined the effect merchandising and temporary promotional activities of

groceries had on sales. The study explored how sales of vegetables and

fruits were affected by variables such as display space and quality of

display location. The findings suggest that increased display space

21

increased sales of all four fruit and vegetable categories that were tested.

For example, one of the fruit categories increased its sales by 44%, as a

result of bonus space. Furthermore, the display quality was found to affect

sales of the categories of salad vegetables and soft fruits. This would imply

that in order to affect sales of the cooking vegetables and hard fruits more

attention should be paid on display location instead of display quality.

A study conducted by Gagnon & Osterhaus (1985) also found that sales can

be affected by display space and the type of fixture the merchandise is

displayed on. The study examined the effect of pop up floor stands on unit

sales in 24 grocery stores and pharmacies. The floor displays were located

in independent pharmacies chain pharmacies and grocery chains. The

amount of units sold from a floor display increased by 388% in the grocery

store and 107% in the pharmacies, compared to units sold from store

shelves.

Markkanen (2008) divides the product display into two different categories.

The merchandise in a retail setting can be displayed vertically or

horizontally. When the merchandise consists of several different brands a

vertical display is most suitable. The display method is especially suitable

for product news. The display enables an easy comparison of the different

brands, even though it might take a longer time to browse through the

products than in a horizontal display. (Markkanen 2008)

However, if the products are of completely different quality the brand

image of the higher quality product might suffer. Thus, a horizontal display

would be more suitable. In a horizontal product display the shelves can be

divided into different categories, based on their relative selling power. The

shelves on eye-level are found to generate most sales, followed by the

shelves that are on the same level as the hands. The shelves on the same

level as the head are the third most important shelves, followed by the

shelves on the same level as the knees and the feet. Studies have

corroborated the relative selling power of the different shelf levels. In one

study the products on the shelves at eye-level where moved down to the

level of the feet. The sales of the rearranged products plummeted by 60%

as a result. (Markkanen 2008)

22

Aesthetic elements

Aesthetic elements include colour, style, design materials and architecture

(Baker et al. 1994).

The effects of colour have been widely studied in the marketing literature.

Especially packaging and advertising has been the centre of attention.

Researchers have shown that colour can draw attention, generate

emotional responses etc. Thus, retailers attempting to utilize colours in

order to affect consumers’ buying mood for example, have had to rely on

knowledge from non-retail fields such as psychology. Previous research has

shown the attention-getting power of colours. Colour selection becomes

important for retailers as it attracts customers’ attention, but more

importantly it can physically draw a customer to the retail setting (Bellizzi

et al. 1983). Colours can evoke several different emotions. These are

presented in table 1.

23

Table 1. The Psychological associations of colours

Red Exsiting, passionate and warm

Orange Sociable, "folk-style" and implifies affordability

Blue Relaxing, refershing and cool

Green Nurturing, dynamic and universally appealing

Brown and earth colours

Stable, respectful and relates to instincts

Yellow Cheereful, communicative and youthful

White Unifies; brings life into other colours; and cold, impersonal and steril

Black Culturally ambiguous and formal

Grey (metallic and pearl shades)

Mysterious

Source: adapted from Sivakumar (2007)

Several studies regarding colour hue, i.e. colour wavelength, have been

made. Colours that have a short wavelength are the cool colours, while

colours of long wavelength are warm colours. It has been consistently

shown that cool colours are preferred over warm colours. The study by

Bellizzi et al. (1983) shows that retail environments with cooler colours

were preferred over retail setting with warmer colours. A significantly

larger amount of the subjects were physically drawn to the cooler colours.

Additionally, blue/violet colours increased purchase intention more than

red/orange. However, warmer colours have been proven to create greater

arousal. (Babin et al. 2003)

In a research conducted by Bellizzi & Hite (1992) 70 subjects, exposed to a

red or blue simulated retail setting, were studied. The research

corroborates previous research of cool colours yielding more positive retail

environment outcomes, than warm colours. The blue display was found to

24

increase purchase (decreasing postponement of purchase). Furthermore,

the authors found that 50% of the subjects exposed to the blue display

would have chosen the most expensive merchandise, whereas 19% of those

exposed to the red display would have chosen the most expensive

merchandise. Additionally, the blue environment resulted in greater

intentions to buy, shop, and browse.

Studies of cool and warm background colours have also been made. In

Middelstadt’s (1990) regarding background colours and product attributes

and beliefs, a cool colour was found to elicit a more positive attitude

towards buying. The subjects were shown a pen against a blue and a red

background. The combination of a pen against a blue background colour

affected positively respondents’ attitudes as well as the underlying beliefs.

The literature and research in the area of style and design material is

limited. It is difficult to draw any general conclusions about style as it is

relatively subjective. Furthermore, styles are subjected to frequent change

which makes it difficult to create a general framework.

The various researches have studied the effects that overall retail

environment aesthetics can have on consumer opinions. Dick et al. (1996)

found that retail aesthetics were strong moderators of consumers’

evaluation of retail brand quality. Thus, investing in aesthetics e.g.

upgrading fixture quality, making it easy to move between aisles and

keeping the retail environment clean, helps enhance the overall perception

of retail brand quality.

As a conclusion it can be stated that amongst the three groups of elements

constituting a retail setting, the design elements constitutes the largest

group of elements. Functional and aesthetic retail elements are important

factors of a retail environment. Functional elements can increase the

likelihood of purchase. For example, a specific layout can entice customers

to stay longer in a retail setting and possibly shop more. Increasing product

display space has shown to increase sales. Furthermore, aesthetic elements

such as the usage of a cool colour in a retail environment, will result in

more positive purchase attitude. This paper assumes that the design

25

elements in a retail environment presented in this section can also be found

in a soft and hard corner environment.

2.2.3 Social elements

The people in a retail environment can be classified as social elements. A

retail environments social elements are the amount, type and behavior of

the other customers and sales personnel.

Studies about the social factors of the retail environment have mostly

revolved around the subject of crowding. The amount and behavior of sales

personnel has also been studied. The studies have shown that the

perceived crowding has a negative effect on consumers’ evaluations of the

shopping experience. For example, Bateson & Hui (1991) found that there

was a positive relationship between the density and perceived crowding.

Therefore, the authors concluded that density had a direct negative

influence on pleasure. Eroglu, Kellaris & Machleit (1994) also found

crowding to negatively impact shopping satisfaction. However, more recent

studies have proven that crowding has a positive impact on service

experience. Laroche, Mourali & Pons (2006) found there to be an overall

positive relationship between how customer perceived density and their

evaluation of the service setting. This result is naturally more likely if the

service setting is a movie theater, a concert, an opera, a sporting event etc.

The ideal number of sales personnel present in a retail environment has

been the subject of several studies. Mazursky & Jabocby (1986) found the

number of sales personnel to be a critical factor in the consumers’

evaluation of the service quality. Baker et al. (1992) studied the amount of

sales personnel and sales personnel behavior, and its result on consumer

behavior. Respondents subjected to a service setting with three shop

assistants, of whom one greeted the customer when entering the setting,

perceived a high level of arousal. Meanwhile, the respondents subjected to

a setting with only one shop assistant who did not greet the customer,

perceived a lower level of arousal. Moreover, there was a significant

positive relationship between perceived arousal and willingness to buy.

26

Social elements comprise all the persons present in a retail environment.

Crowding and the behavior of other customers are also social elements of a

retail environment. However, observing other customers in a retail

environment is demanding. Furthermore, brands do not always use own

sales personnel in a hard corner setting. The staff found in a hard corner is

usually the retail store’s own. Therefore, the social elements of a retail

environment will not be used in the empirical study of this paper.

Section 2.2 has presented Baker’s (1987) model of classifying the various

elements in the retail environment. The elements in the retail environment

can be divided into three critical groups: ambient elements, design

elements (functional and aesthetic elements) and social elements. The

model by Baker classifies the retail environment into variables that

retailers can control and combine in an easy manner. This is one of the

reasons that the model has been extensively used by other researchers

(e.g. Baker et al. 1994; Lam 2001).

Furthermore, looking at the retail environment through the lenses of the

model provided by Baker, one can identify elements that have a direct

effect on consumers’ opinions. These elements can affect everything from

perceived retail image to brand quality perceptions, price fairness

perceptions, purchase behaviour and consumers’ evaluations of the

shopping experience.

27

3 RETAIL IMAGE

This chapter constitutes the second part of the theoretical framework.

Research regarding the categorizations of the different elements in the

retail environmental has been discussed. A more focused view on the

environmental elements and their effect on consumer opinions will be

presented in the next sections. The paper presents the model by Baker et

al. (1994) that divides the retail environment into a prestige image or a

discount image environment, based on the elements in the retail

environment. This enables the identification of consumer opinions resulting

from a higher or lower image retail environment. The hypotheses of this

paper will be presented in combination with this chapter, as the aim of this

paper is to study the different effects the retail environment and the image

it portrays can have on consumer opinions.

3.1 Higher image and lower image retail environments

The study by Baker et al. (1994) investigated the influence of retail

atmospheric elements on consumers’ inferences of merchandise and

service quality, and how the inferences shape the retail image. Moreover,

Baker et al. created a model of ambient, social and design elements that

constitute a prestige or a discount image retail environment. The model is

based on previous marketing and environmental psychology literature

about the retail environment. The authors concluded that the model is

particularly suitable for retail settings that are related, but that have a

different retail environment. Moreover, the model makes it possible to

compare the effects of a high versus discount image retail environment.

Thus, the model is suitable in comparing a hard and soft corner setting,

and the kind of effect the image they portray can have on consumer

opinions. Hence the model will be utilized as a framework for this paper

too.

The retail environment provides several important cues for the consumer,

and can therefore have a substantial impact on consumers. Many purchase

decision are made at the point of purchase. As a consequence, different

elements in the retail environment, such as colour, music or lighting, can

28

have a more immediate effect on consumers than other marketing inputs,

such as advertising, that are absent in the point of purchase. Previous

research has identified what a big impact the retail image, e.g. a prestige

image, can have on consumers (Darden, Darden & Ordem 1983 (cited in

Grewal 1998); Gardner & Siomkos 1986; Mazursky & Jacoby 1986; Baker,

Berry & Parasuraman 1988 (cited in Barnes et al. 1992)), and their

opinions, such as purchase intentions (Baker et al. 2002). (Baker et al.

1994)

3.1.1 Higher image ambient elements

In a higher image ambient environment the music played is classical;

scents are utilized; and the lighting is low and soft. Classical music has

been found to affect everything from an increase in purchase of more

expensive products (Areni & Kim 1993) to evaluations of the retail

atmosphere (Baker et al. 2003) and pleasure (Baker et al. 1992). The

utilization of scents has shown to affect consumers in different ways.

Studies have shown that using scents in a retail setting can increase

purchase likelihood (Hirsch 1996), increase retail setting patronage

(Hirsch 1995) and positively affect retail environment perceptions (Chebat

et al. 2005).

Garnder & Siomkos (1986) studied how retail atmospherics influence

consumer evaluations of a perfume, when subjected to descriptions of

either high or low image retail atmospherics. “The lighting is indirect and

subtle”, was one of the descriptions of a high image retail environment

(Garnder & Siomkos 1986:28). A lower image environment was described

as having very bright and harsh lighting. Ratings, evaluations and

evaluative beliefs of the perfume were given higher scores by the

customers subjected to the high image description. Furthermore, in 2003

Babin et al. conducted a research on color, lighting and price point

combinations. The findings demonstrate the relationship between lightning

and price fairness perception. Prices were more often perceived fair in the

simulated retail setting with a soft light, than with bright lights.

29

However, one ought to remember that several studies have shown that

utilizing brighter lights in a retail environment in fact has a positive impact

on consumer behavior. For example, Areni & Kim (1994) compared the

lighting a retail establishment. The findings show that customers in the

setting with the brighter lighting examined and physically handled more

products than customers in the setting where the lighting was softer. As

previously stated, the research conducted by Herbert & Summers (2001)

came to similar conclusions: customers in both of the two stores that were

being tested touched significantly more items when a stronger light was

used, than when a stronger light was not used. Additionally, customers in

both stores picked up significantly more items when a stronger light was

used then when it was not used.

Therefore, one ought to be careful when drawing conclusions in terms of

what lighting will be most valuable. On one hand, soft and dim lighting can

give the impression of a higher image which results in customers

perceiving products to be of higher value, and in customers being more

acceptant of a higher price. On the other hand, stronger lighting has

proven to result in customer examining and handling more products, which

can lead to direct increase in sales.

Levy & Weitz (2009) point out that having an appropriate lighting has been

shown to positively influence consumers’ shopping behavior. One way of

arranging the lighting in the retail environment is the so called popping of

the merchandise: using a spotlight to showcase specific areas and items.

The aim with the lighting is to draw the customers’ attention to strategic

areas. Additionally, this kind of lighting can be used to physically draw the

customers through the retail setting. (Levy & Weitz 2009) An example of

the popping of the merchandise-lighting could be that the overall lighting

in the retail environment itself is soft and dim. However, additional

spotlights are used in the retail environment to illuminate a counter with

new product arrivals, for example. In accordance with the research

findings mentioned above, this approach would take into account the

benefits of both the soft and the bright lighting.

30

3.1.2 Higher image design elements

A higher image design environment comprises wood floors or carpets.

Moreover, a higher image retail environment uses an aromatic- neutral and

brown monochromatic colour palette of few vivid hues. A light hard wood

floor provides a nice backdrop for fixtures and merchandise. It creates a

natural and warm feeling compared to vinyl, for example. However, the

upcoming trend especially in bars and restaurants is the usage of a richer

and darker coloured wood floor. (Sivakumar 2007) Nevertheless, it would

be more reasonable to utilize a lighter coloured wood in a retail

environment as the aim is to draw attention to the products being sold, as

opposed to creating and overall relax and enjoyable atmosphere where a

customer would want to linger for hours.

The different effects that colours can have on consumer opinions have been

presented in the section describing the retail environment’s design

elements, section 2.2.2. Red and violet represent the separate ends of the

extreme wavelengths. They have been found to elicit opposite physiological

responses. A red coloured environment will raise the blood pressure while

a blue coloured environment will lower it. (Bellizzi et al 1983) Thus, red

colours excite and arouse while blue colours calm and sedate. Therefore,

the optimal colour would be in the middle of these extreme colours

(Markkanen 2008). That is, neutral colours such as white, beige, light

brown and dark brown. A high image retail environment is characterized as

utilizing neutral, monochromatic-brown colours. These colours elicit

neither extremely aroused behaviour nor extremely phlegmatic behaviour,

but rather a pleasurable and relaxing atmosphere. Moreover, the colours

generate the kind of atmosphere that correlates the image of a higher end

brand (Levy & Weitz 2009).

Previous research findings show a significant difference between the

organizational type and the way colours are employed. Retail

establishments, especially higher end women’s clothing shops, tend to have

a narrow spread of colour and often tend to use few vivid hues. The most

used colours in these retail environments are natural and monochromatic-

brown colours: white, beige, medium brown, dark brown, light grey and

31

black (Foote 1983). Furthermore, Markkanen (2008) states that light

neutral colours signal elegance. Light colours such as off-white, beige, light

brown and light grey help display merchandise more effectively (Golden &

Zimmerman 1980).

Similar results can be seen in research on retail environment colours and

price level. For example, Foote (1983) examined the relation between the

overall price level, and the number of colours and the type of hues that

were used in a retail environment. Women’s and men’s clothing stores

were divided into three price categories. The least expensive category was

made up of discount stores and outlets; the intermediate category

comprised low priced goods; and finally design store and boutiques

constituted the most expensive category. The findings show that there was

a significant difference between the colour scheme and the price level of

the clothing shops. Shops belonging to the most expensive category used

the least amount of colours as well as the least amount of vivid hues. These

design stores favoured black, beige, light grey, off-white and medium

brown colours.

Table 1 presents the psychological associations with different colours.

However, the impact of different colours can vary if a particular colour is

used alone or together with several other colours. According to Bender &

Kizer (2010), the colour of white may prompt a feeling of absence of colour.

Sivakumar (2007) further states that when white is used together with

other colours it unifies and brings life to the other colours. In other words,

using a white colour solely can actually result in negative associations.

Instead of the white colour resulting in positive associations such as a high

retail image, when used together with brown, beige and black. According

to Markkanen (2008), white is a dominant colour in the lower image retail

environments such as grocery stores.

The characteristics of a higher image retail design are also coordinated

fixtures that portray a brand’s image; and neatly decorated and un-

crowded displays. The general purpose of fixtures is to display merchandise

(Levy & Weitz 2009). Furthermore, fixtures should portray a sense of

coordination throughout the retail environment by using same design

32

features. The style of the fixtures should complement and accentuate the

merchandise. Fixtures ought to correlate with the retail image and

character. This enables the support and reinforcement the retail brand

image. It is common that well established retail brands use their own

customized fixturing. (Varley 2001) According to Levy & Weitz (2009),

fixtures are also used to guide customers and affect the traffic flow.

Fixtures can be used to define areas and hence it is important that fixtures

correspond with the other design elements in the same area.

In a high image retail environment the fixtures, such as wall stands or

islands, should present the merchandise so that the display is neat and un-

crowded (Garnder & Siomkos 1986). According to Johnson (2007), displays

should be easy to view, enabling a customer’s eye to move easily over the

display. The author further posits that an overcrowded showcase can hurt

the perceptions of value of the merchandise. Berman & Evans (2007)

continue on this notion by stating that in a higher image environment the

displays should be somewhat decorated, in order to avoid too exposed

fixtures. For example, the merchandise on a wall stand should be organised

so that the stand is not exposed and drawing attention. The fixtures and

displays can be decorated in various ways. A wall stand selling living

products can be decorated with flowers in flower vases, fruits in bowls, a

loaf of bread and a knife on a cutting board etc. The decorations of the

fixtures and displays should be beautiful, but the decorating should be

almost imperceptible in order to avoid a messy look (Markkanen 2008).

Fixtures and counters that were crowded and had an all over messy look

were used in Garnder & Siomkos (1986) experiment to characterise a lower

image retail design.

A retail environment with a higher image design has displays incorporating

an “idea-orientated” presentation of the merchandise (Levy & Weitz

2009:528). In an idea-orientated presentation the merchandise in a retail

setting is presented based on the image or an idea of the setting. Individual

items are presented together to showcase how the items would look in real

life, and to give ideas of how the products could be combined and used. For

example, a furniture store can combine different furniture in a setting,

showing how a specific room would look like. Consequently, the customers

33

are able to see how the furniture would look in their home. Higher image

brands tend to opt for an idea-orientated presentation. (Levy & Weitz 2009)

Finally, a retail environment with a higher image design is characterized by

a “freeform” layout (Doukidis et al. 2004:14), aisles that are wide and an

overall clean look. The layout should be unique and it should convey the

image the brand wishes to project; suit the merchandise being sold; and

correlate with the purchase habits of the customers. The free form layout is

common in designer stores and boutiques. The layout enables customers to

form their own shopping patterns and allows more casual shopping and

browsing. (Golden & Zimmerman 1980) The free form layout is more

suitable in retail environments with high- end merchandise as it creates a

relaxed atmosphere (Levy & Weitz 2009). The layout differentiates itself

from the hectic atmosphere that can be felt in the retail environments with

lower end merchandise, utilizing a grid layout such as grocery stores (Levy

& Weitz 2009).

Garnder & Siomkos (1986) studied how retail atmospherics influence

consumer evaluations of a perfume when subjected to descriptions of either

high or low image retail atmospherics. “The lighting is indirect and subtle”

was one of the descriptions of a high image retail environment (Garnder &

Siomkos 1986:28). A lower image environment was described as having

very bright and harsh lighting. Ratings, evaluations and evaluative beliefs

of the perfume were given higher scores by the customers subjected to the

high image description

As mentioned earlier, the study conducted by Garnder & Siomkos (1986)

examined the evaluations of a perfume. The respondents were subjected to

a description of either a high or low image retail environment. The high

image retail environment was described as having “aisles that are wide”

(Garnder & Siomkos 1986:28). The perfume received higher evaluations,

ratings and evaluative beliefs by the customers when it was combined with

this description. Meanwhile, “aisles that are narrow” (Garnder & Siomkos

1986:28) was the description of a low image retail environment. The low

image description resulted in lower ratings, evaluations and evaluative

believes of the perfume, than the high image description.

34

And finally, a retail environment needs to be kept clean. According to Levy

& Weitz (2009: 551), “[n]o matter how impressive the […] interior, an

unkempt store will be perceived poorly”. According to Johnson (2007), an

unclean retail environment affects customers’ perceptions of the retail

brand image.

As a conclusion, a high image retail environment should have a soothing

and peaceful atmosphere. The furniture should be of high quality but

simple. The fixtures should have a degree of cohesiveness throughout the

retail setting, using the same set of design features (Varley 2001). The

layout and the merchandise displays should create a spacious and un-

crowded feeling. (Phibbs 2012) When the various ambient and design

elements of a retail environment are shifted towards that of a higher image

retail environment, overall evaluations of the retail design ought to

increase. Hence, it is suggested that:

H1 a Changes in the ambient elements towards a higher image

retail design, will be better evaluated by the consumer

And

H1 b Changes in the design elements towards a higher image

retail design, will be better evaluated by the consumer

Table 2 summarises the various ambient and design elements that can be

found in a retail environment. Furthermore, the table demonstrates the

elements that researchers have found to portray a retail environment with

either a higher or a lower image.

35

36

Table 2. Higher image and lower image retail environments

CharacteristicsHigher image store design Lower image store design Authors

Ambient elements

LightningOverall soft lighting with some spotlights showcasing specific products

Very bright and harshLevy & Weitz 2009 and Garnder & Siomkos 1985

Design elements

Floor covering

Wood with a light colour, ceramic tiles

Linoleum Sivakumar 2007

FixturesSimilar design features, coordinated, portray brand image

ExposedBerman & Evans 2007; Levy & Weitz 2009 and Varley 2001

DisplayBeautifully decorated but in a imperceptible manner; neat; and spacious and un- crowded

Messy, crowdedGardner & Siomkos 1985; Markkanen 2008

ColourBlack, beige, light grey, off- white, medium brown, few vivid hues

Largest amount of vivid hues, flashy and flamboyant colours, only white

Foote 1983; Golden & Zimmerman 1980; Markkanen 2008 and

Aisles Wide Narrow Gardner & Siomkos 1985

Layout Free-form layout Grid layoutBerman & Evans 2007; Doukidis et al. 2004 and Levy & Weitz 2009

Presentation techniques

Idea-oriented presentation Style/item presentation Levy & Weitz 2009

Source: adapted from Baker et al. (1994); Berman & Evans 2007; Doukidis et al. (2007); Foote (1983); Gardner & Siomkos (1985); Golden & Zimmerman (1980); Levy (2007); Markkanen (2008); Sivakumar (2007); Varley (2001)

37

3.2 Retail image and consumer opinions

It has been recognized that consumer behavior is affected by the stimulus

in the environment. This behavior can be everything from retail patronage

to purchase behavior and the retail image a consumer infers.

Retail atmosphere is a retail settings physical characteristic that projects a

certain image. Customer often judge the firm even before they have

examined the merchandise and their prices. (Berman & Evans 2007) Retail

image can affect perceived product and brand quality. It can also increase

customer traffic and attention, and prompt positive word-of-mouth.

(Donthu, Lee, Yoo 2000) Consequently, consumers’ retail images are of

vital information to a company as it gives valuable clues in terms of

possible behavior (Golden & Zimmerman 1988), or might even lead to

direct behavior in some situations.

Martineau (1958:47) described retail image as “the way in which the store

is defined in the shopper’s mind, partly by its functional qualities and partly

by an aura of psychological attributes”. Meanwhile, Bloemer & de Ruyter

(1997:501) posit that the retail image is “the complex of a consumer’s

perceptions of a store on different […] attributes”. Lindquist (1974-75)

identified different attributes that affect the image of a retail environment.

Merchandise is one of the attributes, and comprises quality; styling and

fashion; and selection or assortment. Another attribute is physical facilities

that incorporate lighting, air conditioning, architecture, retail layout and

aisles placement and width. Also retail atmosphere is regarded as a retail

image attribute. (Lindquist 1974-75)

The retail image is formed and developed through the process of inferring

various beliefs from perceptions, with the possible interference of memory

factors (Bloemer & de Ruyter 1997). Thus, the creation of a retail image is

a complex process because it can be influenced by numerous elements

(Chebat et al. 2005), and can also be altered (Mellott, Pettijoh & Pettijoh

(1992). As a result, the concept of retail image has been difficult for

researchers to conceptualize and utilize (Chebat et al. 2005). However,

38

once a retail image is formed it can be associated with several critical

behaviours such as retail satisfaction (Chang & Tu 2005), brand image

(Mellott et al. 1992), retail loyalty (Koo 2005), retail patronage (Kotler

1973) and spending (Hildebrandt 1988 (cited in Chebat et al. 2005)).

Consumer perceptions can be influenced by the retail image. Nagle (1987)

continue on this notion by concluding that consumers’ impressions of the

entire purchase situation are important determinants of the consumers’

response to price (cited in Baker et al. 2002). The retail environment can

be regarded as the entire purchase situation. Thus, retail environment cues

will influence the kind of price level a customer expects. Thaler (1985)

conducted a research where he studied consumers’ price expectations.

Subjects were asked to estimate how much they would be willing to pay for

a bottle of beer that they would be drinking on a beach. One group of

respondents were told that their beer was bought from a resort hotel

nearby, while the other group was told that their beer was purchased from

the local grocery store. The respondents estimated the price for the beer

bought from the hotel to bee $1,15 higher than the beer bought from the

grocery store. Meanwhile, the respondents in Lin & Sternquist’s (1994)

study estimated the price for sweaters from a store with a higher image to

be $ 4,62 more expensive than sweaters from a store with a lower image.

Davis, Kern & Sternquist 1990 (cited in Lin & Sternquist 1994) found in

their study that retail prestige was the strongest information cue for

customers’ price estimates. Likewise, Sternquist & Davis 1986 (cited in Lin

& Sternquist 1994) found customers to infer significantly higher prices to

products from a retail setting with a more prestige image. The finding of

the study by Baker et al. (2002) concur this assumption. The authors found

that when the retail design was geared toward a more favourable one,

customers’ perceptions of the merchandise prices increased.

Therefore this paper arrives at the conclusion that when the overall design

of the retail setting is changed to that of a higher image retail environment,

consumers’ price perceptions will increase. Hence, it is posited that:

39

H2 When the overall retail design is shifted towards a higher

image retail environment, consumers will perceive merchandise

prices to be higher.

Researchers have found that retail image also serves as an informational

cue for consumers’ perceptions of merchandise quality (Champion, Hunt &

Hunt 2010). In the study by Chiu & Wheately (1977) respondents rated the

quality of six different carpets in a high prestige and in a low prestige retail

environment. The findings indicate that the there was a significant positive

relationship between the high prestige environment and the perceived

quality of the carpets. The study by Baker et al. (2002) arrives at similar

conclusion. The author found a significant relationship between perceived

merchandise quality and retail image. The respondents evaluated

merchandise in a retail setting with a prestige looking design to be of

higher quality that the merchandise in a retail setting with a discount

looking design.

Champion et al. (2010) studied how a low, medium and high retail image

affects three types of product quality: low, medium and high. The results

show that the retail image was directly associated with the product quality

perceptions. The results indicate that even if a lower image retail

environment would sell a high quality product, the products might not be

perceived as carrying a higher quality. Furthermore, Schlosser (1998)

found that social identity products were evaluated more favourably in a

prestige retail atmosphere than in a discount retail atmosphere.

Meanwhile, the findings of Dick et al. (1996) indicate that private label

products sold in a retail setting with a pleasant looking image were

perceived to be of significantly superior quality, than in a retail setting with

an unpleasant image.

Baker’s et al. study from (1994) also analysed the relationship between

retail image and perceptions of merchandise quality. Two respondents

were shown a videotape of a retail environment with ambient, design and

social elements that correlated with a prestige image retail design, or a

discount image retail design. The study measured effect the retail

environment portraying a prestige or a discount image had on perceived

40

merchandise quality and service quality. The authors found that

respondents perceived the merchandise to be of higher quality in a prestige

image ambient, design and social environment, than in a discount image

retail environment. The study by Sharma & Stafford (2000) also indicates a

significant relationship between perceived merchandise quality and a

prestige image retail environment.

Thus, it can be concluded that when the overall design of the retail setting

is changed towards that of a higher image retail environment, consumers’

merchandise quality perceptions will increase. It is posited in this paper

that:

H3 When the overall retail design is shifted towards a higher

image retail environment, consumers will perceive the

merchandise quality to be higher

Finally, the relationship between retail image and purchase intentions is

discussed. Buckley found in 1990 a direct link between retail image and

intentions to purchase a specific product. Champion et al. (2010)

conducted a study where respondents rated the willingness to buy for a

low, medium and high image retail setting. The authors found retail image

to directly influence the willingness to buy. That is, the higher the retail

image, the higher the intention to purchase a product. Huston & Nevin

(1980) concluded that retail image had a significant impact on actual

purchase behaviour in an intra- urban shopping area.

Furthermore, the findings of a study conducted by Baker et al. (1998) also

verify the relationship between retail image and purchase intentions. The

respondents evaluated bicycles from a store with a higher image and a

store with a lower image. The authors found a significant positive

relationship between the perceived retail image and consumers’ purchase

intentions. Therefore, it is assumed in this paper that when the overall

retail design is changed towards that of a higher image retail environment,

consumers purchase intentions will increase. Moreover, it is posited that:

41

H4 When the overall retail design is shifted towards a higher

image retail environment, consumers’ purchase intentions will

be higher.

This chapter presented the model by Baker et al. (1994) that divides the

retail setting into a higher or lower image, based on various elements in

the retail environment. Furthermore, various image induced opinions and

behaviour were described. The elements in the retail environment have a

critical bearing on the kind of retail image a consumer will infer. Based on

previous literature it is hypothesised that a higher image retail

environment will receive higher consumer evaluations than a lower image

retail environment. Additionally, it is hypothesised that a retail setting with

an overall higher design can prompt consumers to perceive both

merchandise quality and merchandise prices to be higher. The final

hypothesis posits that consumers’ purchase intentions will increase in a

higher image retail environment.

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Table 3. Compilation of hypotheses

Hypotheses TheoryH1 a Changes in the ambient elements towards a higher image retail design, will be better evaluated by the consumers

Baker et al. (1994)

H1 b Changes in the design elements towards a higher image retail design, will be better evaluated by the consumers

Baker et al. (1994)

H2 When the overall retail design is shifted towards a higher image retail environment, consumers will perceive merchandise prices to be higher

Davis et al. 1990 (cited in Lin & Sternquist 1994), Lin & Sternquist (1994); Baker et al. (2002)

H3 When the overall retail design is shifted towards a higher image retail environment, consumers will perceive the merchandise quality to be higher

Davis & Sternquist 1986 (cited in Lin & Sternquist 1994); Schlosser (1998); Baker et al. (2002)

H4 When the overall retail design is shifted towards a higher image retail environment, consumers’ purchase intentions will be higher

Baker et al. (1998)

Source: Baker et al. (1994); Baker et al. (1998); Baker et al. (2002); Davis & Sternquist 1986 (cited in Lin & Sternquist 1994); Davis et al. 1990 (cited in Lin & Sternquist 1994); Lin & Sternquist (1994); Schlosser (1998)

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4 METHODOLOGY

The chapter will begin with a short introduction the research subject,

Georg Jensen. Georg Jensen’s soft corner and hard corner which will be

compared in this study, are also presented. Next, the research

questionnaire will be described and the chosen research method will be

motivated. Finally, the chapter will discuss the data collection and analysis

method, as well as the validity and reliability of the study.

The aim of this study is to get an insight in the different effects the retail

environment and the image it portrays can have on consumer opinions.

Therefore there is a need to study the various effects different images can

have on consumer opinions.

4.1 Georg Jensen

Georg Jensen is a Danish luxury design brand. Georg Jensen himself was a

jeweler and silversmith with superior artisanal skills and an eye for

aesthetics. Georg Jensen founded the company carrying his own name in

1904. (Georg Jensen, 2014) Jensen was a well-known professional already

then, participating in many international fairs and producing hollowware to

the royal Danish family. Even though Jensen started within jewellery, he

also created impressive hollowware pieces. Thereafter, Jensen started to

produce living products as well. Today the brand Georg Jensen represents

quality craftsmanship and timeless aesthetics. The products range from

jewellery to living products, watches and hollowware (Georg Jensen, 2014).

Georg Jensen is a Danish luxury design brand. In order to keep on

portraying this image, the company has taken certain measures. To be able

to portray the image of a luxury design brand, the company has created

global guidelines that secure a unanimous look no matter where in the

world. The brand needs to look the same in Helsinki, London, New York,

Taipei etc., in order to consider itself as a luxury design brand.

Thus, the company has decided to move away from the usage of soft

corners and more toward the usage of hard corners, in order to secure that

44

a dedicated area correlates with the brand image. This can of course be

achieved in Georg Jensen’s own retail stores. In a wholesale context this is

only possible by using hard corners. Georg Jensen has had an extensive

project where wholesalers that cannot meet these requirements are cut

out. Short term sales are affected, but in the long term this is what is

beneficial for the brand. After this new company policy 50% of the Finnish

customers were cut off in 2013 -2014. This is a necessary step if the

company wants to portray an image of a luxury design brand.

In other words, hard corners have been a lot in the focus. The hard corner

visual merchandising and product range is predetermined according to the

square meters of a dedicated area. The material and colour of the hard

corners are black and cherry wood. This creates a dramatic effect that suits

the luxury image of the jewelleries. However, in the last years the sales of

the brand´s living products have grown to that extent that it was decided to

make it an own brand: “Living Georg Jensen”. The material of the hard

corner is steel and oak wood, with a colour palette of off-white, beige, light

brown and little bit of black. This correlates with the image of a Nordic

contemporary premium brand that the brand wishes to portray.

4.2 Research method

A presentation of various researches conducted in the field of retail

environment and retail environment induced retail image have been

presented in the chapters constituting the theoretical framework (chapter

2&3). The image a retail environment portrays and its effect on consumer

opinions has mainly been studied in laboratory settings or controlled retail

environments. The majority of these studies have been quantitative

(Milliman & Turley 2000) mostly utilizing questionnaires to gather the data

(Jacoby & Mazursky 1986; Baker et al. 1992; Chebat et al. 2005; Champion

et al. 2010) According to Birks & Malhotra (2006), qualitative methods are

used to create hypotheses and identify variables that ought to be included

in a quantitative study. This also seems to be the case in the retail

environment and retail image literature. In the literature the hypothesizes

and variables have been created based on previous literature, or been

created based on qualitative researches. Meanwhile quantitative methods

45

have been used to study these hypothesizes. A quantitative research

method is suitable for the study of this paper as the aim is to verify the

theory regarding the retail environment and retail image, and measure

consumers’ opinions thereof.

If a research takes on a quantitative approach it usually means the usage of

a deductive approach. A deductive approach starts from general theory and

ends in data, thus verifying theory. An inductive approach starts from data

and ends in theory, thus creating theory. (Hyde 2000) In this paper,

hypotheses have been based on existing theory about retail environment

and retail image. Furthermore, the choice of variables and the result

measure is also based on previous literature regarding retail environment

and retail image. Therefore the research approach of this paper can be

classified as deductive. (Birks & Malhotra 2006)

In order to study how a retail environment and the image it portrays can

effect consumers’ opinions, data was gathered using questionnaires. Using

a quantitative approach enabled gathering a large sample which improves

the possibility to generalize the research findings (Anderson, Babin, Black

& Hair 2010).

4.3 Research questionnaire

The effects retail environmental induced retail image can have on

consumer opinions were examined by utilizing a 5-point Likert-type scale.

The Likert scale was chosen as it is easy to construct and administer.

Furthermore, respondents find it easier to understand how to use the scale.

Utilizing five response categories ranging from “strongly disagree” to

“strongly agree” was chosen as it the most typical approach. The questions

were brought from previous studies in the retail environment field such as

Collin-Dodd & Lindley (1990), Ambrosini, Riel & Semeijn (2004) and

Champion et al. (2010) (see table 3 and page 63). For every question, a

high score reflected a favorable response. This method of consistent

scoring was used in order to avoid confusion amongst respondents. The

advantages of this kind of survey method are that a questionnaire is simple

to administer; the obtained data is consistent due to the limited responses;

46

and data analysis and interpretation is relatively easy. (Birks & Malhotra

2006) The questionnaire was made both in Finish and in English in order to

secure a wide range of responses.

A pilot test was carried out before the main research study. A pilot test

with two respondents, for both the higher and lower image retail

environment, was conducted in order to ensure the validity of the

questionnaire. (Birks & Malhotra 2006) According to Anderson et al.

(2010), each construct should comprise at least three items in order to

secure that the data is reliable and can be generalized. This is why the

ambient design comprised three different questions. In other words, no

construct was measured with only a single item. Nevertheless, the aim has

been to keep the questionnaire compact in order to increase the

consumers’ willingness to participate and response accuracy.

The questions can be found in appendix 1 (English) and 2 (Finnish). The

questionnaire was formatted so that questions measuring the overall

design and style were placed first. These questions served as an

introduction to the subject being studied, i.e. the image of the retail

environment. The aim was to use interesting yet simple questions.

Questions 1 a-n measured the opinions on overall retail design, and were

presented in a logical order under their respective construct. Hence, all

questions regarding the ambient elements of the retail setting were asked

before moving on to the next measure, the design elements of the retail

setting. (Birks & Malhotra 2006) Questions 2 a-c and 3 a- c measured the

effects the retail setting and the image it portrays can have on consumers’

price and quality perceptions. Furthermore, the relationship between

purchase intention and retail setting induced retail image was measured

with questions 4 a-c. Demographical questions, 7 1-4 were placed last in

the questionnaire as some of them can be regarded sensitive (Birks &

Malhotra 2006). Furthermore, it is recommended to have simple questions

such as age and gender last in the questionnaire.

47

4.4 Data collection

The aim of the study is to see how a higher and lower image retail design,

induced by the retail environment, can affect consumers’ opinions. It was

deemed fit to gather the data at the respective retail setting: one

portraying a higher image and one portraying a lower image. Thus, the

data was collected in Stockmann Helsinki where Georg Jensen has its hard

corner, and Stockmann Tapiola where Georg Jensen has its soft corner.

Stockmann is Scandinavia’s largest high-end department store. Hence,

customers around the retail setting constituted the specific sampling frame

(Birks & Malhotra 2006).

Georg Jensen’s hard and soft corner was used as the environments studied

in this paper due to the writer’s connections to the company. Furthermore,

in accordance with the aim of this study, the data had to be gathered at

respective retail settings, so that the customers could see the respective

retail setting design while filling in the questionnaire. Some of the

researches in the literature of retail environment and retail image have

used video tapes or photos in their study. Due to the nature of some of the

statements in this study, e.g. “the isles are wide”, respondents had to be

physically present at the retail setting. The data was collected 17.5.2014

from the hard corner and 27.5.2014 from the soft corner.

The questionnaire was both in Finish and English. In the translated

questionnaire grammar was important, but more attention was paid on

retaining the meaning of the questions (Brace 2013). A native Finnish

speaking marketing professional reviewed the Finnish questionnaire. This

enabled a wide range of respondents to participate in the study. The other

domestic language, Swedish, was not chosen as most Swedish speakers

know well both Finnish and English. Meanwhile, Finnish speakers have a

harder time understanding Swedish. In this study the data was gathered at

the respective retail setting, the one portraying a higher image and the one

portraying a lower image. The respondents were chosen by the writer, thus

constituting a non- probability sample. This was method was deemed

appropriate because of the aim of the study, as well as due to the limited

amount of time and money. According to Birks & Malhotra (2006), a non-

48

probability sample may yield good estimates of the characteristics of the

population. However, the estimates obtained cannot be statistically

projected to the population. (Birks & Malhotra 2006)

The data was gathered at days when there are the most customers in the

department store. However, physically distributing questionnaires takes a

longer time than simply distributing a questionnaire electronically.

Respondents were given a chance to participate in a draw of a price. The

price was a Georg Jensen “Bloom” bowl that was shown to the customers at

the end of the questionnaire. This was done in order to avoid respondents

participating in the study just because of the price, instead of participating

because they want to contribute to a scientific study.

4.5 Analysis method

The following sections present the two statistical methods used in the study

of this paper. First, a Mann-Whitney U test is used to test whether there is

a difference between the variances of two groups (Birks & Malhotra 2006).

The u-test will be used to answer H1 a& b. Continuingly, the multivariate

analysis of variance, MANOVA, will be described. MANOVA is used to test

if there is an overall difference between the perceptions and intentions, H2-

H4, of the respondents in the two groups (Anderson et al. 2010).

4.5.1 Mann-Whitney U test

The Mann-Whitney U test is suitable when two independent groups need to

be compared. The independent variable needs to be measured at least on

an ordinal scale. In the test the data of the two groups are combined and

ranked according to increasing size, so that the lowest value receives rank

1. The ranks are then compared. The number of times the score from group

one precedes the score from group two will give the test statistic, the “U”.

(Birks & Malhotra 2006) If there is difference (systematic) between the

conditions then the lower ranks will belong to one condition and the higher

ranks will belong to the other, resulting in fairly different total rank. If

there is not a difference between the conditions then the ranks will be

evenly distributed between the two conditions, resulting in similar total

49

ranks. (Lind, Marchal & Wathen 2010) Contradicting from other tests, a

smaller U value in a Mann-Whitney U test indicates that the differences

between the two total ranks is less likely caused by chance (Hole s.a.)

If the variances from the two groups can be assumed equal, the test

correlates with the t-test for an independent variable measured on an

interval scale. Moreover, the Mann-Whitney U test can be used even if

variances between the groups are unequal. Instead of testing the difference

of means between the two groups (e.g. a t-test), the Mann-Whitney U test

studies weather two groups are identical. Thus, the null hypothesis

assumes that the two groups are identical and the alternative hypothesis

assumes that the two groups are not identical. (Andersson, Freeman,

Shoesmith, Sweeney & Williams 2009)

The Mann-Whitney U test differs from the other parametrical test such as

the t-test. The u-test does not have any assumptions. For example, it is not

assumed that the sample has a normal distribution (Lind et al. 2010). If the

data is not normally distributed the Mann-Whitney U test is more powerful

than the t-test. Studies have indicated that the Mann-Whitney U test is

more efficient even when sample sizes are small (n<30). Additionally, it is

known that in the case of outliers the non-parametric test such as the

Mann-Whitney U test, are favored. This is due to the fact that the power of

the t-test is reduced when values are extremely deviant. (Andersson et al.

2009) The Mann-Whitney U test was regarded suitable for the study of this

paper for the aforementioned reasons.

4.5.2 Multivariate analysis of variance

The one-way multivariate analysis of variance (MANOVA) examines

differences between two or more dependent metric variables based on a set

of non-metric independent variables (Anderson et al. 2010). The dependent

variables ought to correlate with each other and be conceptually related. If

these requirements are not fulfilled an analysis of variance, ANOVA, is

more suitable. (Birks & Malhotra 2006) Instead of analyzing many separate

variables, which is the case in univariate analyses, the multivariate

50

analyses such as MANOVA, enable the analysis of combinations of variables

(Anderson et al. 2010).

In a MANOVA the variables in each group ought to be normally distributed.

The sample size should be equal to, or above 30 in each group.

Furthermore, the dependent variable should be related in some manner or

be conceptually linked. In order to conduct a MANOVA the sample has to

be large enough. There ought to be more cases in each cell than there are

dependent variables. (Pallant 2010)

The null hypothesis in MANOVA assumes that the vector of the means of

the two or more dependent variables is equal between the groups.

Meanwhile, the alternative hypothesis assumes that the vector of the

means of the variables is not equal between the groups. (Birks & Malhotra

2006) Hence, MANOVA is useful when the researcher controls on or more

independent variables to study how they affect the dependent variables.

This enables to determine if an observed differences is caused by a random

sampling variability, or by a treatment effect. (Anderson et al. 2010) For

the aforementioned reasons MANOVA was regarded suitable for this study.

This chapter has given a brief presentation of the study subject Georg

Jensen, specifying on the companies hard and soft corner in Stockmann’s

department stores. Next, the quantitative and deductive research method

was introduced. Motivations for using a questionnaire were described, as

well as the scale, questions and language of the questionnaire.

Furthermore, it was explained in this chapter where and when the data was

sampled, and what technique was used to sample this data. Finally, the

analysis methods used in this study were described.

51

5 RESULTS OF THE EMPIRICAL STUDY

The results of this paper’s study are presented in this chapter. The chapter

will start by presenting the respondents’ background information. Next, the

first hypothesis is tested using the Mann-Whitney U test. Moreover, a

Multivariate analysis of variance is used to test hypothesis two, three and

four. The chapter will end with discussions of the reliability of the scales.

5.1 Background information

A total of 66 people participated in the study. Thirty two responses were

gathered from the hard corner and 34 from the soft corner. The sample

consisted of 54 (81,8%) females and 12 (18,2%) males. Majority of the

respondents, 24,2%, belonged to the age group 46-55 year olds. Not a

single respondent belonged to the age group <16 year olds. Otherwise the

spread between the different age groups was fairly equal.

Majority of the respondents, 33,3%, were higher level employees, followed

by the executives (18,2%). The minority of the respondents, 3%, were

unemployed. The spread between the different occupational positions was

fairly even. Next, the respondents’ total household income per month

(including taxes) was studied. Majority of the respondents, 28,8%,

belonged to the largest income group, those that had a total household

income of over 7000€ per month. The second largest group, 13,6%,

comprised those respondents that had a total household income of 5000-

5999€ per month. The sample’s basic characteristics can be found in table

4.

52

Table 4. Basic characteristics of the sample

Gender N %Female 54 81,8Male 12 18,2Age N %<16 0 016-25 12 18,226-35 14 21,236-45 6 9,146-55 16 24,256-65 13 19,7>65 4 7,6Occupation N %

Unemployed 2 3,0Student 10 15,2Pensioner 6 9,1

Entrepreneur 4 6,1Lower level employee

10 15,2

Higher level employee

22 33,3

Executive 12 18,2 Total income of household/month (before taxes) N %< 1000 € 4 6,11000-1999 € 4 6,1

2000-2999 € 7 10,6

3000-3999 € 6 9,14000-4999 € 4 6,15000-5999 € 9 13,66000-6999 € 8 12,1>7000 € 19 28,8N (gender)=66N (age)=66N (occupation)=66N (income)=61

Finally, respondents were asked about their brand familiarity. The majority

of the respondents, 74,2%, were familiar with the brand Georg Jensen. Of

the total amount of respondents, 19,7% were not familiar with the brand,

53

meanwhile 6,1% might have been familiar with the brand. Furthermore, by

looking at the two settings separately it was evident that 75% of the

respondents in the hard corner were familiar with the brand Georg Jensen.

A smaller amount, 73,5%, was familiar with the brand in the soft corner.

Only 18,8% of the respondents in the hard corner were unfamiliar with the

brand. Meanwhile a larger amount, 20,6%, was unfamiliar with the brand

in the soft corner. The results are visible in graph 1.

Graph 1. Brand familiarity

For a more detail description of the basic assumptions see Appendix 2.

54

5.2 Mann-Whitney U test

A Mann-Whitney U test was performed in order to compare the evaluations

of the ambient and design elements between the hard corner and the soft

corner.

In order to understand the results it is necessary to look at the differences

between the hard and the soft corner (see appendix 7, 8 and 9 for images).

In the hard corner:

Lighting has been made somewhat softer and additional spotlights

have been placed on top of the island displaying various products.

These products are aimed to display products in a real-life manner.

Colors and materials portray the image of a Nordic contemporary

premium brand

Fixtures are Georg Jensen’s own, portraying the image of a Nordic

contemporary premium brand

Products are presented in a clear way.

Adding of extra items such as flower to be put in the flower vase,

champagne bottle in the champagne cooler etc.

Products are gathered and displayed in a manner that simulates a

real-life kitchen (Island).

The displays are clean, as well as decorative yet clear.

The layout of the hard corner is carefully planned to best utilize the

dedicated area. Fixtures are placed in a manner that enables the

customers to move as easily as possible within the area.

In the Mann-Whitney U test the data of the two groups are combined and

ranked according to increasing size. The ranks are then compared. The

number of times the score from group one precedes the score from group

two, will give the test statistic (U). (Birks & Malhorta 2006)

55

After running the Mann-Whitney U test, it is possible to see if changes in

ambient elements towards higher image retail design will be better

evaluated by the customers. The test will also indicate weather changes in

the design elements towards higher image retail design will be better

evaluated by the customers. The hard and soft corner are the independent

variables. Meanwhile, each question concerning both ambient and design

retail elements are dependent variables. Each of these questions are

compared to determine whether or not there are significant differences

between their median values.

5.2.1 Evaluations of the ambient elements

In this paper it was hypothesized that:

H1 a Changes in the ambient elements towards higher image

retail design, will be better evaluated by the consumers.

The median values of statements 1a and 1b were studied in order to

answer hypothesis 1a. The Mann-Whitney U test showed that median value

for the hard corner and the median value for soft corner were identical for

both statements (MdHc 4.0 vs. MdSc 3.0). There was a significant

difference between the two groups both in terms of statement 1a and 1b

(p=0.000 & p=0.000). The evaluations in the hard corner were higher than

in the soft corner. Worth noting, too, is that the p-value for both statements

was below the critical alpha value of 0.01. Thus, the statements received

higher evaluations in the hard corner than in the soft corner. Consequently,

hypothesis 1a can directly be accepted.

5.2.2 Evaluations of the design elements

It was suggested in this paper that:

H1 b Changes in the design elements towards higher image

retail design, will be better evaluated by the consumers.

56

In order to test hypothesis 1b, the median values of statements 1c-n were

investigated. The Mann-Whitney U test showed that all these median values

were higher in the hard corner than in the soft corner. The differences

between these values in the hard and soft corner were generally 1.0.

However, worth noting is the statement “the product presentation gives me

a good idea of how it would look in a home”. The median value for this

statement was 4.0 in the hard corner, meanwhile the median value for the

soft corner was 2.0. One of the aims of the brand has been to visualize how

the products would look in a customer’s home. Part of the hard corner is an

island with bar stools, aiming to create the feeling of a real-live kitchen. On

top of the island combinations of various items such as a cutting board, a

bread basket with filled with bred, a basket filled with apples, a flower vase

filled with flowers, etc. are displayed. In the soft corner the display only

consists of the individual Georg Jensen products that are sold. The bread,

flowers and the other additional items are products that belong to

Stockmann’s existing product range. Brands can by these means create an

environment that enables the consumers to visualize how the brand’s

products would look in their homes. This can have had an impact on the

differing evaluations between the two retail settings.

Another interesting statement is “the fixtures suit this brand well”. This

statement had a median value of 4.0 in the hard corner. However, the

median value for this statement in the soft corner was 2.0. It seems as

though appropriate fixtures, such as the brands own fixtures, would be

considered to suit the brand better than the retailer’s own, common

fixtures. Similarly, the statement “the retail setting portrays a Nordic

contemporary premium brand” had a median value of 4.0 in the hard

corner and 2.0 in the soft corner. It is important for a brand that the retail

environment it sells its products in, conveys the image that brand wishes to

portray. A Nordic contemporary premium brand is the image Georg Jensen

wants to portray.

Additionally, the statement “the layout is creative” had a median value of

3.o in the hard corner and 1.0 in the soft corner. It requires creativeness to

set up a shop within a shop with a fairly limited amount of space. In the

soft corner the two shelves and one island displaying the Georg Jensen’s

57

products, are situated behind one another between two aisles. Even though

the layout could be regarded as more open and clear, it is not very creative.

As a consequence, the respondents might have felt that the hard corner,

where a shop is set up inside a shop, had a more creative layout. However,

the median value for both the hard and soft corner was identical (3.0) for

one statement. This statement was “the floor suits the style of the retail

setting”. The result is probably due to the fact that the floors were in fact

identical in both retail settings.

The median values provided by the Mann-Whitney U test can only receive

numbers that are half or whole. Hence, a median value is regarded as quite

coarse. (S. Taimitarha, e-mail 12.9.2014). This is important to bear in mind

when analyzing the differences between two groups.

The Mann-Whitney U test also showed that the statement 1c to 1n all

received significantly higher evaluations in the hard than in the soft corner,

at an alpha level of 0.05. Every statement between 1c and 1n was also

significant at the level of 0.01, except for one statement. Consequently, all

the statements received significantly higher evaluations in the hard corner

than in the soft corner. Therefore, hypothesis 1b was directly accepted:

changes in the design elements towards higher image retail design, will be

better evaluated by the consumers.

In conclusion, the findings regarding hypothesis 1a& b showed that the

respondents in the hard corner gave higher evaluations for the all retail

elements that were measured in the study, than respondents in the soft

corner. As a result, it can be stated that changes in the ambient and design

elements towards higher image retail design, will be better evaluated by

the consumers.

58

Table 5. Evaluations of ambient elements and design elements

Overall evaluationAmbient factors N M U Sig

Hard corner 32 4.0The lighting in this retail environment is pleasant 127.0 0.000**

Soft corner 34 3.0Hard corner 32 4.0

The lighting in this retail environment is aimed at strategically important places

144.5 0.000**

Soft corner 34 3.0

Design factorsHard corner 32 3.0

The floor suits the style of the retail environment 333.5 0.004*

Soft corner 34 3.0Hard corner 32 4.0

The colours suits the style of the retail environment

113.0 0.000**

Soft corner 34 3.0Hard corner 34 4.0

The fixtures complement each other 131.5 0.000**Soft corner 32 3.0Hard corner 32 4.0

The fixtures suit this brand well 72.5 0.000**Soft corner 34 2.0Hard corner 32 4.0

The combination of colours and material of the fixtures portrays a Nordic contemporary luxury brand

32.5 0.000**

Soft corner 34 3.0

Hard corner 32 4.0The merchandise is displayed clearly and well organized

108.0 0.000**

Soft corner 34 3.0

Hard corner 32 4.0The product presentation gives me a good idea of how it would look in a home

75.0 0.000**

Soft corner 34 2.0

Hard corner 32 4.0The layout makes it easy to get around 181.0 0.000**

Soft corner 34 3.0

Hard corner 32 4.0The retail environment is spacious 363.0 0.013*

Soft corner 34 3.0Hard corner 32 3.0

The layout is creative 54.5 0.000**Soft corner 34 1.0Hard corner 32 5.0

The retail environment is clean 143.5 0.000**Soft corner 34 3.5Hard corner 32 4.0

The retail environment portrays a Nordic contemporary luxury brand

16.5 0.000**

Soft corner 34 2.0* Significant at 95% confidence interval** Significant at a 99% confidence interval

59

5.3 Multivariate analysis of variance

A one-way multivariate analysis of variance test, MANOVA, was conducted

in order to investigate differences in consumer price perceptions, quality

perceptions and purchase intentions between the hard corner and soft

corner. MANOVA is used to identify differences between two or more

conceptually related dependent variables based on a set of independent

variables. The dependent variables ought to be metric meanwhile the

independent variables ought to be non-metric. (Anderson et al. 2010)

The hard and soft corner are the independent variables in the MANOVA

test used in this study. The higher and lower image that the two retail

settings portray, are identified from previous literature. Statements that

are specific for the hard and soft corner have also been included.

Furthermore, some statements that regarded the brand Georg Jensen were

also added. The dependent variables were the statements for each

perception and intention studied. First, the customers’ price perceptions

were studied, with statements 2a-c being the dependent variables that

were measured. Second, the customers’ quality perceptions were studied.

Statements 3a-c were the dependent variables that measured quality

perceptions. Finally, the consumers’ purchase intentions were studied, with

statements 4a-c being the dependent variables measured. As mentioned

earlier, MANOVA is used to study differences between two or more

conceptually related dependent variables (Anderson et al. 2010). For this

reason it was deemed more suitable to perform a separate MANOVA for

the price perceptions, quality perceptions and purchase intentions.

5.3.1 Assumptions for MANOVA

In order to conduct a MANOVA test, there are some assumptions that need

to be met. First, the sample size was investigated. In this study there are

three statements per price and quality perceptions, as well as purchase

intentions. As there was a minimum of 31 respondents per hard and soft

corner after outliers were deleted, it can be concluded that there are more

60

cases than there are dependent variables. As a result, the sample size is

enough to perform a MANOVA. (Pallant 2010).

Then normality was checked. In order to assess univariate normality, the

skewness and kurtosis of the data was investigated. The skewness values

for price perceptions, quality perceptions, and purchase intention were

0.302, 0.299 and 0.302. Furthermore, the kurtosis values were 0.595,

0.590 and 0.595. Both the skewness and kurtosis values indicate that the

distribution is not normal. (Pallant 2010) Nonetheless, if outliers are

deleted and the sample size is big enough, a non-normal distribution is

acceptable (Tabachnik & Findell 2007 (cited in Pallant 2010)). In order to

assess the multivariate normality of data, the Mahalanobis distance needs

to be calculated. Pallant (2010:288) The critical value for three variables is

16.27. In the data there was only one case with a Mahalanobis distance

(16.85) that exceeded the critical value. This case was still left in the data

file because the difference was so small. Therefore, it can be concluded

that the date has a multivariate normal distribution.

Next, the homogeneity of variance-covariance matrices was assessed. The

Sig. value in this study was 0.096 for price perceptions, 0.000 for quality

perceptions and 0.975 for purchase intentions. The assumption of

homogeneity was not violated for price perceptions or purchase intentions,

as their Sig. values were greater than 0.001. Nevertheless, the Sig. value of

0.000 for quality perceptions indicated a violation of the assumption of

normality. (Pallant 2010) However, different covariance matrices do not

have a distortive effect on the results if the sample sizes are equal (S.

Taimitarha, e-mail 11.8.2014). The sample size was equal for both groups

in this study (N=32). Thus, this violation will not be an issue.

Continuingly, the equality of variance for variables was investigated. None

of the dependent variables in this study violated the assumption, except for

one variable: “products in this retail setting are expensive” (p=0.032).

(Pallant 2010) Nonetheless, if the assumption of equality of variances is

violated, Thabachnik & Findell 2007 (cited in Pallant 2010:294) urge to set

a stricter Sig. value such as 0.025 or 0.01, instead of the traditional 0.05.

By using the Sig. value of 0.025, the variable was not significant any longer

61

(p=0.032> 0.025). Consequently, it can be stated that the assumption of

equality of variances was not violated.

Then the data was check for statistically significant differences among the

groups, on a linear combination of the dependent variables. The Pillai’s

Trace was chosen as the statistic for this study. For price perceptions the

Pillai’s Trace value was 0.137 (F=3.935), with a Sig. value of 0.013. For

quality perceptions the Pillai’s Trace value was 0.455 (F=16.677) and the

Sig. value was 0.000. Finally, the Pillai’s Trace value for purchase

intentions was 0.258 (F=6.835), with a Sig. value of 0.000. In conclusion,

there is a significant difference among the hard and soft corner in terms of

the overall price and quality perceptions, as well as purchase intentions.

(Pallant 2010)

As there was statistically significant differences among the groups for each

perception and intentions, it gave permission to investigate each of the

separate dependent variables. If the test of Between- Subjects Effect shows

Sig. values under 0.05 for a dependent variable, it can be concluded that

there are significant differences between the groups. (Pallant 2010) In this

study that would have been the case for all three separate statements

regarding price and quality perception. Additionally, there would also have

been significant differences between all three separate purchase intention

statements. Nevertheless, in order to avoid the type 1 error, the error of

finding a significant result when it does not actually exist, researchers

recommend to set a more conservative alpha level (Pallant 2010). This can

be done by dividing the original alpha level of 0.05 with the number of

analysis to be done, for example. Thus, the new alpha level was 0.017.

From there forward the new adjusted alpha level of 0.017 was used in the

study. The new alpha level changed the interpretation as some of the

dependent variables were no longer significant. These results are

presented in the next three sections.

Finally, the importance of the impact of the independent variable on the

dependent variables can be measured by the effect size (Pallant 2010). By

looking at the Partial Eta Squared values of the three price perception

variables it was evident that that 6.5%, 11.3% and 8.4% of the variance in

62

these variables could be explained by the hard or soft corner setting. These

values are considered as medium and large effects (Cohen’s 1988 (cited in

(Pallant 2010:210)). In terms of the quality perception, 4.5%, 16.2% and

9.4% of the variance in the variables could be explained by the hard or soft

corner setting, which are also considered to be large effects (Cohen 1988

(cited in Pallant 2010:210)). Finally, 16.9 %, 25.5% and 8.8% of the

variance in the purchase intention variables could be explained by the hard

or soft corner setting. These values are also considered as large effects

(Cohen 1988 (cited in Pallant 2010:210)).

5.3.2 Differences in price perceptions between the hard corner and soft corner

In accordance with the aim of this study, consumers’ price perceptions

were investigated. A MANOVA was performed in order to compare

customers’ price perceptions between the hard corner and soft corner.

The MANOVA showed that the respondents in the hard corner agreed most

with the statement “I expect products in this retail setting to be more

expensive than average”, giving it the highest mean (4.06). Next, came the

statement “products in this retail setting are expensive” (M=3.73),

followed by “the price of this ‘Cobra’ candleholder is” (M=3.15). In the soft

corner the order of the statements was the same. However, this time the

statement “I expect products in this retail setting to be more expensive

than average” had the mean of 3.47, indicating that the respondents in the

soft corner neither agreed nor disagreed with the statement. The mean

value for statement “products in this retail setting are expensive” and “the

price of this ‘Cobra’ candleholder is” was 3.37 and 2.73. All the mean

values for the price perceptions received higher mean values in the hard

corner than in the soft corner. This also correlates with the findings

regarding hypothesis 1a and b, where the respondents in the hard corner

evaluated the various retail elements higher than respondents in the soft

corner.

63

In this paper it was assumed that when the overall design of the retail

setting is changed to that of a higher image retail environment, consumers’

price perceptions would increase. Hence, it was posited that:

H2 When the overall retail design is shifted towards a higher

image retail environment, consumers will perceive merchandise

prices to be higher.

As stated previously, the Pillai’s trace value of 0.000 indicates there was a

significant difference in the overall price perceptions between the hard and

soft corner. Looking at each statement separately, it was possible to see if

there was a significant difference between the hard and soft corner

regarding a particular statement.

The results of the MANOVA show that the statement “I expect products in

this retail setting to be more expensive than average” received significantly

higher scores by the respondents in the hard than in the soft corner

(p=0.007). This would indicate that products that are sold in a retail

environment portraying a higher image, are perceived to be more

expensive than average. However, the statements “products in this retail

setting are expensive” and “the price of this ‘Cobra’ candleholder is”, were

non-significant (p=0.044& 0.022).

Majority of the respondents in the hard corner were familiar with the brand

Georg Jensen (75%). Thus, the respondents knew that the products in

question belong to a premium brand, and are therefore expensive.

Nevertheless, many of the respondents said that they did not think that the

products are expensive considering that they in fact do belong to a

premium brand. This resulted in the respondents neither agreeing nor

disagreeing with the statement “products in this retail setting are

expensive”. Meanwhile, those in the soft corner were not equally familiar

with the brand. Thus, they might have given the same answer because they

felt they could not tell. The results would indicate that customers perceived

a Georg Jensen product to be of equal value no matter in which setting they

were sold. However, it is doubtful weather companies should rely on such

64

assumptions. There will always be consumers who are not familiar with a

brand and will therefore use other cues to estimate the products’ values.

Additionally, the statement regarding the candleholder’s price was

probably non-significant due to the fact that respondents’ estimations were

based on the product, not the setting. This result would indicate that a

particular Georg Jensen product is still perceived as a premium brand item

and thus price estimations correlate with that opinion, even if the

respondents are in a soft corner setting. Moreover, customers can still

estimate correct product prices even if the products are being sold in a

retail environment that portrays a lower image. Interestingly, majority of

the respondents in both groups estimated the price of the “Cobra”

candleholder to be €80-119. The price for the “Cobra” candle holder is €65.

Thus, there was not a significant difference between the price estimation

between the hard and the soft corner. Additionally, customers in both retail

settings actually estimated the price for the “Cobra” candleholder to be

higher that it is.

Concludingly, it can be said that when the overall retail design is shifted

towards a higher image retail environment, consumers will perceive

merchandise prices to be higher. Hence, hypothesis 2 is accepted.

Table 7 presents the results of the MANOVA analysis and the combined

mean values for the different price perception statements in the hard and

soft corner.

65

Table 6. Differences in price perceptions between the hard and soft corner

Mean values

Products in this retail setting are

expensive

I expect products in this retail setting to be more expensive than

average

The price of this “Cobra candleholder”

isHard

corner3.73 4.06 3.15

Soft corner

3.37 3.47 2.73

Total 3.56 3.78 2.95F-

value4.224 7.801 5.567

p- value

0.044 0.007* 0.022

Multivariate test, Pillai’s trace: F- value 3.935. p= 0.013.* Significant at the 0.017

5.3.3 Differences in quality perceptions between the hard corner and soft corner

Corresponding to the aim of this study, consumers’ quality perceptions

were investigated. A MANOVA was performed in order to compare

customers’ quality perceptions between the hard corner and soft corner.

In table 8 one can see that the respondents in the hard corner gave the

highest mean value to the statement “the products in this retail setting are

high in quality” (M=4.69). “The ‘Cobra’ candleholder appears to be of very

high quality”, was the statement with the second highest mean value

(M=4.53). The statement that obtained the lowest mean value was “the

craftsmanship of products in this retail setting is high” (M=4.34). These

mean values indicate that the respondents agreed with every quality

perception statement. Meanwhile, in the soft corner the statement “the

‘Cobra’ candleholder appears to be of very high quality” had the highest

mean (M= 4.13), followed by “the products in this retail setting are high in

quality” (M=3.78) and “the craftsmanship of products in this retail setting

is high” (M=3.75). These results indicate that the respondents in the soft

corner only agreed with the statement “the ‘Cobra’ candleholder appears

66

to be of very high quality”. All the mean values for the quality perceptions

received higher scores in the hard corner than in the soft corner. This

would also fit the findings regarding hypothesis 1a and b, that the

respondents in the hard corner evaluated the various retail elements

higher than respondents in the soft corner.

This paper posited that when the overall design of the retail setting is

changed towards that of a higher image retail environment, consumers’

merchandise quality perceptions would increase. In this paper it was

assumed that:

H3 When the overall retail design is shifted towards a higher image retail

environment, consumers will perceive the merchandise quality to be higher

As mentioned earlier, the Pillai’s value for quality perception was 0.000.

Hence, there was a significant difference in the overall quality perceptions

between the hard and soft corner. Additionally, there were significant

differences between the two groups in terms of each separate statement:

“the products in this retail setting are high in quality” (p=0.000), “the

craftsmanship of products in this retail setting is high” (p=0.001) and “the

‘Cobra’ candleholder appears to be of very high quality”. Thus, the

customers felt Georg Jensen products to be of significantly higher quality in

the hard corner, than in the soft corner. Moreover, the customers also felt

that the craftsmanship of the Georg Jensen products was significantly

higher in the hard corner.

Particularly interesting is the fact that the respondents evaluated the

quality of the “Cobra” candleholder to be significantly higher in the hard

corner than in the soft corner. The perceptions regarding this statement

were based solely on the candleholder itself, which was identical in both

retail settings. Yet, customers felt the quality to be significantly better in

the hard corner. Hence, it seems as though consumers in a higher image

retail environment also perceive a specific product to be of higher quality.

In conclusion, it can be stated that when the overall retail design is shifted

towards a higher image retail environment, consumers will perceive the

merchandise quality to be higher. In other words, hypothesis 3 is accepted.

67

The results of the MANOVA analysis, and the combined mean values for the

different quality perception statements in the hard and soft corner are

presented in table 8.

68

Table 7. Differences in quality perceptions between the hard and soft corner

Mean values

The products in this retail setting are high in

quality

The craftsmanship of products in this retail

setting is high

The “Cobra candleholder” appears to be of very high

qualityHard corne

r4.69 4.34 4.53

Soft corne

r3.78 3.75 4.13

Total 4.23 4.05 4.33F-

value49.849 11.969 6.428

p- value

0.000* 0.001* 0.014*

Multivariate test, Pillai’s trace: F- value 16.677. p= 0.000.* Significant at the 0.017

5.3.4 Differences in purchase intentions between the hard corner and soft corner

In accordance with the aim of this study, consumers’ purchase intentions

were investigated. A MANOVA was performed in order to compare

customers’ purchase intentions between the hard corner and soft corner.

The results show that the respondents in the hard corner agreed most with

statement “I will definitely consider buying a Georg Jensen product”

(M=4.09). The statement “the probability that I would buy a Georg Jensen

product is high” (M=4.00) received the second highest mean value,

followed by the statement “if I were to buy a candleholder, I would buy a

Georg Jensen ‘Cobra’ candleholder” (M= 3.30). In the soft corner the

statements had the exact same order, but with the mean values 3.20, 2.97

and 2.60. This means that the respondents in the soft corner in fact

disagree with the statements “probability that I would buy a Georg Jensen

product is high” and “if I were to buy a candleholder, I would buy a Georg

Jensen ‘Cobra’ candleholder”. All the mean values for the price perceptions

received higher mean values in the hard corner than in the soft corner.

This would also support the findings regarding hypothesis 1 a& b, where

69

the respondents in the hard corner evaluated higher the various retail

elements than respondents in the soft corner.

It was presumed in this paper that when the overall retail design is

changed towards that of a higher image retail environment, consumers

purchase intentions would increase. Moreover, it was posited that:

H4 When the overall retail design is shifted towards a higher

image retail environment, consumers’ purchase intentions will

be higher.

As the Pillai’s trace had a Sig. value of 0.000, it was concluded that there

was a significant difference in the overall purchase intentions between the

hard and soft corner. Furthermore, studying the statements separately

showed that there were significant differences between the two groups for

both the statement “I will definitely consider buying a Georg Jensen

product” (p=0.001) and “the probability that I would buy a Georg Jensen

product is high” (p=0.000). In other words, the customers expressed grater

considerations against purchasing a Georg Jensen’s product in the hard

corner. Moreover, customers in the hard corner saw it more probable that

they would by a Georg Jensen product, than those in the soft corner did.

This is of vital information for brands as purchase intentions are the

predesigning step of an actual purchase. This is facilitated by a retail

environment that portrays a higher image.

However, the statement if “I were to buy a candleholder, I would buy a

Georg Jensen ‘Cobra’ candleholder” had a Sig. value of 0.018, and is

therefore non-significant. This is probably due to the fact that one’s

personal preference regarding a particular product is independent of the

retail environment the product is sold in. This notion is viable for

companies when they estimate how much they should invest in a particular

retail environment. The retail environment affects consumers’ purchase

intentions, but as it seems that personal preferences also affect these

intentions, companies ought to take this notion into consideration when

making strategic decisions regarding the retail environment.

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Concludingly, it can be assumed that when the overall retail design is

shifted towards a higher image retail environment, consumers’ purchase

intentions will be higher. Therefore, hypothesis 3 is accepted.

Table 9 presents the results of the MANOVA analysis and the combined

mean values for the different purchase intention statements in the hard and

soft corner.

Table 8. Differences in purchase intention between the hard and soft corner

Mean values

I will definitely consider buying a

Georg Jensen product

The probability that I would buy a Georg Jensen

product is high

If I were to buy a candleholder, I would buy a Georg Jensen

“Cobra candleholder”Hard

corner4,09 4,00 3,30

Soft corner

3,20 2,97 2,60

Total 3,67 3,51 2,97F-

value12,366 20,903 5,910

p- value

0.001* 0.000* 0,018

Multivariate test, Pillai´s trace: F- value 6.835. p= 0.000.* Significant at the 0.017

5.4 Reliability of scale

The reliability of a scale indicates how free the scale is from random error.

In order to secure reliability of the scale, its internal consistency was

investigated by studying the Cronbach’s alpha coefficient.

The first scale measured respondents’ evaluations of the overall retail

elements (statements 1a-n (see appendix 1)). The scale had a Cronbach’s

alpha value of 0.937, indicating a very good reliability. The price

perception scale (statements 2a-c) had a Cronbach’s alpha value of 0.590.

Nevertheless, as it is a scale comprising only three items, the mean inter-

item correlation was used instead. The Summary Items Statistics table

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showed a mean inter-item correlation of 0.332, with values ranging from

0.208 to 0.427. This would be considered an optimal level (Briggs & Cheek

1986 (cited in Pallant 2010:97)). The quality perceptions scale (statements

3a-c) had a Cronbach’s alpha value of 0.767, indicating an acceptable

reliability. Finally, the purchase intention scale (statements 4a-c) had a

Cronbach’s alpha of 0.845. This would indicate that the reliability is good.

(Pallant 2010) Table 5 presents the Crobach’s alpha coefficient for the

summated scales used in this study.

This chapter has presented the results of the study that was conducted in

this paper. The respondents’ background information was presented first.

Next the first hypothesis was tested using the Mann-Whitney U test. Next

the Multivariate analysis of variance, MANOVA, was introduced. After that,

the chapter presented the assumptions that need to be met before

preforming a MANOVA. The chapter continued with the testing of

hypothesis two, three and four using the Multivariate analysis of variance.

The chapter ended with a discussion of the reliability of the scales used in

this paper.

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6 DSICUSSION

This chapter will build further on the results of the empirical study. Based

on these results, both theoretical and managerial implications will be

presented. The chapter will continue by presenting the limitation and

suggestions for further research. This chapter will end with conclusions.

6.1 Higher and lower image retail environment

In today’s competitive world where it is becoming increasingly difficult to

gain advantages over competitors by price, promotion, product or place,

the retail environment and the image it portrays are becoming more

important. Furthermore, Kotler (1973-74) states that the place where a

product is purchased can be more influential than a physical product itself.

The retail environment, and the image it portrays can have a large effect on

consumer opinions. The aim of this paper was to study how a higher and

lower image retail design, induced by the retail environment, can affect

consumers’ opinions. These opinions comprised more specifically of

perceptions and intentions.

The first hypothesis concerned the evaluations of the various elements in a

retail environment. These elements were based on Baker’s (1987) model as

well as other previous literature within the field (Areni & Kim 1994;

Herberts & Summer 2001; Babini et al. 2003; Grohmann et al. 2005 etc.).

Some of the statements were additionally based on the two retail settings

that were investigated. A few brand related statements were also included.

As a result, two ambient and 12 design retail elements were studied in this

paper.

The second hypothesis, price perceptions, was also identified from previous

literature (Thaler (1985); Nagle (1987); Lin & Sternquist’s (1994); & Baker

2002). Quality perceptions, the third hypothesis of the paper, was based on

studies conducted by Chiu & Wheately (1977), Dick et al. (1996), Schlosser

(1998), Champion et al. (2010) etc. Similarly the fourth hypothesis,

purchase intentions, was brought from previous literature such as Baker et

al. (1998) and Champion et al. (2010)

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The higher and lower image that the retail environments portray, were

based on the model by Baker et al. (1994). The two retail setting were

however chosen on behalf of the writer, as no other previous studies have

been conducted in the area.

6.2 Theoretical implications

Baker et al (1994) identified various ambient and design elements that

constitute a higher or a lower image retail environment. The authors found

these elements to significantly affect consumer opinions and behaviour in

the higher image retail environment, compared to the lower image retail

environment. The findings from this paper’s study continue on this notion,

as the result showed that particular ambient and design elements received

significantly higher evaluations in the retail environment portraying a

higher image than the one portraying a lower image. The study shows that

the results are valid in a hard and soft corner solution, which are a higher

and lower image retail environment that hasn’t been studied before.

Additionally, the results of this study show that consumers’ overall price

perceptions are significantly higher in a retail environment portraying a

higher image. This result correlates with the findings of e.g. Thaler (1985)

and Lin & Sternquist’s (1994). Although the particular statements

“products in this retail setting are expensive” and the price for this ‘Cobra’

candleholder is”, did not receive significant results, overall price

perceptions was still regarded significantly higher in the hard than in the

soft corner.

The results of the researches conducted by Chiu & Wheately (1977) and

Dick el al. (1996) are also concurred in this study. It was found that

consumers’ overall quality perceptions are significantly higher in a higher

image retail environment than in a lower image one.

And finally, the results in this study indicate that consumers’ overall

purchase intentions are significantly higher in a higher than in a lower

image retail environment. This result matches the findings of e.g. Baker’s

et al. (1998) and Champion’s et al. (2010) studies. The only separate

74

statement that did not receive significant results was statement “if I were

to buy a candleholder, I would buy a Georg Jensen ‘Cobra’ candleholder”,

which is a question based on purely personal preferences.

As a consequence, this paper’ study also proves that the results that are

found in these researches are valid in a hard and soft corner solution,

which are a higher and lower image retail setting that hasn’t been studied

before.

6.3 Managerial implications

In today’s competitive market it is becoming increasingly difficult to

compete based on product, price, promotion and location (Baker et al.

1994). Therefore, the retail environment is becoming increasingly

important as a differentiator. It has already been acknowledged that the

image a retail environment portrays can affect the consumers (Gardner &

Siomkos 1986; Mazursky & Jacoby 1986; Baker et al. 1988 (cited in Bitner

1992)). A successful retail image can serve as a tool for differentiation and

is more difficult to copy than a product or price for example (Chebat &

Turley 2002), but it also a powerful tool for affecting consumers and their

opinions such as perceptions and intentions (Baker et al. 2002). In order to

see concretely what kind of effect the retail environment induced retail

image can have on consumer opinions, this study investigated and

compared a higher and a lower image retail environment, and their

respective effect on consumer opinions.

In a retail store, such as a department store, a myriad of various brands are

being sold. This kind of settlement is beneficial to a brand as it is less risky

and requires very few investments compared to owning an own retail store.

Nevertheless, it is vital for higher- end brands that the environment their

products are sold in is of high class, and correlates with the brand’s image.

Hence, a soft corner solution is not optimal. A hard corner, a so called

shop-in-shop, is a good solution to the questions brands are facing. The

costs are higher than in a soft corner solution, but lower than owning an

own retail store. This is also true for the risks. Simultaneously, the brand

still gets to decide on practically all matters regarding the area where the

75

products are sold: layout, fixtures, materials, colours, lighting, product

range, product presentation etc. In order to investigate wheatear or not

there are significant differences between a higher and lower image retail

environment and their respective effects on consumer behaviour, a hard

and soft corner were compared in this study.

The results show that various elements in the retail environment receive

significantly higher evaluations in a retail environment that portray a

higher image than in one portraying lower image. This was the case for all

14 elements measured in the study of this paper. Moreover, a higher image

retail environment also results in significantly higher expressed overall

price perceptions, quality perceptions and purchase intentions. Looking

separately at the items measuring the various perceptions and intentions,

only three items were non-significant. One of these was for example the

statement “the price for this ‘Cobra’ candleholder is”. However, this need

not be a problem as it only indicates that consumers still recognize a

premium brand product and adapt their price estimations accordingly,

even if the product is sold in a retail environment that portrays a lower

image.

In the light of the findings of this research, a hard corner solution is

recommended over a soft corner. A hard corner is beneficial for any brand

facing the question of not having to take significant risks or investing

significant sums of money, while still being in control of almost all

decisions regarding the brand dedicated area from colours to product

assortment. Despite there being evidence of the relationship between a

higher image retail environment and increases in sale, higher purchase

intentions and even buying behavior, brands need to measure the possible

effect a higher image retail environment can have on the consumer against

the cost of a redesign. As Baker et al. (1994:336) stated, “[i]n any case the

lesson for store managers is that if they are planning to spend large

amounts of money remodeling their stores, they will need to determine in

advance if the design changes will contribute to their objectives”.

76

6.4 Limitations and suggestions for further research

There are limitations to this study concerning the type of brand that was

investigated. In the study a premium design brand Georg Jensen was

studied. A premium brand as a concept already sets some standards of

what is regarded suitable or not. Therefore, questions that for example

concerned whether or not the consumers felt that the lower image retail

setting portrayed a Nordic contemporary premium brand, would quite

certainly receive low evaluations as the soft corner did not portray a

premium brand. Had the question been whether or not the retail setting

portrays a mid-priced clothing brand, the difference between the

evaluations of the higher and lower image retail setting might not have

been as large. Thus a different type of brand could have resulted in less

drastic differences between the higher and lower image retail setting in

terms of some of the questions. Therefore, it would be interesting to see if

equal results would be obtained with a different type of brand.

This study used a hard corner and soft corner as retail environments that

portray a higher and a lower image. This has not been done before to the

knowledge of the writer, and thus the study can be regarded to contribute

to the existing retail environmental literature. Previous studies have to a

large extent used simulated settings, where the respondents are asked to

see pictures or a video of the study subject. If the studies have been done

in real-life settings they have mostly been conducted in brands’ own retail

stores. Therefore, it would be interesting to so study the environments of

different kinds of retail settings, such as a space or stand in a department

store or mall. Furthermore, the objects of previous studies have often been

lower end brands. It would be interesting to compare the different retail

environments where luxury brands are being sold.

Another suggestion for further research is the type of the respondents. In

this paper, the respondents that participated in the study were people who

entered the particular retail setting, or stopped and eyed the setting but

chose not to enter. It would be interesting to investigate respondents that

are not familiar with the brand, or showing interest in the brand that is

being studied. That way the results would be truly representative of the

77

everyday consumer. As majority of the respondents in this study were

women, it would also be interesting to get a more even representation of

the genders and see if this would affect the results.

6.5 Conclusions

The findings in this paper’ study show that both ambient and design

elements receive significantly higher evaluations in a retail setting

portraying a higher image than in a retail setting portraying a lower image.

There were notable differences in the mean values between the two retail

settings in terms of several statements (“the fixtures suit this brand well”;

“the product presentation gives me a good idea of how it would look in a

home”; “the layout is creative”; “the retail setting portrays a Nordic

contemporary premium brand” etc.) The median values between the two

retail settings were only identical regarding on statement: “the floor suits

the style of the retail setting”.

There was a significant difference between the higher image retail setting

and the lower image retail setting in terms of the overall price perceptions.

All statements received higher mean values in the higher than in the lower

image retail setting. However, looking at the price perceptions statements

separately, it was evident that only one statement had a significant

difference between the two groups. Thus, there was not a significant

difference between the two groups regarding the statements “products in

this retail setting are expensive” and “the price of this ‘Cobra’ candleholder

is”. This is probably due to the fact that respondents in the hard corner

were familiar with the brand, and felt that even though the products are

expensive they are not that expensive considering that the products belong

to a premium brand. Meanwhile, those in the soft corner were not equally

familiar with the brand and therefore gave the same answer because they

felt they could not tell. Additionally, the statement regarding the

candleholder’s price was probably non-significant due to the fact that

respondents’ price estimations were based on the product, not the setting.

There was also a significant difference between the higher image and the

lower image retail setting regarding the overall quality perceptions. All

78

statements received higher mean values in the higher than in the lower

image retail setting. There were also significant differences between the

hard and soft corner in terms of all three quality perception statements.

And finally there was a significant difference between the higher image and

the lower image retail setting in terms of the overall purchase intentions.

All statements received higher mean values in the higher than in the lower

image retail setting. There were significant differences between the hard

and soft corner in terms of all three purchase intention statements, except

for one statement. The statement “if I were to buy a candleholder, I would

buy a Georg Jensen ‘Cobra’ candleholder”, was probably non-significant

due to the fact that it is a question based on pure preference for the

product in question, and not a question based on the retail setting.

79

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Personal communication

Catani, Yvonne (20014), Berrysco Ab, Cheif Director, email 1.4.2014.

Taimitarha, Susanna (2014), Hanken School of Economics, lecturer, e-mail 11.8.2014.

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APPENDIX 1 QUESTIONNAIRE IN ENGLISH

1. Overall evaluation Stronly Neither Stronglydisagree agree/disagree agree

Ambient factors 1 2 3 4 5The lighting in this retail setting is pleasantThe lighting in this retail setting is aimed at strategically important places

Design factorsThe floor suits the style of the retail settingThe colours suit the style of the retail settingThe fixtures complement each otherThe fixtures suit this brand well

The combination of colours and material of the fixtures portrays a Nordic contemporary premium brand

The merchandise is displayed clearly and well organizedThe product presentation gives me a good idea of how it would look in a homeThe layout makes it easy to get aroundThe retail setting is spaciousThe layout is creativeThe retail setting is cleanThe retail setting portrays a Nordic contemporary premium brand

2. Price perceptions Products in this retail setting are expensiveI expect products in this retail setting to be more expensive than averageThe price of this “Cobra candleholder” < 39 40 -79 80 - 119 120 - 159 > 160

SURVEY RETAIL SETTING

The aim of this survey is to study the effect of a retail environment on consumer opinions. The survey will be used as data for a Master’s thesis at Hanken Svenska handelshögskolan. The survey is conducted in co-operation with Georg Jensen’s finish agency, Berrysco Oy. The responses will be used confidentially. A respondent cannot be identified in the results.

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Strongly Neither Stronglydisagree agree/disagree agree

1 2 3 4 53. Quality perceptions

The products in this retail setting are high in qualityThe craftsmanship of products in this retail setting is highThe “Cobra candleholder” appears to be of very high quality

4. Purchase intentions I will definitely consider buying a Georg Jensen productThe probability that I would buy a Georg Jensen product is highIf I were to buy a candleholder, I would buy a Georg Jensen “Cobra candleholder”

5. About the logoThe logo correlates with the image the retail setting The logo portrays the image of a Nordic Contemporary Premium brandI think the word “Living” is too dominant in relation to the brand name “Georg Jensen” Adding the word “Living” to the word “Georg Jensen” does not give any additional value

6. Brand knowledge Are you familiar with the brand “Georg Jensen”?

7. Backround information1. Gender

a) Femaleb) Male

2. Agea) under 16 yearsb) 16- 25c) 26- 35d) 36- 45e) 46- 55 f)56- 65g) over 65

3. Educationa) Unemployedb) Studentc) Pensionerd) Entrepreneure) Lower level employeef) Higher level employeeg) Executive

4. the total income of your household for one month (before taxes)a) Under 1000 €b) 1000- 1999 €c) 2000- 2999 €d) 3000- 3999 €e) 4000- 4999 €f) 5000- 5999 €g) 6000- 6999 €h) over 7000 €

Thank you!

The published study is available in the Hanken Svenska handelshögskolan library in the fall 2014.

Anna Catani, Bachelor in Science, Hanken Svenska handelshögskolan.

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APPENDIX 2 BASIC ASSUMPTIONS

Both skewness and kurtosis values were investigated in order to assess the

normality of the distribution of scores. Skewness values demonstrate how

symmetrical a distribution is. A skewness value of 0 indicates a perfectly

normal distribution. (Pallant 2010) Looking at the statistics it was evident

that the skewness values for the different variables were very similar. The

skewness values were all positive, meaning that the scores were clustered

at the low values. Meanwhile, kurtosis shows how peaked or flat a

distributions is. Similarly, kurtosis values of 0 would signify perfectly

normal distributions. (Pallant 2010) The kurtosis values for the different

variables were also very similar. All the kurtosis values were positive. This

would indicate that the scores are clustered in the center, and therefore

the distribution is peaked. (Pallant 2010) With a smaller sample (N<200),

kurtosis can result in underestimation of the variance which is important to

bear in mind during the interpretation of the data (Tabachnik & Findell

2007 (cited in Pallant 2010) Nontheless, Pallant (2010) states that

skewness and kurtosis values of 0 are uncommon in social sciences. Hence,

the fact that the distribution lacks normality will not be an issue.

The normality of the distribution can further be assessed using the

Kolmogorvo-Smirnov statistic. If the statistic shows a Sig. value above 0.05,

then the distribution can be regarded as normal. (Pallant 2010) The Sig.

values for all the variables in this study were all below 0.05, indicating

violation of the assumption of normality. However, Pallant (2010) states

that this is rather common in social sciences and therefoe will not be an

issue.

Even though the skewness and kurtosis values, as well as the Kolmogorvo-

Smirnov statistic demonstrate a data that is not normally distributed, it can

be concluded that that this will cause a problem in this study.

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APPENDIX 3 MANN-WHITNEY U TEST

Overall evaluationAmbient factors N M U SD Sig

Hard corner 32 4.0 0.545The lighting in this retail environment is pleasant 127.0 0.000**

Soft corner 34 3.0 0,952Hard corner 32 4.0 0,695

The lighting in this retail environment is aimed at strategically important places

144.5 0.000**

Soft corner 34 3.0 0,888

Design factorsHard corner 32 3.0 0,896

The floor suits the style of the retail environment 333.5 0.004*

Soft corner 34 3.0 0,727Hard corner 32 4.0 0,672

The colours suits the style of the retail environment

113.0 0.000**

Soft corner 34 3.0 0,674Hard corner 34 4.0 0,588

The fixtures complement each other 131.5 0.000**Soft corner 32 3.0 0,890Hard corner 32 4.0 0,780

The fixtures suit this brand well 72.5 0.000**Soft corner 34 2.0 0,878Hard corner 32 4.0 0,659

The combination of colours and material of the fixtures portrays a Nordic contemporary premium brand

32.5 0.000**

Soft corner 34 2.0 0,758

Hard corner 32 4.0 0,700The merchandise is displayed clearly and well organized

108.0 0.000**

Soft corner 34 3.0 0,844

Hard corner 32 4.0 0,772The product presentation gives me a good idea of how it would look in a home

75.0 0.000**

Soft corner 34 2.0 0,857

Hard corner 32 4.0 0,609The layout makes it easy to get around 181.0 0.000**

Soft corner 34 3.0 0,774

Hard corner 32 4.0 0,780The retail environment is spacious 363.0 0.013*

Soft corner 34 3.0 0,933Hard corner 32 3.0 0,761

The layout is creative 54.5 0.000**Soft corner 34 1.0 0,748Hard corner 32 5.0 0,507

The retail environment is clean 143.5 0.000**Soft corner 34 3.5 0,743Hard corner 32 4.0 0,592

The retail environment portrays a Nordic contemporary premium brand

16.5 0.000**

Soft corner 34 2.0 0,776* Significant at 95% confidence interval** Significant at a 99% confidence interval

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APPENDIX 4 MANOVA PRICE PERCEPTIONS

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APPENDIX 5 MANOVA QUALITY PERCEPTIONS

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APPENDIX 6 MANOVA PURCHASE INTENTIONS

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APPENDIX 7 GEORG JENSEN SOFT CORNER, STOCKMANN TAPIOLA

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APPENDIX 8 GEORG JENSEN HARD CORNER, STOCKMANN HELSINKI

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APPENDIX 9 GEORG JENSEN HARD CORNER, STOCKMANN HELSINKI

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