Brick-and-Mortar goes Phygital: The Impact of Checkout-Free Technology on Customer Experience and Purchase Intention

Abstract

The brick-and-mortar industry is increasingly endangered by the continuous growth of digital stores that leverage new innovations and technological advances. Covid-19 has further decreased the sales in physical retail stores as the pandemic accelerated the adoption process of digital technologies. Especially in the brick-and-mortar food retail context where customers are primarily driven by utilitarian-based value propositions the competition with digital on-demand service providers challenges traditional supermarkets. An increasingly popular approach to withstand the growing competition is to leverage the capabilities of phygital technologies, allowing brick-and-mortar stores to bridge the gap between the digital and the physical world by integrating digital technologies into their store design. This study aims to determine how phygital technologies can provide value to the brick-and-mortar food retail industry. Specifically, it investigates how innovative checkout-free technologies affect the customer experience at Continente Labs, an innovative store concept of Portugal’s biggest food retailer. It examines (1) the factors influencing the customer intention to use the technology and how it varies across different consumer segments as well as (2) the gains and pains experienced through the interaction with the technology. To answer the research questions the study investigates the checkout-free technology developed and provided by Sensei as the contemporary phenomenon within the real-life context of Continente Labs as a single case study. The study employs a sequential mixed-methods approach using quantitative and qualitative data collection techniques. A quantitative internet-mediated questionnaire based on the technology acceptance model UTAUT2 measured the intention to use the technology of 110 Portuguese consumers and was analysed using Structural Equation Modelling. Ten qualitative semi-structured interviews with customers were conducted at Continente Labs in Lisbon to learn about the gains and pains experienced through the interaction with the technology. The data was analysed using thematic analysis. To contextualise the findings observations were made during the interview and two expert interviews were conducted with representatives of Continente Labs and Sensei. The analysis of the quantitative questionnaire revealed that Sensei’s technology is accepted to varying degrees by different consumer segments. The analysis of the qualitative interviews revealed the main gains of checkout-free technologies as time savings and increased convenience. However, several pain points were identified, especially the counterintuitive store design, a lack of provided information, data privacy concerns, and technological limitations. These results show that despite the number of pain points, customers expect to embrace the benefits of the system once they learned how it works and adapted to it. Most customers intend to return to the store again in the future. On this basis food retail companies implementing a checkout-free system should focus on a user-centric design, providing information on how the technology works to ease the first encounter with the technology as much as possible