Abstract

This study delves into the impact of on-premise and e-commerce service bundling strategies on foot traffic within warehouse clubs in the fiercely competitive US grocery retail sector. The on-premise service bundle incorporates services such as optometry, pharmacy, fuel stations, and tire centers, while e-commerce service bundle includes standard delivery, omnichannel pickup, and platform delivery options. The focus of our research is to investigate how these service bundling strategies can effectively retain customers and sustain the physical presence of warehouse clubs. We postulate that enhancing on-premise service bundling can lessen the unfavorable correlation between e-commerce service bundling and physical store traffic.
Our research unveils a favorable connection between on-premise service bundling and customer visits, contrasting with an inverse correlation between amplified e-commerce service offerings and foot traffic. Intriguingly, this downward trajectory can be offset by strategically incorporating on-premise service offerings. However, the influence of these services fluctuates across on-premise service categories (such as healthcare and automotive) and e-commerce service categories (such as standard delivery, omni-pickup, and platform delivery). Additionally, these effects vary based on the geographical proximity of households (classified as less than 5 miles, 5-10 miles, 10-30 miles, 30-50 miles, and beyond 50 miles). These results underscore the strategic need for a harmonious mix of on-premise and e-commerce service offerings to uphold and augment foot traffic within warehouse clubs.
In conclusion, the adoption of a balanced and strategic approach to service bundling not only allows warehouse clubs to meet their customers' needs more effectively, but also safeguards their brick-and-mortar presence. By fine-tuning the combination of on-premise and e-commerce service offerings, warehouse clubs can better adapt to evolving consumer preferences, maintain their competitive edge, and potentially increase foot traffic. This comprehensive approach not only bolsters customer engagement but also ensures resilience in a rapidly changing retail landscape. Our findings, thus, contribute to the advancement of theoretical understanding in multi-channel retail strategies, and present actionable insights for practical implementation within the retail industry, ultimately supporting sustained growth and profitability for warehouse clubs in the face of increasing competition.
Key words: warehouse club industry, on-premise service, e-commerce service, consumer foot traffic