The Behavioral Implications of Consumer Trust Across Brick-and-Mortar and Online Retail Channels

Qimei Chen David A. Griffith Fang Wan

ABSTRACT. Changes in the retail environment have stimulated retailers to develop strategies aimed at synchronizing multiple, complementary channels to service an increasingly diverse consumer marketplace. In this research, two studies are presented to test a model of the behavioral implications of trust in brick-and-mortar and online retail channels. Results from Study 1 indicate that trust was influenced primarily by channel interactivity, and that trust, in turn, influenced behavioral loyalty to the channel as well as intention to purchase from the channel in both brick-and-mortar and online retail channels. Results from Study 2 demonstrate carry-over effects from a retailers online channel to its brick-

Qimei Chen is Assistant Professor of Marketing, University of Hawaii, Department of Marketing, College of Business Administration, C303, 2404 Maile Way, Honolulu, HI 96822 (E-mail: qimei@hawaii.edu). David A. Griffith is Assistant Professor of Marketing, Michigan State University, Department of Marketing and Supply Chain Management, The Eli Broad Graduate School of Management, 370 North Business Complex, East Lansing, MI 48824-1122 (E-mail: griffith@bus.msu.edu). Fang Wan is Assistant Professor of Marketing, University of Manitoba, Department of Marketing, I.H. Asper School of Business, 181 Freedman Crescent, Winnipeg, MB, R3T 5V4, Canada. Authors are listed in an alphabetical order and contributed to the manuscript equally. Journal of Marketing Channels, Vol. 11(4) 2004 Available online at http://www.haworthpress.com/web/JMC 2004 by The Haworth Press, Inc. All rights reserved. doi:10.1300/J049v11n04_05

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and-mortar channel. Academic and practitioner implications related to multi-channel retailing are presented. [Article copies available for a fee
from The Haworth Document Delivery Service: 1-800-HAWORTH. E-mail address: <docdelivery@haworthpress.com> Website: <http://www.HaworthPress. com> 2004 by The Haworth Press, Inc. All rights reserved.]

KEYWORDS. Online retailing, channel integration, e-commerce, crosschannel synchronization

INTRODUCTION The retail environment continues to evolve, increasing competition and compelling existing retailers to develop innovative strategies. Although currently a minor segment of the $3.2 trillion U.S. retail environment, the online retail ($35.9 billion) channel is projected to grow substantially faster than traditional brick-and-mortar channel retailing (Department of Commerce, 2002; National Retail Federation, 2002). The development and growth of the online retail channel has increased not only inter-channel retail competition (i.e., competition between brick-and-mortar and online channels) (Brynjolfsson and Smith, 2000; Palmer, 1997), but also has stimulated retailers to develop strategies aimed at synchronizing multiple, complementary channels (i.e., where a single retailer employs both brick-and-mortar and online retail channels to provide value to consumers) (Mathwick, Malhotra, & Rigdon, 2001; Rubin, 2001; Schoenbachler & Gordon, 2002). For example, established brick-and-mortar retailers, such as Wal-Mart, Macys, JC Penney, etc., recognizing the importance of the online retail channel, have integrated online storefronts into their channel strategy. The employment of a multi-channel retail strategy generates a number of retail strategy issues, such as multi-channel pricing (Keegan, 1998; Mathwick et al., Mathwick, Malhotra, & Rigdon, 2001), cross-channel branding (Reda, 2000; Rubin, 2001) and cross-channel strategy integration. Fundamental to an effective multi-channel retail strategy is the development of strong customer relationships. Only after a retailer understands the fundamental factors related to the development of strong relationships in multiple channels can they effectively develop appropriate retail strategies for each channel to maximize overall channel strategy effectiveness. Central to the study of relationships has been the issue of trust (Hart & Johnson, 1999; Merrilees & Fry, 2002; Sirdeshmukh, Singh, & Sabol, 2002). While prior research has added to our understanding of trust in retail

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channels, it has not explored the applicability of trust across retail channels, thus providing retail academics and practitioners with limited insights into this important area. More importantly, research has not explored if a consumers trust of a retailer in one channel influences consumer behavioral implications in the retailers other channels. As understanding these issues is necessary to the development of theories in the area of multi-channel retailing, the conceptual and empirical study of these issues are important areas of inquiry in retail research. These issues are also managerially important, as failure to understand the behavioral implications of trust in consumer relationships in a multi-channel retail setting could hinder a retailers performance. In this article, we present a two-study examination of multi-channel retailing. In the first study, we examine how a consumers trust of a retail channel is influenced by both the interactivity of the channel and the consumer characteristic of risk aversion and how trust in a channel results in consumer behavioral implications in both brick-and-mortar and online retail channels. We then present a second study to explore the carry-over effect of a retailers online trust on the behavioral implications in the retailers brick-and-mortar retail channel. THEORETICAL RATIONALE AND HYPOTHESES Retailing necessitates an integration of channel and customer approaches (Schoenbachler & Gordon, 2002; Sheth, 1983). As such, in this research, we employ a channel-and-customer focused conceptual framework by investigating the influence of a key channel characteristic (i.e., channel interactivity) and a key consumer characteristic (i.e., risk aversion) on trust and trusts subsequent influence on behavioral implications in multiple channels (see Figure 1). The conceptual framework developed is in no way intended to represent a complete causal nexus of the antecedents and consequences of trust in retail channels, as trust is not the primary focus of the study. Rather, we wish to examine a rudimentary model of trust across retail channels to provide insights for multi-channel retailing. As such, the focus of this article is on behavioral implications (i.e., channel loyalty and purchase intentions) in brick-and-mortar and online retail channels in the context of multi-channel retailing. We begin our discussion of the model by conceptualizing trust and then discussing how channel interactivity and consumer risk aversion influence trust in retail channels and the resulting behavioral implications.

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JOURNAL OF MARKETING CHANNELS FIGURE 1. A Channel-and-Customer Focused Conceptual Framework

Channel Characteristic

Trust Consumer Characteristic

Behavioral Implications

Trust Trust is an important element of success in both brick-and-mortar and online retail channels (e.g., Hart & Johnson, 1999; Hoffman, Novak, & Peralta, 1999; Merrilees & Fry, 2002; Sirdeshmukh, Singh, & Sabol, 2002). The value of trust is derived from a reduction in risk and cost to ones exchange partner (Arrow, 1974). In social science, trust has been construed predominantly in terms of ones beliefs about the motives or intent of another party (Blau, 1964; Rempel & Holmes, 1986). Luhmann (1979, p. 42) argues, one fundamental condition of trust is that it must be possible for the partner to abuse the trust; indeed it must not merely be possible for him to do so but he must also have a considerable interest in doing so. Similarly, Morgan and Hunt (1994) conceptualize that trust exists when one party has confidence in the reliability and integrity of its exchange partner. Common to these conceptualizations is the willingness of one party to rely upon the other. As such, consistent with prior conceptualizations of trust, consumer trust is conceptualized in this study as the dependability, competence, and integrity a consumer perceives in a retailer or retail channel. Channel Interactivity (Channel Characteristic) Interactivity is an important aspect of retail channels (Hoffman & Novak, 1996; Merrilees & Miller, 2001; Novak, Hoffman, & Yung, 2000; Srinivasan, Anderson, & Ponnavolu, 2002). Interactivity refers to the dynamic nature of the engagement that occurs between a retailer and its customers (Srinivasan, Anderson, & Ponnavolu, 2002). In a brick-and-mortar, channel interactivity could be in the form of interactions with a retailers employees or friends and acquaintances (Underhill,

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2000; Woodruffe-Burton, Eccles, & Elliott, 2002). Further, Mathwick et al. (2001) argue that the brick-and-mortar retail channel is being transformed into a retail interactive theater, staffed to offer advice, cooking lessons, beauty makeovers and fashion shows, thus enhancing channel interactivity. Similarly, in an online retail channel, interactivity has been viewed as a critical element driving consumer experiences (Merrilees & Fry, 2002; Hoffman & Novak, 1996; Novak, Hoffman, & Yung, 2000). For example, Alba et al. (1997) argue that interactivity in online retail channels influences consumer response. They argue that an online channels interactivity in a search/query process can reduce dependence on detailed consumer memory thus increasing the perceived value that the consumer derives from the transaction. Building on this research we theorize that one outcome of channel interactivity is trust. Researchers theorize that consumer trust is contingent upon the consumers perceived level of interactions with a retailer that provide the consumer information (Sultan & Mooraj, 2001; Yoon, 2002). Here we theorize that interactivity in a retail channel increases consumer information acquisition, e.g., through the dynamic, bi-directional flow of information. Retailers efforts in encouraging information flows via interactivity signal to consumers a concern and willingness of the retailer to involve the consumer in the purchase decision. The signaling of concern and openness for information flows build a consumers trust. Therefore, we theorize that higher levels of channel interactivity will result in higher levels of trust in both brick-and-mortar and online retail channels. More formally stated: H1: Channel interactivity positively influences trust in both brickand-mortar and online retail channels. Risk Aversion (Consumer Characteristic) Risk aversion refers to a consumers avoidance of uncertainty (e.g., Campbell & Goodstein, 2001; Dowling & Staelin, 1994; Rogers, 1983; Szymanski & Busch, 1987). Risk aversion, as well as consumers perceptions of the risk inherent in certain retail channels, is commonly studied in the retailing literature (e.g., Berkowitz, Walton, & Walker, 1979; Cox & Rich, 1964; Donthu & Garcia, 1999; Donthu & Gilliland, 1996; Hawes & Lumpkin, 1986; Keaveney & Parthasarathy, 2001; Spence, Engel, & Blackwell, 1970; Tan, 1999). Research indicates that highly risk averse consumers avoid uncertainty in their retail behavior whereas those con-

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sumers with a greater risk-taking propensity tolerate greater uncertainty in their retail behavior. Researchers theorize that consumers are vulnerable when they rely on another partys goodwill (Rousseau, Sitkin, & Ronald, 1998). Intrinsically, trust implies a willingness to accept vulnerability, but with an expectation or confidence that one can rely on the goodwill of the other party (Lewicki, McAllister, & Bies, 1998; Moorman, Zaltman, & Deshpande, 1992). As risk averse consumers are unwilling to accept risk, we theorize that consumers with higher risk aversion tend to be less trusting of a retailer, or a retail channel. Bestowing of trust to a retailer or retail channel increases consumer uncertainty and therefore increases the consumers vulnerability. Thus: H2: Consumer risk aversion negatively influences trust in both brickand-mortar and online retail channels. Interaction Effects of Interactivity and Risk Aversion The channel-and-consumer focused conceptual framework employed here suggests interactivity between channel and consumer characteristics. For example, Sheth (1983) argues that choice calculus and shopping predisposition are outcomes of the interactive effects of consumer and retailer determinants. As such, we theorize that channel interaction and consumer risk aversion will jointly influence trust. For example, it can be theorized that consumers higher in risk aversion would prefer higher levels of interactivity in a channel as higher levels of interactivity would enhance the bi-directional flow of information thus reducing uncertainty. Therefore, we theorize: H3: The interaction between interactivity and consumer risk aversion positively influences trust in both brick-and-mortar and online retail environments. Behavioral Implications of Trust Research suggests that trust influences behavioral intent (e.g., Geyskens, Steenkamp, & Kumar, 1999; Macintosh & Lockshin, 1997; Singh & Sirdeshmukh, 2000). For example, conceptualizing trust as a relationship quality dimension, Smith and Barclay (1997) reported a positive effect of trust on forbearance from opportunism. Similarly, Morgan and Hunt (1994)

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found empirical support for the relationship between a trust and cooperative behavior. In the retailing literature, Sirdeshmukh et al. (2002) found a direct relationship between consumer trust and consumer loyalty. Similarly, in online retail research, Lynch, Kent and Srinivasan (2001) note that given the absence of physical exposure and contact, trust may be particularly important in influencing behavioral implications. It is argued here that trust in a retailer diminishes consumer uncertainty (e.g., false advertising, not honoring policies, privacy concerns, etc.), thus enhancing positive behaviors such as loyalty and purchase intentions. Therefore, we theorize: H4: Trust is positively related to behavioral implications in brickand-mortar and online retail channels. RESEARCH DESIGN To enable us to examine the central issues proposed, we cast our investigation in the retail context of the apparel industry. We selected this setting for four key reasons. First, the apparel industry was selected given its overall importance in the retail sector. Second, the context of apparel was selected given the nature of the product. Klein (1998) and Shim et al. (2001) argued that the Internet facilitates information search is particularly useful for search goods because the perceived costs of providing and assessing objective data are low in the online retailing setting. Our choice of an experience good is intended to complement the contexts adopted by previous research. Third, apparel retailing was determined, via pre-testing, to be an appropriate product category for the intended subjects (i.e., undergraduate students). Finally, apparel retailing allows for the direct examination of multi-channel retailing as most apparel retailers are currently engaged in this strategy. Because we know relatively little about multi-channel retailing and most notably the carry-over effects across retail channels, we used this context as an opportunity to extend knowledge in this area. STUDY ONE Sample One hundred and thirty-eight undergraduate students participated in a survey at a large mid-western university. Respondents received extra credit in return for their participation. The majority of respondents (65%)

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reported that they had purchased clothes from both brick-and-mortar and online stores in the six months preceding the research. All 138 respondents were Internet users. Sixty percent of respondents indicated greater than seven hours of online activity per week. Ninety-three percent of respondents were between the ages of 17 and 25, with fifty-eight percent being female. Thirty-five percent of respondents reported annual family income between $20,000-$59,999, with sixty percent of the respondents reporting annual family income as over $60,000 and five percent reporting annual family income at less than $20,000. Measures A structured questionnaire was developed. To ensure content validity of the measures, a review of the relevant academic and practitioner literature was conducted. In this study, we conceptualized behavioral implications as consisting of behavioral loyalty and purchase intentions related to a retail channel. We operationalized behavioral loyalty as a composite measure based on a consumers purchasing frequency and amount spent in a retail channel in accordance with suggestions made by Sirohi, McLaughlin, and Wittink (1998) and Pritchard, Havitz, and Howard (1999). Purchase frequency for each channel was measured by asking: About how many times the respondents purchased clothes from the channel (brick-andmortar or online) in the past three months (response categories were: never, 1-2 times, 3-4 times, 5-7 times, 8-10 times, and more than 10 times). Amount spent in each channel was measured by asking: About the total amount a respondent spent on buying clothes from the channel (brick-and-mortar or online) in the past three months (the response categories were: $0-$50, $51-$150, $151-$250, $251-$350, $351-$450, $451-$550, and $551 or more). Confirmatory factor analysis of the two-item factor structures for behavioral loyalty yielded adequate goodness of fit measures (brick-and-mortar: chi-square/degree of freedom = 2.80, p > .10, NFI = .997, CFI = .998, RMSEA = .12, AIC = 55.43; online: chi-square/degree of freedom = 1.80, p > .10, NFI = .992, CFI = .996, RMSEA = .13, AIC = 52.43). In addition, correlations between the behavioral loyalty items were acceptable (r brick-and-mortar = .78; r online = .91). Each two-item scale was summed to create an index of in-store and online behavioral loyalty. In addition, factor analysis of the two behavioral loyalty items yielded one factor structure, explaining an adequate amount of explained variance (brick-and-mortar = 70.1%; online = 76.7%). In the path analysis, each behavioral loyalty index was entered as separate endogenous variables. Purchase intention in each channel was

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measured via a one-item, seven-point scale asking: How likely is it that you would consider purchasing clothes from a brick-and-mortar (online) store in the next few weeks? (from very unlikely to very likely). Trust was assessed using a four-item, seven-point semantic differential scale similar to the scales used by Ganesan (1994) and Sirdeshmukh et al. (2002). Respondents were asked to rate their overall trust toward the online retail channel or brick-and-mortar retail channel: (1) very undependable-very dependable, (2) very incompetent-very competent, (3) of very low integrity-of very high integrity, and (4) very unresponsive to customers-very responsive to customers (abrick-and-mortar = .76; aonline = .82). Exploratory factor analysis of the four items yielded a single factor solution for both online and brick-and-mortar channel with an adequate amount of explained variance (brick-and-mortar = 62.1%; online = 64.8%). Confirmatory factor analysis of the four-item factor structures for trust yielded adequate goodness of fit measures (brick-and-mortar: chi-square/degree of freedom = 3.14, p < .05, NFI = .997, CFI = .998, RMSEA = .232, AIC = 30.29; online: chi-square/degree of freedom = .43, p > .10, NFI = .999, CFI = .998, RMSEA = .132, AIC = 24.87). For each channel, a composite index was created. Channel interactivity was conceptualized as the potential for immediate feedback within a retail channel. Channel interactivity was measured via two, four-item, seven-point Likert scales (one for each channel) similar to Jee and Lee (2002) and Li, Kuo and Russell (1999). The scales assessed the respondents perception of (1) the interactivity of the brickand-mortar/online channel, (2) the responsiveness of the brick-andmortar/online channel, (3) the availability of the brick-and-mortar/online channel, and (4) the sensitivity of the brick-and-mortar/online channel (abrick-and-mortar = .77; aonline = .82). Exploratory factor analysis of the four items yielded a single factor structure for both online and brick-and-mortar channel with adequate amount of variance explained (brick-and-mortar = 62.8%; online = 60.8%). Confirmatory factor analysis of the four-item factor structures for channel interactivity yielded adequate goodness of fit measures (brick-and-mortar: chi-square/degree of freedom = 2.48, p > .10, NFI = .997, CFI = .998, RMSEA = .223, AIC = 28.96; online: chi-square/degree of freedom = .51, p > .10, NFI = .999, CFI = .996, RMSEA = .139, AIC = 25.02). For each channel, a composite index of channel interactivity was created for use in subsequent analysis. Risk aversion was conceptualized as a consumers cognitive and behavioral disposition toward avoiding uncertainty. Risk aversion was captured using a four-item, seven-point Likert scale derived from Raju

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(1980). The scale consisted of (1) I am the kind of person who would buy any new product once (reverse coded), (2) Even for an important date or dinner, I wouldnt be afraid of trying a new or unfamiliar restaurant (reverse coded), (3) I never buy something I dont know about at the risk of making a mistake, and (4) If I buy a product, I will buy only well-established brands (a = .75). Exploratory factor analysis of the four items yielded one factor with 61.22% of total variance explained. Confirmatory factor analysis of the four-item factor structure for risk aversion yielded adequate goodness of fit measures (chi-square/degree of freedom = 3.44, p < .05, NFI = .995, CFI = .996, RMSEA = .245, AIC = 30.87). A composite index was created by summing up the four items and treated as exogenous variables in subsequent analysis. A multiplicative term incorporating channel interactivity and risk aversion was created to test the interaction effect of channel interactivity and risk aversion for each channel model. We first deducted the mean from each index and then multiplied the two difference scores to minimize multicollinearity in the path analysis (Aiken & West, 1991). The interaction terms were entered in the final path analysis as exogenous variables. Results To test our hypotheses, we reconfigured our data and stacked the parallel measures for brick-and-mortar and online retail channels. A dummy variable (0 = online and 1 = brick-and-mortar) was then created; the a path model was assessed for each group using AMOS 4.0 using summated scales of indicators. This approach is similar to researchers who have adopted a two-stage procedure (e.g., Baker, Parasuraman, Grewal, & Voss, 2002; Homburg, Hoyer, & Fassnacht, 2002; Sirdeshmukh, Singh, & Sabol, 2002; Voss, Parasuraman, & Grewal, 1998). In the path models, channel interactivity, risk aversion and the interaction term were entered as exogenous variables. We allowed two correlational pathsbetween interactivity and the interaction term and between risk aversion and the interaction term. Trust was entered as an endogenous variable that was predicted by all three exogenous variables. In addition, trust was also predicting two endogenous variablesbehavioral loyalty and purchase intentions. The error terms of the final two endogenous variables were allowed to correlate. Means of each variable in the model and correlations are reported in Table 1a and Table 1b. The path results are presented in Figure 2.

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TABLE 1a. Brick-and-Mortar Model Variables: Descriptive Statistics and Correlations (Study One)
Model Variables 1. Channel Interactivity: Brick-and-Mortar 2. Risk Aversion 3. Brick-and-Mortar Trust 4. Brick-and-Mortar Behavioral Loyalty 5. Brick-and-Mortar Purchase Intention Mean 14.75 15.65 10.87 8.58 4.33 Std. Dev. 1 2.65 3.41 2.81 3.13 1.04 -.085 .269** .159# .147# -.019 .166# .065 -.199* .166# -.521** -2 Correlations 3 4 5

TABLE 1b. Online Model Variables Descriptive Statistics and Correlations (Study One)
Key Variables in the Model 1. Channel Interactivity: Online 2. Risk Aversion 3. Online Trust 4. Online Behavioral Loyalty 5. Online Purchase Intention Mean 6.85 10.87 11.41 2.75 2.08 Std. Dev. 1 2.78 2.81 3.31 1.73 1.23 -.065 .238** .085 .077 -.274** .115 .151# -.274** .438** -.567** -2 Correlations 3 4 5

Note: **Correlation is significant at the 0.01 level (2-tailed). *Correlation is significant at the 0.05 level (2-tailed). #Correlation is significant at the 0.10 level (2-tailed).

The general model specified for both channels yielded adequate fit measures with chi-square/degree of freedom index being less than 1 (c2 = 12.14, df = 14, p > .10), CFI (.998), NFI (.997) and RMSEA (.05) meeting the standards established by Marsh, Balla and Hau (1996), i.e., CFI and NFI exceeding .95 and RMESEA of .08 or lower. The relationships among variables for both brick-and-mortar and online models were similar. As theorized in H1, channel interactivity positively influenced consumer trust in both brick-and-mortar (path coefficient = .27, p < .01) and online (path coefficient = .23, p < .05) retail channels. The results did not support risk aversion (H2: path coefficient brick-and-mortar = .04, p > .10; path coefficient online = .19, p > .10) or the interaction of interactivity and risk aversion (H3: path coefficient brick-and-mortar = .05, p > .10; path coefficient online = .09, p > .10). However, as theorized in H4, trust significantly influenced the behavioral implications of both loyalty (path coefficient brick-and-mortar = .22, p < .01; path coefficient online = .27, p < .01) and purchase intentions (path coefficient brick-and-mortar = .16, p < .05; path coefficient online = .43, p < .01) in both retail channels.

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FIGURE 2. Path Analysis Results (Standardized Path Coefficients) (Study One: Brick-and-Mortar Model vs. Online Model)
Channel Interactivity .27** .02 Risk Aversion .04
2

Error variance = 6.442** .22** Trust Brickand-Mortar (R explained: 7.3%) .16* .05

9.047** Brick-andMortar Behavioral Loyalty 2 (R explained: 4.6%) .50**

.82** Interaction

1.053** Brick-andMortar Purchase Intention 2 (R explained: 2.7%) 2.745** Online Behavioral Loyalty 2 (R explained: 7.5%)

Channel Interactivity .23* .12** Risk Aversion .19 .83** .09 9.047** Interaction
2

Error variance = 9.522** .27** Trust Online (R explained: 11.9%) .43**

.51**

1.226** Online Purchase Intention (R explained: 18.9%)

2

Goodness of Fit Measures: c2= 12.14, df = 14, c2/df = 0.868, p > .10; NFI = 0.995; CFI = .998; RMSEA = .05; AIC = 92.150 **Standardized Path coefficients significant at p < .001; *p < .05; # p < .10.

Further analysis was conducted to assess comparability across brickand-mortar and online retail channels. To compare the path coefficients across models, we followed the procedure recommended by Cohen and Cohen (1983) and Jaccard, Turrisi, and Wan (1990). Here, we treated the channel as a dummy variable and tested whether retail channel moderated the relationships in the model. We first took the difference between the correspondent path coefficients in the brick-and-mortar and online channel and then subjected the difference to a test of statistical significance with the following equation: t= b1 b 2 ( S. E . b1) 2 + ( S. E . b 2 ) 2

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Where b1 and b2 refer to the unstandardized regression coefficients for group 1 and 2 (split the sample on the median of moderator X2); S.E. b1 and S.E. b2 refer to the standard error of the unstandardized regression coefficient. As indicated in Table 2, the only significant path difference related to the trust to purchase intentions relationship, thus indicating cross-channel applicability of the model. Further, differences in explained variance were identified. Comparing across models we note that the model for online retail channel explains greater variance of the endogenous variables than the brick-and-mortar retail channel model (trust: 11.9% for online vs. 7.3% for brick-and-mortar; behavioral loyalty: 7.5% for online vs. 4.6% for brick-and-mortar; purchase intentions: 18.9% for online vs. 2.7% for brick-and-mortar). Discussion Findings from Study One indicate partial support for the model. Specifically, perceived interactivity was found to be an important influencing variable in the development of trust in both brick-and-mortar and online retail channels. Second, in both brick-and-mortar and online retail channels, a consumers trust in the channel significantly influenced the behavioral implications of loyalty and purchase intentions. The findings suggest that interactivity may serve as a trust building mechanism in both brick-and-mortar and online retail channels. Further, and more importantly, the findings demonstrate the importance of trust in
TABLE 2. Comparing Path Coefficients in Brick-and-Mortar and Online Models (Study One)
Specific Paths Compared Channel InteractivityTrust Risk AversionTrust InteractionTrust TrustBehavioral Loyalty TrustPurchase Intention In-Store .21** (.064) .037 (.134) .009 (.023) .254** (.098) .064* (.003) Web .275** (.098) .22 (.171) .021 (.035) .143** (.043) .162** (.029) t-Value .555 .842 .287 1.037 3.361**

Note: 1.Cells represent unstandardized path coefficients with standard errors in the parentheses. 2. Path coefficients are significant at various levels **p < .01; *p < .05, #p < .10. Both unstandardized and standardized coefficients were reported in the cell. Standardized coefficients were included in parentheses. 3. T values with ** significant at p < .01.

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both retail channels. These findings indicate the fundamental importance of trust, whether in a brick-and-mortar or online channel, and its influence on consumer behavioral implications. However, comparison of brick-and-mortar and online retail channel path models suggests that while consumer trust was a major factor significantly influencing consumer behavioral implications in both brick-andmortar and online channels, the effect of consumer trust was significantly stronger in online retail channels. This indicates the challenge that online retailing channel faces. It can be argued that given this channels recent development, consumers may be wary of its use, thus necessitating greater development of trust. Clearly, issues such as privacy, fraud, and post-transaction delivery services further prohibit consumers from rendering ready trust and faith in this new channel. As theorized by previous research (Nohria & Eccles, 1992; Yoon, 2002), this study empirically demonstrates that online trust is different from brick-and-mortar trust. Our findings indicate that trust is more critical in stimulating behavioral implications in an online channel when compared to a brick-and-mortar channel. In Study One, consumer trust was operationalized as trust toward each retail channel (at a general channel level), as opposed to a specific retailers channel alternatives. As such, several additional issues arise. First, will trust still be a significant factor impacting consumers purchase intentions when the context is restricted to a brand-specific online retailer? Second, will channel interactivity and risk aversion influence consumer trust in an online brand-specific context? Third, will trust with a brand-specific retailer in an online channel have behavioral implications in the retailers brick-and-mortar channel? Study Two was designed to address these questions. STUDY TWO In Study Two, an experiment was designed to investigate two effects in a brand-specific environment: (1) the effect of interactivity and risk aversion on trust, and (2) the carry-over effect of online trust on in-store behavioral implication for a multi-channel business. As indicated previously, the employment of a multi-channel retail strategy generates a number of retail strategy issues. One such issue relates to the stimulation of behavioral implications across a retailers channels. As has been indicated, fundamental to an effective retail strategy is the development of strong customer relationships. However, in a multi-channel retail set-

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ting the issue becomes more complicated as each of a retailers channels may influence behavioral implications in its other channels. At a product/brand level, Aaker (1996) argues that a firms brand equity can be leveraged as a firm expands its product line. Extending the branding literature to the retail channel it can be theorized that trust developed within one of a retailers channels will generate positive behavioral implications for another of the retailers channel (i.e., leveraged to a retailers other channels). For example, trust developed with a consumer in an online channel will carry-over to the retailers brick-and-mortar retail operations. As such, building on the rudimentary model hypothesized previously, we add the following hypothesis: H5: In a brand-specific retail setting, consumer trust in an online retailer will positively influence consumer behavioral implications in the retailers brick-and-mortar retail channel. Sample Sixty-nine students (32 male and 37 female) in undergraduate marketing courses at a large Western university participated in an experiment in Study Two. Ninety-two percent of the subjects were between the ages of 20 and 25 with the balance between the ages of 26 and 35. Seventy-seven percent of subjects had purchased products online. Among them, nearly half of the subjects had purchased online at least once a month (42%), with 24% routinely purchasing clothes online. Subjects spent an average of 11 hours online per week. Subjects were assigned randomly to two treatment conditions (i.e., degree of interactivitylow/high) resulting in cell sizes of 35 and 34. Experiment Procedure Several Web-based search engines (e.g., Yahoo, Netscape, Altavista, etc.) were used to identify apparel retailers targeting the 18-35 market. Careful attention was paid to the interactivity offered in each retailers online channel. After careful assessment, Lands End (the largest online apparel retailer, generating $1.462 billion in revenue in 2001) was selected as the context for use in Study Two. One week prior to the experiment subjects were randomly assigned to two treatment conditions (high/low interactivity) and asked to fill out a short-survey regarding their body features (body feature information was needed to create virtual models for the high interactivity treatment).

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Although only the body feature information from the subjects assigned to the high interactivity treatment was used, all participants were asked to fill out the short-survey to minimize the confounding effect of the task. The online shopping task employed necessitated subjects to select casual pants and a casual shirt for personal use. In the low-interactivity treatment condition only color palette and fabric choices were used to stimulate interactivity (with opportunity to increase viewing size of each). The high interactivity treatment condition consisted of (1) a color palette and fabric choices for the clothing presented (with opportunity to increase viewing size of each) and (2) a virtual model built for each subject. Each virtual model was personalized to share the same body features as the subject. Further, each virtual model could be manipulated by the subject (e.g., rotating view, changing color of clothing, etc.). Both experimental treatments constrained subjects from accessing additional product or company information. Efforts were taken to ensure that male and female subjects were exposed to comparable apparel in terms of price, style, color and fabric. Experimental sessions were conducted in a computer lab in groups ranging from 8 to 12 participants. Male and female subjects were assigned to different sessions to avoid cross-gender confounding effects. Experiment administrators gender matched the subjects in each session. Experiment administrators read the instructions from a script describing the procedures. Subjects were first asked to complete the questions measuring their pre-exposure to the brand and their risk aversion characteristics. Next, subjects were directed to the computers, preloaded for each treatment. After examining the retailers apparel, subjects were asked to complete the questionnaire with the manipulation measures and dependent measures. Subjects were then debriefed. Measures As the focus of Study Two was the carry-over effect in multi-channel retailing, behavioral implications were assessed as purchase intentions in multiple channels. To assess purchase intentions, we employed scales similar to Griffith, Krampf and Palmer (2001), and Baker and Churchill (1977). Online purchase intention was assessed using a one-item seven-point scale (ranging from not likely to very likely) capturing the subjects intention to buy the clothes from the online retailer. Brick-and-mortar purchase intention was assessed using a two-item, seven-point scale (ranging from not likely to very likely) capturing the subjects intention to (1) buy the product if they saw it in

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store, and (2) actively seek out the product in store to purchase it. The correlation for the scale was .92. As in Study One, trust was assessed using a four-item, seven-point semantic differential scale similar to the scale proposed by Ganesan (1994) and Sirdeshmukh et al. (2002). Respondents were asked to rate their overall trust toward the online retailer: (1) very undependable-very dependable, (2) very incompetent-very competent, (3) of very low integrity-of very high integrity, and (4) very unresponsive to customers-very responsive to customers (a = .94). Exploratory factor analysis of the four items yielded one factor with 83.20% of total variance explained. Confirmatory factor analysis of the four-item, one-factor structure for trust yielded adequate goodness of fit measures (chi-square/degree of freedom = .144, p > .10, NFI = .998, CFI = .998, RMSEA = .125, AIC = 24.29). A composite index was created (a = .93). A scale similar to the channel interactivity scale employed in Study One (Jee and Lee, 2002; Li, Kuo, and Russell, 1999) was employed as a manipulation measure in Study Two to assess the interactivity, responsiveness, sensitivity and availability of the low/high interactivity treatments. The scale was modified to fit into the brand-specific online apparel retail environment. The four-item, seven-point Likert scale asks: (1) Interacting with this site is like having a conversation with a sociable, knowledgeable and warm representative from the company, (2) I felt as if this Web site talked back to me while I was navigating, (3) I perceive the Web site to be sensitive to my needs for product information, and (4) All of the attributes about clothes I want to know have been successfully digitized online (a = .92). Exploratory factor analysis of the four items yielded a single factor solution with 80.66% of the total variance explained. Confirmatory factor analysis of the four-item, one factor structure for channel interactivity yielded adequate goodness of fit measures (chi-square/degree of freedom = 5.43, p < .01, NFI = .985, CFI = .988, RMSEA = .255, AIC = 34.85). A composite index was created and used as manipulation check. As in Study One, risk aversion was assessed by adapting Rajus (1980) scale (a = .78). Exploratory factor analysis of the four items yielded a single factor solution with 60.16% of total variance explained. Confirmatory factor analysis of the four-item, one factor structure for risk aversion yielded adequate goodness of fit (chi-square/degree of freedom = 32.58, p > .05, NFI = .992, CFI = .995, RMSEA = .153, AIC = 29.16). A composite index of risk aversion was created. The interaction term of channel interactivity and risk aversion was developed similar to Study One. The interaction term was entered as one of

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the exogenous variables in the analysis. Further, as a pre-existing brand was used in the experiment, pre-exposure attitude toward the brand was assessed. Attitude toward the brand was measured by a three-item, sevenpoint semantic differential scale (a = .93): (1) bad/good, (2) dislike/like, and (3) unfavorable/favorable (Griffith, Krampf, & Palmer, 2001; Smith, 1993; Kempf & Smith, 1998). No differences were observed across treatment conditions (X high = 4.67, X low = 4.21, t = 1.95, p > .10). Results Hypotheses were examined through the development of a model similar to that in Study One. However, as the focus of Study Two was to explore the influence of trust on behavioral implications in multi-channel retailing, to address H5, trust was modeled to influence both online and brick-and-mortar purchase intentions. A manipulation check was conducted. Results indicated that subjects in the high-interactivity condition reported a significantly higher level of channel interactivity than in the low-interactivity treatment condition (X high = 8.82, X low = 3.11, df = 67, p < .001). The descriptive statistics and correlations are presented in Table 3. The proposed model adequately fits the data: chi-square/degree of freedom = 6.43, p < .01; NFI = .96, CFI = .96, RMSEA = .28 and AIC = 85.22. Results, supportive of H1 (however, at the retailer level as opposed to the retail channel level), indicate that channel interactivity in the online channel positively influenced trust (path coefficient = .92, p < .01). Further, H2 was supported (path coefficient = .21, p < .10), indicating that individuals with high risk aversion were less likely to demonstrate trust with online retailers. In addition, H3 was supported (path coefficient = .37, p < .05), indicating that the interaction between interactivity and consumer risk aversion positively influences online
TABLE 3. Multi-Channel Model Variables: Descriptive Statistics and Correlations (Study Two)
Correlations Model Variables 1. Channel Interactivity (Manipulation) 2. Risk Aversion 3. Online Trust 4. Online Purchase Intention 5. Brick-and-Mortar Purchase Intentions Mean .49 3.69 4.18 4.96 4.67 Std. Dev. .50 1.08 1.25 1.88 1.65 1 -.284* .706** .535** .514** -.169 .456** .498** -.173 .307* -.785** -2 3 4 5

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trust in a brand-specific retail channel. Further, H4 was supported (path coefficient = .18, p < .10), indicating that trust significantly predicted online purchase intention. Lastly, the results of Study Two are supportive of the carry-over effect hypothesized in H5 in that online trust of a retailer positively influenced a consumers brick-and-mortar purchase intentions (path coefficient = .31, p < .05) (see Figure 3). Compared to the path model in Study One, risk aversion, channel interactivity, and the interaction terms explained a greater amount of the variance in trust in Study Two (R2 = 53.9% in Study Two vs. R2 = 7.3%, 11.9% in Study One). To further delineate the interaction effect (H3), we converted risk aversion to a dummy variable and conducted ANOVA analysis with risk aversion and channel interactivity as between-subject factors and trust as dependent variable. ANOVA analysis yielded a significant interaction effect of risk aversion and channel interactivity (F = 6.30, p < .01). Planned contrast showed that among high risk-averse individuals, there was a significant main effect of channel interactivity (F = 8.33, p < .01), indicating that subjects of high risk aversion reported more trust in online store in high interactivity condition than in low interactivity condition (mean = 3.92 vs. 4.54). Results indicate that high interactivity enhances trust only among high risk-averse individuals. Planned contrast also showed that within the low interactivity condition, there was a sigFIGURE 3. Path Analysis Results (Standard Path Coefficients) (Study Two: Multi-Channel Model)
3.38** Channel Interactivty .93** Risk Aversion .27** .37* Interaction .31* C2: Brickand-Mortar Purchase Intention 2 R explained: 9.8% 2.24** .92** .21# B1: Trust R explained: 54.2%
2

Error variance: .74** .18#

C1: Online Purchase Intention 2 R explained: 3.2%

.78**

Goodness of Fit Measures: c2/df = 6.432; p < .01; NFI = .96; CFI = .96; RMSEA = .28; AIC = 85.02 ** Path coefficients significant at p < .001; *p < .05, #, p < .10

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nificant main effect of risk aversion. That is, individuals of high risk aversion reported less trust than those of low risk aversion (mean difference = 1.27, F = 17.93, p < .001). Discussion The purpose of Study Two was to confirm the findings of Study One and extend our understanding of multi-channel retailing through the investigation of the carry-over effect of a retailers online trust to the brick-and-mortar behavioral implication of purchase intentions. Findings from Study Two demonstrate that channel interactivity and risk aversion influence trust. Further, the significant interaction between channel interactivity and risk aversion relating to trust provides new insights. Specifically, the results indicate that only high risk averse individuals were able to translate the highly interactive features of online retail channel into enhanced trust in the online channel. Thus, this finding suggests that channel interactivity, while an effective trust building mechanism for high risk averse consumers, may not be an effective strategy when a firm is targeting low risk averse consumers. More importantly, the findings of Study Two provide the first empirical support for the carry-over effect in multi-channel retailing. The findings indicate that a multi-channel retailers online trust building activities stimulate brick-and-mortar behavioral implications, thus necessitating an integrated approach to multi-channel retail strategy. GENERAL DISCUSSION AND IMPLICATIONS The purpose of this research was two-fold. First, our intention was to examine trust to gain greater understanding of its applicability across retail channels, thus furthering our understanding of multi-channel retailing. As such, the general focus of this article was on consumer behavioral implications (inclusive of behavioral loyalty and purchase intentions) in brick-and-mortar and online retail channels as well as in the context of multi-channel retailing. Second, we wished to develop a greater understanding of how trust developed in one of a retailers channels would influence consumer behavioral implications in the retailers other channels. To accomplish these objectives, two studies were conducted. The studies provided for the exploration of consumer trust across multiple retail channels in two contexts, i.e., general channel and

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brand-specific retailer channel. The results of both studies indicate that channel interactivity (whether at a general channel level or within a retailers specific channel context) positively influences trust. It can be argued that through greater channel interactivity a consumer can gain greater understanding of the retailer and its products, and the retail channel in general, thus serving as a trust building mechanism for a retailer. While the results of both studies support the importance of interactivity in influencing consumer trust, Study Two provided additional insights via the significant influence of risk aversion and interaction of channel interactivity and risk aversion on trust. First, the results indicate that risk aversion does not influence channel level trust (i.e., a consumers trust of a specific retail channel). Rather the results indicate that risk aversion is isolated to a brand-specific retailer context, thus highlighting the importance of retailer branding in multi-channel retailing. The results also indicate that only high risk averse individuals were able to translate the highly interactive features of online retail channel into enhanced trust in the online store. Thus, this finding suggests that channel interactivity can be an effective strategy for retailers to enhance trust in a retailers most hesitant consumers. Hence, the findings indicate the complex interactions between channel characteristics and personal characteristics in retail channels. Although a significant interaction effect was not found in Study One, the lack of finding may be a result of the unit of analysis (i.e., Study One was conducted at the channel level). Further, it was demonstrated that trust resulted in positive behavioral implications at both the general channel level as well as at the brandspecific retailer level. These results add additional insights into the existing literature in both the brick-and-mortar and online retail context. Of particular note is that consumers distinguish among retail channels at the general level and differentiate trust at this unit of analysis. Of greater interest is that general channel trust not only influenced channel directed purchase intentions, but it also influenced channel-directed loyalty. This issue is of critical importance to academics studying multichannel retailing as it provides a foundation for developing analysis at the generalized channel level. This suggests, from a theoretical perspective, that consumers evaluate channels independently and form specific attitudes toward each channel independent of the brand-specific retailer. Most notably, it was theorized that trust developed in one of a retailers channels would have behavioral implications for another of the retailers channels. The results confirmed the hypothesized carry-over effect. This finding highlights the interplay between a retailers channels from a consumer perspective. Theoretically, this suggests that a

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consumers cognitive and affective evaluations of one of a retailers channels has implications, to some extent, on the retailers other channels. While this concept has been investigated at the brand level when examining products (e.g., Aaker, 1996), it has not been extended to the unit of analysis of a retail channel. This is significant for multi-channel retail researchers as it provides evidence of retailer brand equity and cross-channel behavioral implications, thus facilitating a significant research stream from which to derive theoretical tenets for future research. Managerially, multi-channel retailing has become an increasingly important retail strategy. For instance, most retailers today employ a multi-channel retail strategy. The importance of the employment of a multi-retail strategy can also be observed when exploring funding opportunities for new retail ventures. For example, Direct Equity Partners has intentionally avoided single-channel retailers when funding ventures because it believes that the future of retailing will be based on a multi-channel retail strategy (Cruz, 2000). The difficulty in developing a multi-channel retail strategy is hindered by the lack of research regarding the influencing factors of consumer behavioral implications across channels. Some multi-channel retailers have recently backed away from a multi-channel retail strategy, instead opting for a brickand-mortar channel and an online advertising presence. The results here, specifically in terms of the carry-over effect, may suggest that these retailers may have miscalculated the importance of the firms online retail presence in driving their brick-and-mortar sales. Further, findings from this research also caution multi-channel retailers to be sensitive to differences in consumer characteristics. As KaufmanScarborough and Lindquist (2002) suggest, some shoppers like browsing across a variety of retail channels including the Internet, yet maintain their loyalty to brick-and-mortar channels when it comes to actual purchase. Our research findings suggest that by increasing consumers trust in an online channel context a retailers brick-and-mortar purchases will be influenced. That suggests to retailers that instead of merely attempting to adopt strategies to convert online browsers to online buyers, multi-channel retailers should fully take advantage of the carry-over effect of consumer trust. However, for retailers to fully understand the importance of consumer demand driven by its online retail channel it must develop more effective mechanisms of tracking the demand stimulation of brick-and-mortar purchases. For example, tracking brick-and-mortar redemptions of online sales promotion materials (e.g., coupons) can provide some insights into a retailers carry-over effect. Alternatively, a detailed market research study

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could be conducted to more clearly identify a retailers carry-over effect within its target customer market. LIMITATIONS AND FUTURE RESEARCH DIRECTIONS Although this study provides some new insights, it is not without its limitations. One limitation of the current study is that a narrow focus was taken of the retail industry, i.e., apparel retailing. While apparel retailing is one of the largest and most important retail sectors, the findings here are limited to this context. For instance, while the use of apparel (a product category higher in experience attributes) may provide new insights into apparel retailing, the findings may not be generalizable to products such as computers that tend to have a higher proportion of search attributes. For, it can be theorized, that the carryover effect observed is a function of the product category as with search products a consumer does not necessarily need to experience the product and thus may be more willing to purchase online. As such, the findings here should not be generalized beyond the scope of the context of apparel retailing. Future research could expand upon the current findings using a variety of products within a broader range of product categories, thus extending the generalizability of the work. Second, in our attempt to explore multi-channel retailing we took two unique perspectives. First, in Study One, we explored the model at the channel level. Although this provided for generalized insights at the channel level, the lack of specific retailer focus could have possibly mitigated the significance of the variables in our model (resulting in a lack of significant findings of risk aversion and the interaction channel interactivity and risk aversion). For example, researchers have demonstrated that channel interactivity can vary widely within a single retail channel. As such, our findings should be interpreted with caution. In an attempt to overcome this limitation, a narrow focus was taken in Study Two by examining a single apparel retailer. Much as the first study was limited by the general scope, the second study is limited by the narrow focus. Future research might attempt to overcome these limitations by further multi-study experiments. Furthermore, as the focus in this study was primarily on the behavioral implications of multi-channel retailing, a relatively rudimentary model was developed. While the model employed provided unique insights into the antecedents of trust in retail channels, clearly a greater number of channel and consumer characteristics would provide for a

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greater explanation of channel trust (both at the general channel level as well as at the brand-specific retailer level). However, it is important to note that a difference in the magnitude of influence of trust across channels was identified, thus suggesting the need for more comprehensive research in this area. In conclusion, although changes in the retail environment have stimulated retailers to develop strategies aimed at synchronizing multiple, complementary channels to service an increasingly diverse consumer marketplace, little empirical research has been conducted in this area. As such, academics and practitioners have a limited understanding of this topic. While this study demonstrated the importance of trust in fostering behavioral implications both within and across retail channels, it provides only a starting point for the development of more elaborate multi-channel retailing models. For the multi-channel retailing to truly advance, a systematic research effort is warranted. REFERENCES
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