Physical stores are significant contact points for customers to have unique shopping experience with hedonic values (Hirschman and Holbrook, 1982). The value is becoming even more important as a differentiating factor for companies in the digital era when e-commerce is dramatically expanding and growing (Kotler, Kartajaya, and Setiawan, 2017). In order to deepen our understanding on online for offline (O4O) shopping experience, we focus on Visual Merchandizing Design (VMD) as one of the key factors to differentiate physical stores from e-commerce. VMD has a long history since 18th century VMD and has been extensively researched in various ways, but no study has been done in the setting of online for offline (O4O). VMD is defined as an art of displaying the things in a manner to attract the attention of the customer and persuade them to buy the product (Kerfoot, Davies, and Ward, 2003; Krishnakumar, 2014). In the VMD's extant research, many suggest the importance of VMD from the viewpoint of experiential marketing. It has been discussed that VMD is an effective way to impress consumers with company brands (e.g., Kim and Kim, 2011; Park and Jeon, 2004 Sun and Lee, 2017). In order to analyze the effectiveness of VMD, we use the three elements commonly used in practice that include Visual Presentation (VP), Point of Sales Presentation (PP), and Item Presentation (IP). The role of Visual Presentation (VP) is to invite customers from outside to inside of the store. When a customer enters the store, it is expected to encourage customers to stay longer to look around through PP (Point of sales Presentation). Finally, attractive Item Presentation (IP) on the shelves or hangers encourages customers to purchase products. We combine this VP-PP-IP framework of VMD with New AIDA model proposed by Iwamoto, Kawakami and Suzuki (2016). New AIDA model is a revised version of AIDMA that incorporates online related factors such as search, keep and share. Using this framework, we conducted three case studies on JINS BRAIN Lab by JINS Inc. in Japan, LAB101 in South Korea and On and the Beauty by Lotte Shopping in South Korea. We visited the store to observe how these companies realize the elements of VMD (VP-PP-IP) at each store. The results suggest that, for the better O4O experience to shop at a physical store looking at a mobile device, companies need to design the store from VMD point of view in addition to data-driven or artificial intelligence supported merchandizing. Physical stores with better VMD also play a significant role for generating word-of-mouth for engaging other customers.

• Nhayoon Kim(Waseda University, Japan)
• Tomoko Kawakami(Waseda university, Japan)