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.

With consumption increasingly shifting to online and mobile, the physical retail environment has been called into question. However, not all facets of a physical experience can be substituted virtually (Anderson & Eckstein, 2013; Johnson, Kim, Mun & Lee, 2014, Piotrowicz & Cuthbertson 2014, Verhoef, Kannan, & Inman, 2015). The enduring quest for real, tangible experiences with real people and in real environments is one reason for the acknowledgement of the importance of architectural branding 1 , enabling memorable experiences (Raffelt, 2012). Here, architectural branding plays a key role at the intersection of consumer behavior, marketing management, and design. Furthermore, one can also observe the trend of forward brand verticalization in retail: with brands increasingly strive towards direct distribution, they open and manage more retail stores themselves (Kahn, Inman & Verhoef, 2016, Nierobisch et al. 2017, Teufel & Zimmermann, 2015, Tischer, 2014). This is especially true for the luxury industry, where brands are looking for ways to attain more control over the brand in order to steer highend customer experiences (Wiedmann & Hennings, 2013, Deloitte Touche Tohmatsu, 2015). Therefore, demand to develop good architectural branding in retail and to improve retail design strategies for current and future challenges is crucial. During the last five years, marketing scholars, renowned management consulting firms, and the popular press have examined the role of brick and mortar as one aspect of an omnichannel strategy in a world of increasing digitalization (Anderson & Eckstein, 2013; Bauer, Beil, & Wege, 2014; Piotrowicz & Cuthbertson 2014; Worden, 2013; Verhoef, Kannan, & Inman, 2015). The importance of architecture in general and retail design as a specialization thereof in marketing strategy has been broadly acknowledged (e.g. Kotler, 1973; Kotler & Rath, 1984; Martineau, 1958; Münster & Haug, 2017). Although, there is only little research focused on architectural branding (Raffelt, Littich & Meyer, 2011; Raffelt, Schmitt & Meyer, 2013). This is likely caused by its position at the intersection of the research fields on retail stores (e.g Kent & Stone, 2007; Kirby & Kent, 2010; Borghini, Diamand, Kazinets, Mccrath, Muiz, JR., & Sherry, JR., 2009; Hiss; 1987; Kozinets, Sherry, DeBerry-Spence, Duhachek, Nuttavuthisit, & Storm, 2002), brand experience (e.g. Brakus, Schmitt & Zarantonello, 2009; Pine & Gilmore, 1998; Schmitt 1999), and atmospherics (e.g. Kotler, 1973; Donovan & Rossiter, 1982; Rayburn & Voss, 2013; Spence, Puccinelli, Grewal, & Roggeveen, 2014). Here, articles primarily focused on store design in general (e.g; Kent & Sone, 2007; Kirby & Kent, 2010; Meyers-Levy & Zhu, 2008),flagship store design (e.g. Borghini et al., 2009; Hiss; 1987; Kozinets et al., 2002), or were primarily published in retail management journals. However, in marketing and management research, there are limited journal publications about the role of physical stores in the luxury industry in times of digitalization. Dion & Borraz (2015) stated that luxury brands recently followed the strategy to build very costly and unique boutiques with star architects, which have become sacred places. The role of store design in the luxury industry is even scarcer. In two case studies, Jiang, Nagasawa, & Watada (2014) investigated the role of store design for the brands Bally and Tod's in Japan. Thus, this research project aims to fill this research gap and extend the research in the field of architectural branding in the luxury industry, investigating role of physical stores in an omnichannel construct and to gain a deeper knowledge on how to sustainably tangibilize brands in modern and future luxury retail environments, answering the following question: What is the role of store design for luxury monobrand stores in a digital economy? This research project will apply an inductive and exploratory research method, implying a qualitative research design. It will build upon existing literature in the mass market and draw from two studies using in-depth interviews with academics and practitioners from the field of marketing and retail primarily working in the luxury industry to gain more insights about the role of physical stores in this specific industry. One study will focus on ways to make brands tangible in store. The other study will lay its focus on how a omnichannel strategy supports luxury brands in offering a superior in-store experience. Furthermore, results from a workshop with executives from brands with high-end positioning will be taken into account as well as expert interviews about the role of store design in general. These four studies will be presented in an aggregated manner during the conference. The overall contribution of this project is to provide insights about the role of brick and mortar retail design in the luxury industry and thereby extend research in the field or architectural branding in retail.