Understanding retail exclusion and promoting an inclusive customer experience at transforming service encounters

• Published date: 01 July 2023
• Author: Fang‐Chi Lu,Jayati Sinha
• Date: 01 July 2023
• DOI: http://doi.org/10.1111/joca.12529

RESEARCH ARTICLE

Understanding retail exclusion and promoting

an inclusive customer experience at

transforming service encounters

Fang-Chi Lu

1

| Jayati Sinha

2

1

Department of Management and

Marketing, Faculty of Business and

Economics, The University of Melbourne,

Melbourne, Victoria, Australia

2

College of Business, Florida

International University, Miami,

Florida, USA

Correspondence

Fang-Chi Lu, Department of

Management and Marketing, Faculty of

Business and Economics, The University

of Melbourne, 198 Berkeley Street,

Melbourne, Victoria 3010, Australia.

Email: fangchi.lu@unimelb.edu.au

Abstract

The authors review the marketing practices likely to

make customers feel excluded (ignored or rejected) and

analyze the potency of retail exclusion in the trans-

forming service encounters due to the infusion of

artificial intelligence (AI), robots, and other new

technologies. Synthesizing the findings of prior

studies, the authors propose an integrative theoretical

framework for understanding different perspectives,

psychological mechanisms, and outcomes of retail

exclusion, and highlight research opportunities for

retail exclusion in two contexts of service encounters:

interpersonal and technology-powered. The review

aims to provide implications on proactive strategies to

minimize the adverse effects of retail exclusions and

promote inclusive customer experiences.

KEYWORDS

AI, customer experience, inclusive marketplace, retail

exclusion, service encounter framework

Fang-Chi Lu and Jayati Sinha contributed equally to this study.

Received: 24 October 2022 Revised: 24 March 2023 Accepted: 8 April 2023

DOI: 10.1111/joca.12529

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits

use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or

adaptations are made.

© 2023 The Authors. Journal of Consumer Affairs published by Wiley Periodicals LLC on behalf of American Council on Consumer

Interests.

1482 J Consum Aff. 2023;57:1482–1522.

wileyonlinelibrary.com/journal/joca

1|INTRODUCTION

Creating a rich customer experience (CX) is vital for retailing. 73% of customers find positive

CX critical in their purchase decisions (Clarke & Kinghorn, 2020), and about 89% of retailers

now compete based on CX (Hyken, 2018). Interactions between frontline retail/service

employees (hereafter service agents) and customers during the shopping journey are known to

significantly influence customer satisfaction or delight, loyalty, and word-of-mouth (WOM)

communications (Barnes & Krallman, 2019; Gremler & Gwinner, 2008). However, the digital

revolution has fundamentally changed service encounters (Larivière et al., 2017), broadly

defined as interactions between customers and various aspects of service firms (Bitner

et al., 1990). Service encounters now encompass customer interactions with humans as well as

technology-powered service agents via omni-channels. Indeed, 80% of US retailers now use

AI-powered technology to improve customer service (Alva, 2021). The global retailer spending

on AI-powered technologies is projected to reach $7.3 billion annually (Swinhoe, 2021), and the

global market for retail robots is estimated to reach $55.8 billion by 2028 (Edwards, 2021).

Retailers such as Nordstrom, Patagonia, Starbucks, and Sephora, have committed to creat-

ing an inclusive and welcoming shopping environment for their customers (Patagonia, n.d.;

Edelson, 2020; MacLellan, 2019). To this end, they have implemented various employee train-

ing programs on diversity, unconscious bias, cultural sensitivity, and disability awareness.

Although companies strive to create an inclusive CX during service encounters across

touchpoints, customers sometimes feel excluded. Feelings of exclusion at touchpoints during

the customer journey will likely lead to negative CX (Gong et al., 2022; Sinha & Lu, 2019).

Service agents might fail to accommodate increasingly heterogeneous customer needs and

requests, causing customer dissatisfaction (Beatty et al., 2016; Bitner et al., 1990). Indeed, pres-

sure on service agent productivity in terms of simultaneously achieving efficiency and customer

satisfaction creates stress for service agents, burdens them, and prevents them from offering

optimal CX (Harris, 2020). In addition, service agents' unprompted or unsolicited behaviors,

such as being rude, inattentive, and ignoring customer requests, might make customers feel

rejected or ignored (Bitner et al., 1990; Sinha & Lu, 2019; Ward & Dahl, 2014). Exclusionary CX

is not limited to only interpersonal service encounters; it also occurs with contact-free technol-

ogy in service interactions. For example, customers might feel misunderstood or excluded when

they perceive AI-enabled personalized services inaccurately and classify them as the wrong cus-

tomer type (Puntoni et al., 2021). Stores in China rejecting cash payments have marginalized

the elders who do not use mobile payments (Guo & Hu, 2021). All these instances represent

exclusionary CXs, namely retail exclusion, in this research.

Interpersonal social exclusions—known to influence individuals' emotions, thoughts, and

behaviors—are extensively studied in psychology and organizational behavior (Lee &

Shrum, 2012; Molden et al., 2009; Riva & Eck, 2016). In the business setting, Bitner et al.

(1990), in their seminal article, identified service agent behaviors, particularly rudeness and

ignoring customers, as one cause of dissatisfactory service encounters. Recent empirical works

also demonstrate that brand rejection and ignoring significantly impact customer attitudes and

behaviors (e.g., Hu et al., 2018; Sinha & Lu, 2019; Ward & Dahl, 2014). Despite that, systematic

research examining the antecedents, mechanisms, and consequences of exclusionary CXs across

physical and virtual service encounters is still lacking. To address this research void, we

reviewed existing research, suggested an integrative theoretical framework (Figure 1), and pro-

posed a set of theoretical propositions for future research. Particularly, we distinguish two types

of service encounters—interpersonal (between a customer and a human service agent) versus

LU and SINHA 1483

technology-powered (between a customer and a technology-powered service agent)—to analyze

customer exclusions in the understudied, digital context. Additionally, in response to the recent

call for more research on the role of marketers in improving consumer well-being, we offer an

agenda to guide future research in inclusive CX (Gong et al., 2022; Ng et al., 2022; Rosenbaum &

Russell-Bennett, 2021; Stewart, 2022).

The following sections begin with a formal definition of retail exclusion and explain that

customers are likely to encounter retail exclusions at various service encounters. Second, we

explain methodology of the literature review and summarize the theoretical underpinnings and

consequences of retail exclusion suggested in the literature. Third, we suggest future research

agendas according to how types of service encounters might exert a main effect or a moderation

effect on retail exclusion. Finally, we discuss managerial implications for reactive marketing

actions to mitigate the negative consequences of retail exclusion and proactive service encoun-

ter strategies to prevent retail exclusion and promote inclusive CX.

2|RESEARCH DOMAIN

2.1 |Retail exclusion defined

A sense of belongingness and feeling accepted by important social groups are innate human

needs, and threats to these needs lead to an experience of social exclusion (Baumeister &

Leary, 1995; Baumeister & Tice, 1990). When people feel excluded, they perceive that individ-

uals, groups, or society devalue them (Richman & Leary, 2009). Social rejection (i.e., explicitly

told that one is not wanted) and ostracism (i.e., characterized by being ignored) represent two

core experiences of social exclusion (Molden et al., 2009; Riva & Eck, 2016). Although social

exclusion was initially studied in social psychology, scholars from other disciplines have started

examining this phenomenon across different contexts (e.g., retail, school, and workplace). This

review article focuses on exclusion in retail settings.

Retailing, defined as “business activities involved in selling goods and services to consumers

for their personal, family, or household use”(Berman & Evans, 2001, p. A28), essentially involves

communications, distributions, and transactions (Peterson & Balasubramanian, 2001). CX man-

agement strategists use promotions, advertising, customer service, customer relationship manage-

ment, or loyalty programs to communicate with customers, enhance CXs, and develop brand

FIGURE 1 Retail exclusion at service encounters: An integrative theoretical framework.

1484 LU and SINHA