Unrevealing the Dynamic Impact of Extended Reality Adoption on Offline Channel Performance

The substantial attention of extended reality (XR) technology poses challenges for multichannel retailers. On the one hand, retailers’ adoption of XR can enhance consumers’ online shopping experience and stimulate their purchases. On the other hand, XR technology replace the necessity for multichannel retailers to operate physical stores, which reflects the need to optimize channel structures while adopting XR. To ascertain how the multichannel retailers can outperform under such circumstances, this study combines the data sources of online website information and offline transaction information for over 1,100 global multichannel retailers from 2018 to 2022, thus involves 13497 monthly-brand observations. By using the fixed-effects model, the current study found that XR adoption duration has a non-linear impact on offline store conversion rate, which can initially increase customers’ purchase decision in offline stores, but then turns to result in the negative impacts. Moreover, there are nuanced effects for XR with and without the affordance of create-ability. Findings of the paper aims to provide managerial implications for multichannel retailers to optimize channel structure and adopt XR technology for creating positive cross-channel synergy.