Is a gift on sale “heart-discounted”? Givers’ misprediction on the value of discounted gifts and the influence of service robots

Abstract

The main purpose of this research is to investigate whether, why, and when givers and recipients perceive the value of a discounted gift differently. The studies provide convergent evidence that givers perceive discounted gifts as less valuable than regular-priced gifts whereas recipients do not perceive them as different. Givers' devaluation of the discounted gift is driven by their concern about the thoughtfulness of a gift. Moreover, the giver-recipient asymmetry is mitigated when the in-store interaction with a salesperson is substituted by technology via a service robot. This research contributes to the gift-giving literature and the growing literature on service robots by revealing how promotional offers influence consumers’ evaluation of gifts and how technological advance in retail may affect the proposed effect. Managerial implications for planning and executing price promotions for gifts are also discussed.

Introduction

Gift shopping presents vast business opportunities for firms with gift sales growing every year. The retail sales of year-end holiday gifts in the United States amounted $789.4 billion in 2020 with an increase of 8.3 percent versus a year ago (Shearman, 2021). The growth was more than double the 3.5 percent average holiday increase over the previous five years. Also, Americans did not tighten their gift budget despite unprecedented challenges of the coronavirus pandemic, spending $852 in average (Saad, 2020). As gift occasions include not only holidays but also celebration of milestone events (e.g., birthday, anniversary, and graduation) and expression of empathy and support in daily situations, retailers are keen on assisting consumers’ gift purchases to capture sales. Frontline sales employees would ask consumers for whom they are buying, make suggestions on a suitable gift, and provide further convenience such as gift wrap services and exchange vouchers.

As the retail innovation accelerates, service robots are appearing in-stores supporting gift purchases through gift packaging and comparing price (Bertacchini et al., 2017; Harris et al., 2018) Online retailers' assistance for gift purchases is also notable as consumers increase their gift shopping online (Thomas, 2020). Various tools such as Amazon's Gift Finder page targeting different age groups and gifting purposes and Gift Ideas page recommending the most popular products ordered as gifts have emerged. Online gift registries also suggest promotional offers at the time, recommend popular gifts, and allow easy returns. Moreover, social network services (SNS) are another emerging platform for gift-giving in recent years, as they provide social commerce within the natural context of interactions among users based on partnerships with retailers (Mamonov and Benbunan-Fich, 2017). Consumers enjoy a more immediate and convenient way of preparing and sending a gift in the form of digital vouchers and physical goods within SNS (Kim et al., 2018; Lee et al., 2019).

Given the opportunity of the gifting market, retailers provide promotional offers such as price discounts, coupons, and premiums for consumers purchasing a gift. Consumers may not only utilize promotion codes and seasonal offerings during the holiday events, but also find deals throughout the year when making purchase for others at an ordinary occasion like a friend's birthday. That said, empirical research on consumers' evaluation of sales promotion on gift purchase remains scant. Only a few studies have partially tackled the issue through exploratory investigations of sales promotion within the specific context of holiday shopping (Oh and Kwon, 2009; Thomas and Peters, 2011) and by revealing how evaluation of promotional offers differ according to the purchase target - for self or others (Lee-Wingate and Corfman, 2010; Yu et al., 2020). These studies do not directly uncover the influence of sales promotion on gift evaluation. Motivated by this research gap, the current research probes how consumers evaluate gifts on promotion, in particular, according to the role in exchange.

In fact, the gift-giving literature has largely focused on giver-recipient asymmetry on what makes a valuable gift, and has found givers' misprediction on the value of their resources dedicated into a gift. For instance, givers think that more money and effort in a gift would be appreciated whereas recipients do not hold such association on the gift's value (see Galak et al., 2016 for a review). Given that sales promotion is a salient means to reduce a giver's expenditure on a gift, would consumers be solely favorable about the offer while intending to signal care and commitment through gifts? Especially for price discounts which provide apparent monetary benefits for the giver with “reduced loss” (Sinha and Smith, 2000), how would consumers assess the value of discounted gifts? Although sales promotion provides economic and psychological benefits of being smart (Schindler, 1998), givers might need to cope with the social concern and anxiety about hurting the relationship with a discounted gift. Moreover, we examine a novel factor that may influence consumers' evaluation of discounted gifts – an agent in the retail (e.g., salesperson or service robot) that assists and witnesses the purchase of a gift. Although gift-giving is a matter between the giver and the recipient, we examine how an in-store interaction may influence how consumers perceive the value of the gift. To sum up, this research reveals whether, why, and when gift-recipient asymmetry exists in the evaluation of gifts on promotion. Specifically, three research questions are addressed: 1) Do givers and recipients evaluate discounted gifts differently? 2) What is the underlying mechanism for consumers' evaluation of discounted gifts? 3) How would an in-store interaction with a salesperson or service robot affect consumers' evaluation of discounted gifts?

Building on the sales promotion literature and prior works documenting giver-recipient discrepancies in gift-giving, we propose that givers and recipients have different attitudes toward discounted gifts. Five empirical studies including a preliminary survey and experiments demonstrate that givers perceive discounted gifts as less valuable than regular-priced gifts (i.e., no discount), whereas recipients perceive both gifts as equivalent in value. Such asymmetric responses toward discounted gifts come from givers' concern about the symbolic value of the gift. That is, givers perceive discounted gifts as less thoughtful than regular-priced gifts, which leads to devaluation of discounted gifts. Recipients, on the other hand, perceive discounted gifts as thoughtful as those with no discount. Furthermore, consumers' technology-driven retail experience of a service robot mitigates givers' underestimation of the discounted gift's value. Service robots do not give a pressure to the consumers on the normative value concerning gifts, and alleviates givers' concern that a discounted gift is less thoughtful and thus less valuable.

The current research has clear contributions from both theoretical and practical standpoints by revealing giver-recipient asymmetry on discounted gifts for the first time. Consumers may be less enthusiastic about deals when purchasing a gift for others. Although sales promotions may be economical, convenient, and exciting (Chandon et al., 2000), consumers may not always benefit from purchasing gifts on a promotion. Givers seem to fear that a price-discounted gift may come across as “heart-discounted” to recipients. We also adopt a new perspective to reveal what influences consumers' evaluation of gifts outside the dyadic relationship between givers and recipients and amongst a relatively indirect and wider audience at the point of purchase (e.g., salesperson, service robot). Considering the fact that gift-giving is a shared ritual within the society, the presence of a seemingly irrelevant spectator in the shopping process may influence givers' judgment on what makes a good gift. Furthermore, a technology-mediated retail experience of service robots could alleviate consumers’ reluctance toward discounted gifts. The results provide not only theoretical insights into the influence of in-store technology in retail experience but also practical implications for managers: communicating promotional offers for gifting occasions would be better off when implemented through technologies.