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Business Model Opportunities in Brick and Mortar Retailing Through Digitalization

Published: 02.02.2021

by Harri Hokkanen , Charlotte Walker , Aaron Donnelly

Abstract

Purpose: In current retailing, digitalization provides new value creation mechanisms that increase competition and offer customers myriad options to fulfil their needs. Increasing complexities in the retail landscape have instigated restructuring, pressuring traditional retailers to reconsider their business models. The purpose of this study is to explore and identify how brick and mortar retailers are approaching opportunities presented by digitalization.

Design/Methodology/Approach: 26 semi-structured interviews were conducted with mid- and top-level retail managers from the UK and Finland. This exploratory study analyzes the qualitative data through the key drivers of innovation (operational effectiveness and efficiency, lock-in, customer efficiency, effectiveness, and engagement). The opportunities are presented in terms of the three business model elements (format, activities, and governance).

Findings: The findings illustrate seven key business model opportunities enabled by digitalization. Retailers are responding to competition, providing speed and convenience through multiple channels, leveraging digital tools to improve efficiencies and deliver customer experiences, rethinking management models, and adjusting organizational approaches. However, brick and mortar retailers should re-evaluate the business model elements collectively in order to seize opportunities that drive profits and gain competitive advantage.

Originality/value: This topic is pertinent due to the accelerated restructuring of retail markets, yet the subject is underexplored in the literature. This paper highlights retail managers’ perceptions and experiences of adapting through digitalization. Guided by this enriched data, we provide contributions by developing existing theory and identifying opportunities in brick and mortar retail business models.