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The Impact of Digital Technologies on Innovations in Retail Business Models

Author:

David Prepletan?

The Impact of Digital Technologies on Innovations in Retail Business Models by David Prepletan?

AALBORG UNIVERSITY

International Marketing

The Impact of Digital Technologies on Innovations in Retail Business Models

by David Prepletan?

June, 2013

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The Impact of Digital Technologies on Innovations in Retail Business Models by David Prepletan?

ACKNOWLEDGEMENTS

I would like to express my sincere and genuine gratitude to my advisor Reimer Ivang, Associate Professor of the department of Business and Management at Aalborg University, for his persistent guidance and timely feedback through the course of developing this study. My appreciation also goes to Birgitte Krogner, Senior Secretary of the department of Business and Management at Aalborg University, for her administrative support. Finally, I would like to express my heartfelt thankfulness to my family and friends for their encouragement and assistance during this last semester of my studies at Aalborg University.

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The Impact of Digital Technologies on Innovations in Retail Business Models by David Prepletan?

EXECUTIVE SUMMARY

The journey to business success in the retail industry is neither straightforward nor even. It is a journey fraught with difficulties, obstacles and obstructions that arise from the interplay of several factors and elements that, taken together, render the selection of the correct course intricate and arduous. Not all retailers can stay the correct course in the face of external forces and heightening competitive pressures. However, there are those retailers who have successfully taken advantage of the changes happening in the customers' shopping behavior and in the retail industry as a whole. Innovation in technology, both inside the retail stores and in the hands of customers, is one of those external forces that impact the retail industry and is also the primary focus of this study. This study lists examples of retailers and of recent developments in marketing and technology in retailing that transform the way retail business has been done. Through this study, the reader, potentially retail store or retail chain manager, will explore the topic of retail business model innovation evidenced by cases of retail companies, such as Walmart, Tesco, Safeway, Target, Burberry and other. The role of technology is discussed in these cases and also separately with an outlook to those future technologies that are poised to grab the attention of retailers. Examples of those technologies include, but are not limited to, location-based applications, targeted and customized mobile promotions, mobile point-of-sale, personal shopping assistants and radio frequency identification technology. The study describes how these technologies might affect customer behavior and change the role performed by the store personnel. The combination of these examples sets the stage for a look into the near future of retailing. Moreover, these examples convey an interesting insight into current and future technology trends. Future trends that are going to be characterized by technology creating stronger connections between customers and retailers. Connections that will increasingly be made across several channels and mediums that customers feel comfortable with and that retailers can utilize to increase both their profitability and competitiveness.

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The Impact of Digital Technologies on Innovations in Retail Business Models by David Prepletan? CONTENTS ACKNOWLEDGEMENTS ................................................................................................................... 2 EXECUTIVE SUMMARY .................................................................................................................... 3 CHAPTER 1 - INTRODUCTION .......................................................................................................... 9

1.1. Background of the Study ................................................................................................................. 9 1.2. Technology Connects Retailers to Customers............................................................................... 10 1.3. Technology Opens up New Data Sources ..................................................................................... 11 1.4. Multi-Channel Approach Evolves into Omni-Channel .................................................................. 13 1.5. Research Problem Statement........................................................................................................ 15 1.6. Contributions of the Study ............................................................................................................ 17 1.7. Objectives of the Study ................................................................................................................. 18 1.8. Definition of Terms........................................................................................................................ 18 CHAPTER 2 - METHODOLOGY ....................................................................................................... 22 2.1. The Influence of Rapid Technology Innovation on the Chosen Research Method and Literature Sources Used ............................................................................................................................................ 22 2.2. Case Study as a Research Method ................................................................................................ 25 2.3. The Question of Reliability of On-Line Sources of Information .................................................... 26 2.4. Limitations and Further Research ................................................................................................. 27 CHAPTER 3 ? LITERATURE REVIEW ............................................................................................... 30 3.1. Business Model.............................................................................................................................. 30 3.2. Competing through Business Model Innovation........................................................................... 36 CHAPTER 4 ? SELECTED CASES ...................................................................................................... 52 4.1. Leveraging Customer Loyalty Data ? Case of Tesco and Safeway ................................................ 52 4.2. Customers as Co-creators of Value ? Cases of Mix My Granola, chocri and My M&Ms .............. 55

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