Business Model Opportunities in Brick and Mortar Retailing Through Digitalization

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 field has instigated restructuring, pressuring traditional retailers to reconsider their business models. The purpose of this study is to explore and identify the ways in which brick and mortar retailers are approaching opportunities presented by digitalization.

Design/methodology/approach: 26 semi-structured interviews were conducted with top-level retail managers from the UK and Finland. This exploratory study analyzes the qualitative data through the five key drivers of innovation (operational effectiveness and efficiency, lock-in, customer effectiveness and efficiency). 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 brick and mortar retail managers' perceptions and experiences of adapting through digitalization. Guided by this enriched data, we provide contributions by identifying and suggesting opportunities in brick and mortar retail business model reconfiguration.

Keywords: business model, opportunities, digitalization, brick and mortar retailers