The Impact of Digital Transformation on the Retailing Value Chain

TLDR

Consumers traditionally made purchase decisions in-store, giving brick‑and‑mortar retailers power over behavior, but e‑commerce, mobile shopping, and smart technologies introduce new competitors that threaten this dominance. The study adopts a value‑creation perspective to analyze how digitization erodes institutional retailing as the primary customer interface and develops a framework identifying five new sources of value creation that transform competition. The authors construct a framework that identifies five new sources of value creation and outlines how they advance and transform competition for the customer interface. Depending on the importance of the new sources of value creation in different purchase situations, stationary retailing may remain an important interaction point in a multichannel decision journey, yet the growing diffusion of branded‑product platforms, connected devices, and online retail platforms is shifting this authority to new players.

Abstract

Consumers have traditionally made purchase decisions at the store shelf, giving institutional brick-and-mortar retailers great power to learn about and influence behaviors and preferences. With the rise of e-commerce, mobile shopping, and most recently smart technologies, new competitors threaten this long-standing supremacy. Adopting a value-creation perspective, we analyze how digitization started the erosion of institutional retailing as the primary interface to the customer. We develop a framework that identifies five new sources of value creation and propose how these advance and transform competition for this interface. Depending on the importance of the new sources of value creation (in different purchase situations), stationary retailing may prevail as an important interaction point in a multichannel decision journey. However, increasing diffusion of branded-product platforms including connected devices and online retail platforms is shifting this authority to new players. For the parties involved in this multilayered competition, acknowledging the changes and actively managing their position in the evolving eco-systems is crucial.