How has the digital disruption affected the way customers shop and the factors that influence their decisions? One need look no further than how we have traditionally shopped for one of the most common purchases – shoes. Until recently, customers might see a print or television advertisement that would prompt them to go to a shoe store where the shop experience and effectiveness of the sales staff could have a major impact on the likelihood of a purchase. Perhaps they would go to a few different stores to compare prices, but comprehensive price comparisons were often not worth the effort. What does that process look like today? While the traditional process is still followed by many, today’s customers are exposed to a much wider variety of influencers that can impact their purchase decisions. For example, customers can browse the internet, read the recommendations of bloggers, seek the opinions of friends on social media, and compare prices online. One of the biggest concerns of companies is that most of these digital influencers lie beyond the company’s control compared to traditional physical influencers. In addition, the number of sales channels customers can access has multiplied. While a customer may go to a physical store, there is no guarantee that the final purchase will be made in-store rather than online through Amazon. Though the traditional retail channel has by no means disappeared, companies are faced with the fact that the digital disruption has simultaneously broadened the customer experience and increased the number of channels through which purchases can take place.
To better understand the retail models that companies have at their disposal today, it is essential to appreciate the multi-dimensionality of the digital disruption, taking into consideration both the customer experience and sales channel. Whereas the former takes the form of either a physical or a digital experience, the latter can be either offline (in-store) or online. While many have considered these dimensions individually, we argue that it is critical to consider them simultaneously, thus, leading us to identify four distinct retail models that companies must proactively manage. In particular, two of the four models we identify – namely “Showrooming” and “Webrooming” – are key in today’s retail environment.
About the Authors
Omar Toulan is Professor of Strategy and International Management at IMD Business School in Switzerland. Professor Toulan holds his PhD from the Sloan School of Management at MIT. His areas of expertise include strategic management, international business, growth strategies, and managing the multinational. Prior to entering academia, Professor Toulan worked as a management consultant for McKinsey and Company, as well as a researcher at the U.S. President’s Council of Economic Advisers.
Niccolò Pisani is Associate Professor of Strategy and International Business at the University of Amsterdam Business School. He holds a PhD in Management from IESE Business School. Among the topics of his scholarly enquiry are global strategy, sustainability, and offshoring. His research has been published in top-tier academic journals and practitioner-oriented outlets. Prior to entering academia, Dr Pisani worked several years for Sanlorenzo, one of the world’s leading manufacturers in the luxury yachting industry. He also worked as a researcher for Merrill Lynch in its San Francisco office.