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  • Writer's pictureLina Altenburg

The Rise of Retailing's Big 5 in the Digital Era

Updated: Sep 5, 2022

How Technology disrupts retailers’ value creation. An interview with Werner Reinartz and Nico Schauerte on their 2019 IJRM paper.


Understanding a market disruption


For many years now, we have witnessed the emergence of the internet and how large online platforms, such as Amazon or Alibaba, have changed the way we purchase products. Yet, offline stores have not completely vanished, so they are still providing value to consumers that cannot be fulfilled by online retailers. Hence, the question remains how this digital transformation has changed the way in which physical and online retailing formats provide value to customers. In their IJRM paper "The impact of digital transformation on the retailing value chain” (Volume 36, Issue 3), Werner Reinartz, Nico Schauerte (at this point still Nico Wiegand) and Monika Imschloss (all working at the University of Cologne, Germany, at that time) develop a conceptual framework that summarizes how retailers can create value for consumers and how this value determines the way consumers interact with retailers. The paper is part of a special issue of IJRM, focusing on Marketing Perspectives on Digital Business Models.

How did the digital transformation change the way in which physical and online retailers provide value to customers?


The big 5 value creators of retailing in a digital world


Basically, the authors identify 5 sources of value creation: Automation, individualization, ambient embeddedness, and transparency & control. Digital transformation has revolutionized the way in which firms can provide these values to customers. Brands have found ways to automate annoying reordering processes, such as HP printers that can automatically order new cartridges if necessary to not run out of ink. Other retailers use customer data to offer products that are individualized to the customer’s needs. For example, L’Oreal’s smart hairbrush analyses consumers’ hair and provides recommendations for suitable products. Also, retailers offer products and services that are embedded in our daily routines, for example through digital assistants such as Amazon’s Alexa. Consumers’ increasing access to digital tools has also changed the type of interactions that consumers can have with retailers. For example, through its augmented reality app “Place”, IKEA can help consumers to picture how pieces of furniture look at home. Technology also enables efficient and transparent control of processes. Each retailer, online or offline, provides value to its customers in different ways along these 5 value creators. And the benefits a consumer receives from these 5 value creators determine the choice of the retailer.


"The idea existed way before the paper and is much bigger than the paper" Werner Reinartz

Originated in practice, conceptualized in Academia

The idea to investigate how digital transformation has changed consumer-internet interactions was nothing new to the authors of the paper. Especially Reinartz, who has an extensive network of industry contacts, was well aware of the challenges that physical retailers were facing and the scope of the market transformation. “The idea existed way before the paper and is much bigger than the paper”, he points out. Many presentations and discussions with industry experts and top researchers stressed the importance to conceptualize the factors that had transformed the market. So together with his colleagues Nico Schauerte and Monika Imschloss, Reinartz developed the conceptual framework around the new retailing value chain, which is the central part of their paper.

"We started with the core question of who owns the customer and developed our framework around this" Nico Schauerte

“We started with the core question of who owns the customer, and developed our framework around this”, says Schauerte. The framework was refined and expanded many times to correspond to the complex phenomena observed in practice. This effort is well appreciated by the readership, as the paper is now, about 3 years after its publication, the most downloaded and one of the most cited papers of IJRM.


Are you interested in reading more about the impact of the digital transformation on the retailing value chain?


 

Meet The Authors

 

Werner Reinartz

Professor of Marketing and director of the Center for Research in Retailing at the University of Cologne

What drives you to do the research / work you do?

Looking at important and relevant problems in practice and thinking about, how can we address them using our academic conceptual and rigorous horsepower to address these problems.


If you were not an academic, what would you be?

Either a manager or a gardener. I can see myself working as a manager today. I work a lot with managers, I can emphasize and relate to their work. But before I started working in academia, I was a trained gardener, so I could also become a gardener if things turned worse.


 

Nico Schauerte (formerly Wiegand)

Associate Professor of Technology & Innovation Marketing at Vrije Universiteit Amsterdam

What drives you to do the research / work you do?

Self-learning and the flexibility in doing research about what I want, when I want and gain knowledge along the way. Also my interest in innovation and fascination with technology.


If you were not an academic, what would you be?

Either a journalist or a house-husband. I think journalism is a very honourable work and I like writing. But I can also see myself taking care of my recently born daughter all day.


 

This article was written by

Lina Altenburg

Ph.D. candidate at the KU Leuven (Belgium)




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