Innovations in Retail Business Models
Highlights
► A retailing business model (RBM) has three interconnected core elements: retailing format, activities, and governance. ► These elements and their interdependencies define how a retailer creates and appropriates value. ► We define and provide multiple examples of RBM innovations, which are changes beyond current practice in one or more elements of an RBM and their interdependencies. ► We propose a classification of RBM innovations along six design themes. ► We discuss drivers and consequences of RBM innovations and factors that warrant changes in RBMs.
Section snippets
Business model: definition and usefulness
There is no commonly accepted definition of business model in the literature. Instead, the literature reveals a wide range of definitions that vary in their emphases and scope (e.g., see the 2010 Long Range Planning special issue dedicated to business models). Nevertheless, most authors agree that a business model articulates a firm's value proposition, its sources of revenue, the resources used to extract rents, and the governance mechanism that links firm's stakeholders (Zott and Amit 2010).
Retailing business model (RBM)
Fundamental to the RBM are two unique characteristics of retailing which underlie the rationale behind innovations in RBMs:
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Retailers primarily sell products manufactured by others and, as a result, they rarely derive sustainable benefits from exclusivity in their product assortment. Thus, a narrow focus on product assortment is unlikely to lead to long-lasting competitive advantage, because comparable products may be readily available elsewhere. A successful RBM, therefore, focuses not only on
Business model innovation in retailing
We define a RBM innovation as a change beyond current practice in one or more elements of a retailing business model (i.e., retailing format, activities, and governance) and their interdependencies, thereby modifying the retailer's organizing logic for value creation and appropriation. First, this definition implies that the innovations in retail business models are system-wide changes: even though the change may originate in just one element of the business model, it also triggers changes to
Business models in retailing: a look ahead
For researchers studying business model innovations in retailing, much work lies ahead. Although the conceptualization we present here is a start, more research is needed to clarify the concepts and to measure them empirically. A rich theory that elaborates on antecedents, consequences and various facets of business model innovation needs to be developed and linked to extant theoretical frameworks such as value chain (Porter 1998), configurational theories (e.g. Meyer et al. 1993), or the
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