Innovations in Retail Business Models

doi:10.1016/j.jretai.2011.04.005

Journal of Retailing

Volume 87, Supplement 1, July 2011, Pages S3-S16

https://doi.org/10.1016/j.jretai.2011.04.005 Get rights and content

Abstract

A retail business model articulates how a retailer creates value for its customers and appropriates value from the markets. Innovations in business models are increasingly critical for building sustainable advantage in a marketplace defined by unrelenting change, escalating customer expectations, and intense competition. Drawing from extant strategy and retailing research, we propose that innovations in retail business models are best viewed as changes in three design components: (1) the way in which the activities are organized, (2) the type of activities that are executed, and (3) the level of participation of the actors engaged in performing those activities. We propose six major ways in which retailers could innovate their business models to enhance value creation and appropriation beyond the levels afforded by traditional approaches to retailing. We also describe the drivers of business model innovations, the potential consequences of such innovations, and numerous examples from retail practice that highlight our concepts and arguments. In doing so, we provide a starting point for academic research in a domain that is deficient in theoretical and empirical research, and offer retailing managers a framework to guide retail business model innovations for sustainable competitive advantage.

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:

1.
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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Innovations in Retail Business Models

Abstract

Highlights

Section snippets

Business model: definition and usefulness

Retailing business model (RBM)

Business model innovation in retailing

Business models in retailing: a look ahead

Journal of Management

International Journal of Research in Marketing

Journal of Retailing

Long Range Planning

Long Range Planning

Journal of Retailing

International Journal of Research in Marketing

International Journal of Research in Marketing

Journal of Retailing

Journal of Retailing

Journal of Retailing

Long Range Planning

Journal of Retailing

Journal of Retailing

Journal of Retailing

Journal of Interactive Marketing

Long Range Planning

Journal of Retailing

Journal of Retailing

Long Range Planning

A Demand-Based Perspective on Sustainable Competitive Advantage

Strategic Management Journal

The Impact of Category Management on Retailer Prices and Performance: Theory and Evidence

Journal of Marketing

Inditex Profit Jumps On Zara Chain's Sales

The Wall Street Journal

Zara Uses Operations Research to Reengineer Its Global Distribution Process

Interfaces

Service Delivery Innovation: Antecedents and Impact on Firm Performance

Journal of Service Research

The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation's Technology Spin-Off Companies

Industrial and Corporate Change

Transcript from Fair Disclosure Wire (Quarterly Earnings Reports)

Do Suppliers Benefit from Collaborative Relationships with Large Retailers? An Empirical Investigation of Efficient Consumer Response Adoption

Journal of Marketing

Marketing Channels

Process Innovation: Reengineering Work Through Information Technology

Using the Weapons You Have: The Role of Resources and Competitor Orientation as Enables and Inhibitors of Competitive Reaction to New Products

Journal of Product Innovation Management

American Girl and the Brand Gestalt: Closing the Loop on Sociocultural Branding Research

Journal of Marketing

The Newly Minted Penney: Where Fashion Rules

BusinessWeek

When Cheap is Exclusive

Economist

The Whole is More Than the Sum of Its Parts or Is It? A Review of the Empirical Literature on Complementarities in Organizations

Journal of Management

The ‘I Designed It Myself’ Effect in Mass Customization

Management Science

Business-Model Innovation: General Purpose Technologies and their Implications for Industry Architecture

Long Range Planning