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Introduction
Digitalization is a major factor driving firms to innovate their business models. It has caused disruptions in many sectors and is an especially important issue for the retailing sector. To cope with the new digital environment, traditional retailers at first launched independent digital channels. This led to a multi-channel strategy in which channels were managed in silos as separate business models. However, recently, customer shopping behaviors, combined with new technology, have compelled retailers to adapt their strategies by creating bridges between channels to design and implement an omni-channel business model. This type of innovation can be considered an example of business model hybridization. The main objective of our research is to shed light on decisions regarding the business model hybridization approach used by traditional retailers.
We conducted a qualitative multiple case study of five retailers implementing an omni-channel business model. Our research sheds light on three main issues encountered by each retailer investigated and the underlying decisions. The first is revenue attribution across retail channels, which involves rethinking traditional key performance indicators to involve stores in the transformation. The second issue concerns the supply chain decisions associated with cross-channel operations. The third issue relates to the delicate balance between digital global reach (digital channels) and physical local reach (specific stores) for communication on social media and marketing decisions on pricing. Each of these three issues has consequences for human resources management policies and the daily management of employees.
Omni-channel retailing as a business model innovation
Moving toward omni-channel retailing involves rethinking the value proposition in a way that offers a “seamless experience” for customers (Rigby, 2011) across both digital and physical channels. This value proposition renewing has strong impacts on other components of the business model as it calls for new resources and competences as well as new organizational processes. Therefore, omni-channel retailing is now recognized as a business model innovation per se (Jocevski, 2020; Jocevski et al., 2019) and consists in combining two business models (digital and physical) into one hybrid model (Endres et al., 2019).
Integrating physical and digital channels
Digitalization came as a disruptive innovation in many sectors (Margiono, 2020), including retailing, where the role of physical stores has raised many questions over the past few years (Bell et...