Demand pull and technology push perspective in technology-based innovations for the points of sale: The retailers evaluation
Eleonora Pantanoa, b, , Milena Viassone c,
Abstract
Despite the consumers' increasing demand of technology-based innovations for making stores more appealing and the huge availability of advanced technologies, there is still a lack of research on the retailers' and employees' points of views towards the introduction of these systems. In fact, an efficient innovation should take care of both the final users/consumers' and the retailers/employees' needs and expectations. Hence, the aim of this study is to advance our knowledge on retailers' pull of new technologies for improving their job in accordance with the most recent systems, as well as on the main characteristics of these innovations for defining a new integrative framework of analysis and development.
Keywords
Retailing; Innovation management; Technology management; Demand pull; Technology acceptance
1. Introduction
The innovation issue is acquiring importance also for marketing science studies, by providing new practices and standards for developing new tools able to (i) increase consumers' experience, (ii) reply to environmental changes in market trends fast, (iii) develop new strategies for increasing market share, and (iv) exploit successfully the extant resources (Hauser et al., 2006 and Pantano and Viassone, 2012). In particular, the current advances in technologies are able to enhance both consumers' shopping activity and retailers' job (Pantano and Di Pietro, 2012 and Zhu et al., 2013). For instance, new interactive systems (such as touch screen displays) are able to provide more customized information on available products, as well as applications for clients' mobile devices that can support consumers in product searching inside the stores. Similarly, other mobile applications may provide automatic payment modalities for allowing consumers to save time and reducing the lines at the cash desks.
Hence, the huge availability of advanced technologies that could be introduced in points of sale and consumers' interests towards new systems which are able to support and enhance shopping experience (Chiu et al., 2010 and Oh et al., 2012) forces retail-oriented firms to innovate for maintaining and increasing the business profitability.
For this reason, understanding what consumers and retailers expect acquires importance for the successful adoption and diffusion of innovations. Despite the large number of technologies for points of sale and the potential benefits emerging from the introduction of these advanced systems, still only a limited number of retailers adopted them with different strategies (Pantano and Viassone, 2012). A justification might rely on the uncertainty, risks, huge monetary investments and late returns on investment involved in the innovation process, with consequences for technology failure (Evans, 2011, Alkemade and Suurs, 2012 and Pantano et al., 2013), which could discourage retailers to afford the technology-based innovations adoption process. For instance, uncertainty for retailers would be related to the consumers' acceptance of the technology, and the level of system usage, as well as the risk of obsolescence (in terms of obsolescence of components, threats of substitution with newer technology, and damages by users; Pantano and Di Pietro, 2012, Pantano et al., 2013 and Zhu et al., 2013). Hence, the diffusion and utilization may be affected by several externalities able to reduce the exploitation of all benefits of the innovation.
Retailers are only adopters of the technology, that has been developed by other R&D firms; thus their decision concerns only the introduction/adoption and according to a certain strategy. Although past studies identified consumers' needs as the driver of product innovation (Von Hippel and Katz, 2002 and Bonner, 2010), while identifying what consumers expect to find in the stores concerning new technologies for supporting their experience and helping retailers to identify the best innovation, there is still a lack of research on what retailers expect and need from a new technology, with emphasis on the extent to which the new technology could improve the quality of employees' job and to the extent to whichthey should use it for the business profitability. Past studies considered the research question related to the influence of demand in generating innovation in addition to selecting it (Di Stefano et al., 2012). To achieve this task, efficient measurements of retailers' needs are required for understanding the retail innovation process and how technology providers can capitalize the innovation development.
The aim of this paper is to advance our knowledge on the demand of technology-based innovations for stores based on the retailers' perspective, and on how these ones start from the firm's internal characteristics. To achieve this goal, the study focuses on a qualitative investigation involving 47 small-size retail-oriented firms, based on a content analysis. The first part of the paper is devoted to the definition of expectations and to the role of these ones on the technology-based innovation adoption process, whereas the second one investigates retailers' perspective in terms of needs and expectation through a qualitative analysis by highlighting the main consequences for the innovating process in retailing in order to define a new integrative framework of analysis and development.
2. Theoretical background
2.1. Technology push perspective for innovating in retailing
The last decade has seen a huge deal of effort in the development of the best technology for improving the traditional points of sale such us interactive displays and smart mirrors, new systems for searching and purchasing products, etc. (Evans, 2011, Pantano and Di Pietro, 2012 and Bodhani, 2012).
According to the technical characteristics, the most recent technologies can be classified in 3 main categories: (i) touch screen displays/in-store totems, (ii) systems for mobiles (mobile applications), and (iii) hybrid systems. The systems included in the first category are focused on technologies belonging to the point of sale, such as the virtual garment fitting systems (first introduced in online retail shops, and then, adapted also for physical points of sale), which allow consumers to virtually try clothes through 3D body scanning systems (Choi and Cho, 2012) or the Self-Service Technologies (SSTs; e.g. the automatic cash desks), based on automated and interactive interfaces that consumers can exploit without the assistance of an employee (Zhu et al., 2013), with benefits for reducing costs, and the quality of service efficiency (Lin and Hsieh, 2011, Lee et al., 2012 and Elliott et al., 2012). The second category includes systems for consumers' own mobile phones. These technologies provide interactive contents and services for enriching consumers' in-store shopping experience, by providing detailed and customized information, such as automatic payment modality or automatic item searching according to their own wish list, the possibility to virtually compare the chosen product with others, etc. (Rudolph and Emrich, 2009 and Bennet and Savani, 2011). In fact, many brands are providing free mobile applications for supporting consumers in finding the best product while shopping in physical stores. Since the systems in the third category are based on retailers' own technologies that users can move around the store, these ones can be considered hybrid. In fact, they are usually based on RFID (Radio Frequency Identification) systems able to read the bar code of the item and to subsequently provide more details, to recognize consumer's profile and match the profile with available purchases, to recommend products, etc. (Wong et al., 2012). Other meaningful examples are intelligent shopping trolleys, which consist of traditional shopping trolleys enriched with systems able to interact with consumers through ease-of-use interfaces, provide more information, localize the consumer's position and propose the best path for reaching the selected items, etc. (Black et al., 2009). The main advantage of these technologies is their capability of providing more useful information for supporting consumers' in-store experience, by allowing them to save time through enriched and customized information, useful functions, and entertaining tools.
The most recent technologies are mainly characterized by the context-awareness, the system ability to adapt its behavior according to users' behavior (e.g. the ability to recognize client's position in the store and suggest him/her the path or the proximity of such products) and to overcome the traditional desktop technologies characterized by the response based only on the environmental stimuli (Kurkovski, 2005 and Choi et al., 2011).
2.2. Demand pull perspective for innovating in retailing
Since innovation providers and consumers may view innovation in different ways, innovation might fail in providing the right solution for consumer needs (Kunz et al., 2011). Innovations in products and services must accurately respond to end-users needs for succeeding in the marketplace (Von Hippel and Katz, 2002). Despite the necessity to respond to market desires, this activity is usually expensive, time consuming, and complex. Hence, deep understanding of clients' expectations becomes a critical factor for innovating successfully (Bonner et al., 2010).
Expectations represent the wished level of performance (Ryding, 2011). In fact, consumers create their beliefs about a product, brand, service, etc. by comparing it to their initial expectations (Ryding, 2011). For instance, the expectation confirmation model has been developed for deeply investigating consumers' satisfaction and repeat decision towards a new technology (Bhattacherjee, 2001 and Min and Shenghua, 2007). It posits that user's intention to continue using a certain system is influenced by his/her level of
satisfaction with the system and perceived usefulness, and the extent of his/her confirmation of expectations (Bhattacherjee, 2001). Hence it is strictly linked to the comparison between the post-purchase evaluation and the pre-purchase expectations. This is especially evident in the case of products/services where expectations may change with time (Chou et al., 2010), such as the expectations regarding information technologies that can change in relation with the increasing users' abilities and interests.
According to recent works, retail environment is changing due to increasing competition and consumers' demand with greater expectations (Ryding, 2011). Past studies showed how the current retailers' strategies towards the usage of advanced technologies in the points of sale do not satisfy totally consumers' expectations (Pantano and Viassone, 2012). Therefore, understanding what consumers expect by designing the service that fits the expectations and delivering this service allows retailers to fulfill the gap between clients' expectations and effective perception of the service with benefits for satisfaction and loyalty (Ryding, 2011). Concerning advanced technologies in retailing, consumers mainly expect that these ones will improve their shopping activities, by providing new tools, services and functions for saving time while purchasing (Pantano and Viassone, 2012).
Past studies on consumers' usage of innovative advanced technologies in points of sale underlined the important role played especially by (i) the trust in the technical system, which acquires a vital value when the technology substitutes face-to-face interaction with the retailer such as in the electronic channel (Pantano and Di Pietro, 2012, Chattaraman et al., 2012, Park et al., 2012 and Rafiq et al., 2013.), (ii) the enjoyment while using this innovation (Venkatesh, 2000 and Wang, 2012), and (iii) the influence of others (i.e. relatives, partners, and friends; Chong et al., 2009 and Pantano and Di Pietro, 2012). In fact, these variables are able to influence consumers' intention to use and the effective use of technical innovation, which requires providing fun, trust and use by a certain numbers of friends/relatives/etc. For this reason, current research is focusing on the best interfaces required for making the human–computer interaction more intuitive and enjoyable, by enhancing the feeling of presence through 3D graphics. Indeed, the current advances in 3D graphics and virtual reality techniques offer novel and realistic (virtual) interfaces that can be easily integrated in real environments for enhancing the sensorial inputs and enhancing consumers shopping experience, with benefits for the satisfaction process (Bullinger et al., 2010).
Since the innovation to be introduced in stores should respond to both to consumers' preferences and retailers' needs and expectations, from a retailers' point of view this process is even more complex. In fact, the technologies to be introduced should reply to 2 different clients' typologies: final consumers, with emphasis on their acceptance, and retailers. Hence, the judging capacity of the decision-maker (e.g. retailer) plays a key role in the success of the adoption strategy. Some studies showed how some past technologies have been commercialized without a complete understanding of the requirements that are compulsory for ensuring success (Bandarian, 2007). Moreover, other past works on technologies adoption in the points of sale focused only on consumers' perspective, with some exceptions concerning the analysis of the firm's position in the “S-curve” (which represents the life cycle of an innovation) for promoting innovation process (Zawislak et al., 2009); thus deeply understanding retailers' expectations also would provide new insights for developing/selecting/adopting the best technologies.
The current study aims at investigating retailers' expectations towards advanced-technology-based innovations to be introduced in points of sale. To achieve this task, the research involved 47 subjects from different small-size firms, recruited between December 2012 and February 2013 in different Northern Italian regions. This number is a representative sample for our exploratory research, which aims at deeply achieving the point of view of retailers. In particular, the sample consists only of representatives of Small Medium Enterprises, due to the large presence of SMEs in Italy by representing 99% of the total firms. The qualitative research based on in-depth interviews which support the emerging of new variables necessary for advancing our knowledge of retailers.
Respondents were decision-makers towards choice of adopting a technology in their points of sale. Interviews have been structured in two different parts: the first useful to identify the main characteristics of the firms (e.g. number of stores, age, etc.) while the second one is mainly devoted to the investigation of adoption and the subsequent satisfaction towards technology-based innovations for points of sale by retailers. Table 1 shows the sample characteristics.
Table 1.
Sample demographics.
Demographics Percentage (%)
Corporate age (Years)
Less than 5 25
Between 5 and 10 51
More than 10 23
Omiss. 1
Number of points of sale
1–2 77
5 13
Corporate interest towards new technologies Scarce 13 Sufficient 17 Moderate 11 Good 25 Excellent 34
Technology adoption process
Already adopted 23
Not adopted 76
Retailer's personal experience in retailing (years) Less than 1 3 Between 1 and 3 4 Between 3 and 5 2 Between 5 and 10 9 More than 10 26 4. Key findings
Each interview has been coded and loaded through the MaxQda software for content analysis.
The first investigation is based on frequency analysis for understanding the value, the importance and the frequency of the emerging retailers' expectation towards new technologies to be adopted in the points of sale (Table 2).
able 2.
Frequency value of each need/expectation emerging from the content analysis.
Need/expectation Definition Frequency value
No lines
Retailers expect that the new possible technology will reduce the line in the store (especially at
the cash desk) 15
More clients
Retailers expect that the new possible technology will attract more
clients 22
Reducing personnel costs
Retailers expect that the new possible technology will reduce the costs of employees (for instance by reducing the
number) 22
that the new possible technology will improve the employees' job performance in the stores
Benefits: enhancing supply chain
Retailers expect that the new possible technology will enhance the supply chain, the interaction with stakeholders and the management of the stocks 26
Reducing management costs
Retailers expect that the new possible technology will reduce the management costs, by providing advanced software for the integration of the different functions involved in
retailing 26
We also carried out a subsequent analysis based on the evaluation of association structures between various variables that emerged in each interview (the variables that occurred together) in order to deeply understand retailers' expectations and the importance of each expectation. In particular, in this analysis we focused on the sample that did not introduce innovations yet (Table 3).
Table 3.
Characteristics of firms that did not introduce innovations yet.
Percentage (%)a
Retailers' good interest in new technologies 38
Retailers' personal experience in retailing between 5 and 10 years 32
Retailers' excellent interest in new technologies 32
Retailers' good knowledge of new technologies 28
Corporates' excellent interest in new technologies 23
Retailers' excellent knowledge of new technologies 21
a
As more than one characteristic could be mentioned by respondents, total sum might be more than 100%.
Despite the still limited diffusion of technology-based innovations in points of sale, this analysis shows huge retailer interest in innovation.
5. Discussions
The results of this paper confirm the limited diffusion of new technologies applied to points of sales, as anticipated by Pantano and Viassone (2012), in contrast with the large consumer interest towards the introduction of technology-based innovations in the stores (Oh et al., 2012).
Despite the high interest shown by retailers in technology-based innovations in points of sale (59% of the sample declare a good or excellent interest towards new technologies; 70% of them show good or excellent interest in new technologies and 49% have good or excellent knowledge of new technologies), our findings emphasize how the experience of retailers is still scarce; in fact, only 23% of the sample already adopted advanced technologies. A justification might lie in the retailer dimensions (most of the retailers, around 53%, who do not adopt new technologies have one or two points of sales). Therefore, there is a high number of potential retailers who could adopt technology-based innovations in the future. Presumably, due to the costs, time consumption and complexity involved in the application of these technologies (Alkemade and Suurs, 2012, Pantano et al., 2013 and Zhu et al., 2013), they are not currently able to exploit the advantages of these innovations on scale-economy basis (i.e., with reference to communication/advertising/information to their customers). Indeed, our results suggest no evidence for scale-economy, even if the impacts of
technology-based innovations for various aspects of the business are positive. Interviewed retailers have no standards for designing space and time within which the best-suited innovations can be located, that are not limited to the physical commonalities of the possible technologies. They affirmed the actual impossibility to adopt this kind of technology due to the economic difficulties in investing in them or due to their opinion of the sector that still does not require innovating. They also did not understand the demand pull of innovating in retail domain totally.
To date, main technologies adopted by interviewed retailers are automatic cash desks, automatic systems able to purchase and elaborate orders, to read and deduct them when they are delivered, and vertical computerized storehouses. Furthermore, the ones who adopted these technologies declared their choice on the basis of the promise of management cost reducing, in terms of reducing personnel and improving the communications within the supply chain. Only 22 retailers expect that the new possible technologies are able to attract more clients. Despite past studies highlighting the advantages of these technologies for enhancing the quality of service efficiency (Lin and Hsieh, 2011, Lee et al., 2012 and Elliott et al., 2012), retailers have not introduced innovations with the purpose of reducing the waiting time for customers. Accordingly, among the main expectations of retailers from the introduction of technology-based innovations, the proposal of entertainment or recreational tools for customers for improving the shopping experience seems to be lacking. Hence, in contrast to consumer-centric perspective that posits clients' needs as the key factor for successfully innovating (Bonner et al., 2010; Kunz et al., 2011), our sample sheds light on the exploitation of a retailer-centric approach, which still lacks expectations. As a consequence, although Italian small size retailers' knowledge of advanced technologies is acceptable, their preparedness seems to be still insufficient from a demand pull perspective.
Our analysis indicates to what extent the decision to invest in innovation underlines the retailers' technological limits. For technology-based innovations, retailers show a critical approach in the adoption modalities. Hence, there is a very poor diffusion that does not meet consumers' expectations.
6. Conclusions and implications
Integrating ideas from innovation management, technology management, and marketing research, this explorative research shows how the diffusion of technology-based innovations is influenced by retailers' expectations and their propensity to invest, providing useful results on retailers' perspective that could integrate the current studies mainly focusing on consumers' point of view.
Although from our analysis the role of a retailer aware of the importance of technology-based innovations for making stores more appealing and for attracting new customers emerges, the retailers' scarce preparedness in putting this in practice characterizes the current innovation strategies in the retail domain. Furthermore, the scarce correspondence between the motivations driving retailers to adopt these technologies and customers' expectations emphasized by the results of this paper confirms the difficulty in deeply understanding customers' expectation and in developing services able to fit these expectations. Thus, the current usage of advanced technologies in points of sale does not totally satisfy consumers' expectations, as anticipated by Pantano and Viassone (2012).
Many innovations fail to diffuse through the market without retailers' strong preparedness and the support of critical players in their adoption, such as end-users, who would show positive attitude towards innovations (Chiu et al., 2010, Oh et al., 2012 and Pantano and Di Pietro, 2012). In fact, customers could be reluctant to use certain technologies if information about them is not readily and widely accessible. Thus, consumers are reluctant to adopt those innovations that lack support from retailers and other consumers. On the other hand, retailers do not invest in supporting the innovation until it has sufficiently diffused and been adopted. Hence, technology-based innovations need the support of an adoption network for enhancing their diffusion and meeting consumers' needs. For this reason, government should support their implementation through incentives, especially in a period that asks for a recovery of consumers.
Starting from these results, it is possible to draw paths of action both for the potential retailers interested in adopting new technologies in their points of sale and for those who have already adopted them. First of all, retailers who have to decide whether to apply these technologies should spend time on advancing their knowledge on consumers' preferences and their attitude towards a certain typology of innovation, as well as possible advantages emerging from the subsequent technology adoption, whereas retailers who already adopted these technologies should make their clients be aware of the emerging benefits, according to their expectations. For instance, the communications might focus on time saving, by pushing on the most influencing motivational factors for consumers; at the same time the communication might stress all functionalities and characteristics of the innovations in order to attract housewives and children/families who might spend more time inside the store.
A correct application and communication of the technology-based innovations can further elicit an increase in sales (due to the higher information provided that can affect purchase decisions), customer's satisfaction and loyalty (these technologies can improve personalization, thus allowing meeting consumers' needs effectively) and add value to physical products and in-store experience for clients.
The future diffusion of technology among retailers will dramatically change the concept of the point of sale. This does not mean that the traditional point of sale will disappear. Almost certainly, traditional terminals of points of sale will remain dominant with many retailers, but new technologies and especially mobile points of sale will grow to complement the traditional terminals in specific segments. They will be able to address peculiar needs to generate new customer experience and further value for retailers, by offering a more integrated store solution.
Although this work offers important issues and enriches existent literature, there are some limitations which should be taken into account. In fact, our research is an exploratory study mostly based on a limited size sample and our model finds application only in Northern Italy. It is possible to further develop this research by analyzing, on a wider sample, the real motivations that prevent retailers from adopting new technologies and by investigating how they have communicated with customers in successful case studies, in order to predict the innovations diffusion for retailer-based firms and the new store concept emerging by the adoption of advanced technologies.
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Corresponding author at: University of Calabria, Department of Mechanical, Energetics and Management Engineering, via P. Bucci, cubo 46c, 87036 Arcavacata di Rende, Cosenza, Italy. Tel.: +39 049225; fax: +39 0494110.
