Service Innovation in the Retail Sector How Retailers Make Decisions in a Turbulent Retail Landscape

Total Page:16

File Type:pdf, Size:1020Kb

Service Innovation in the Retail Sector How Retailers Make Decisions in a Turbulent Retail Landscape Service Innovation in the Retail Sector How retailers make decisions in a turbulent retail landscape Name: Simone Velders Student number: 6584268 University: Utrecht Universtiy Course name: Master’s Thesis Innovation Sciences Course code: GEO4-2239X University Supervisor: Koen Frenken Second reader: Matthijs Janssen Internship company: Avanade Internship supervisor: Yorrick Celis Date: July 31st, 2021 0 Acknowledgements I sincerely want to thank my supervisor Koen Frenken for his time and feedback throughout the duration of my thesis. I believe that his feedback helped me lift this thesis to a higher level. I also want to thank my second reader, Matthijs Janssen, for giving elaborate feedback on my proposal, as well as taking some extra time to talk about it in person. Furthermore, I would like to thank Yorrick Celis for being my supervisor during my time at Avanade. He not only gave me feedback on my thesis, he gave me guidance for my career. I would like to thank my all retailers and experts who took the time to talk to me and give me interesting insights. Finally, I would like to thank my friends and my family for supporting me throughout this process. 1 Abstract: Fast and complex changes in the retail landscape cause retailers to struggle and some even to close their doors. To survive, brick-and-mortar retailers are innovating their services to create a memorable customer experience. Understanding the innovation decision process is complex since the service innovation options are plentiful and retailers are known to have an unstructured approach to innovation. Up to date, retail innovation literature is limited, fragmented and does not incorporate service innovation literature. This research uses prior conditions from Rogers’ innovation-decision model to select factors previously identified in both retail and service innovation literature, thereby bridging the literature strands. Even though retailers often adopt technologies, they also innovate themselves. Therefore, this research uses the synthesis perspective on innovation and enriches Rogers’ model meant for the adoption of technological innovations with factors from service innovation literature. Qualitative analysis of interviews with representatives from fashion retailers’ headquarters in the Netherlands show that previous practice and felt needs or problems barely influence the decision process, retailers learn from their cycles of search and change, rely on knowledge from their own manufacturing operations and retailer conferences, imitate other retailers and ultimately base their decision on personal preferences and gut feeling. Using the interviews enabled the identification of thirteen common innovations that have been implemented in the last five years. This research used the service blueprinting technique to create a visual rendering of a generic service process and underlying organization structure of Dutch fashion stores. The service blueprint was used to analyse the effect of the innovations on the service. Results show that typical innovations are not complex and do not have a large impact on the service, are part of the omnichannel trend, and concern innovations in the collection. Finally, the interview data enabled Qualitative Comparative Analysis (QCA), an analysis which links causal combinations of factors to specific innovations - making this the first study to do so on a large-scale. Results from the QCA show that whereas experimentation is necessary for multiple innovations, an interaction between organisational learning without the capability to sense opportunities leads to the implementation of more practical yet simple innovations, and the distinction between large, innovative firms as opposed to small non-innovative firms causes retailers to implement either technological innovations or innovations that have been on the market for a while, respectively. The popularity of three industry trends outweighs the influence of factors on the decision. Keywords: Innovation – decision-making - service innovation – service blueprint - retail – fashion – synthesis perspective – prior conditions 2 CONTENT 1. Introduction ..................................................................................................................................... 4 2. Global trends in the fashion retail ................................................................................................... 8 2.1 Digital customer contact ........................................................................................................... 8 2.2 Accelerated fashion cycles ........................................................................................................ 8 2.3 New customer lifestyles ............................................................................................................ 9 2.4 Experiential stores ..................................................................................................................... 9 3. Theoretical framework .................................................................................................................. 11 3.1 A shift towards services ........................................................................................................... 11 3.2 Identifying service innovation through a service blueprint .................................................... 12 3.3 Service innovation decision-making ........................................................................................ 14 3.4 Prior conditions in the retail and service innovation literature .............................................. 17 4. Research Methods ......................................................................................................................... 24 4.1 Research design ....................................................................................................................... 24 4.2 Sampling strategy and case selection ...................................................................................... 25 4.3 Data collection ......................................................................................................................... 26 4.4 Data analysis ............................................................................................................................ 29 4.5 Research quality indicators ..................................................................................................... 32 5. Results ........................................................................................................................................... 34 5.1 Service in the fashion industry ................................................................................................ 34 5.2 Service innovation decisions amongst fashion retailers in the Netherlands .......................... 36 5.3 Factors influencing the service innovation decisions .............................................................. 57 5.4 Qualitative Comparative Analysis of Service Innovations ....................................................... 64 6. Corona Crisis: a push for innovation?............................................................................................ 80 7. Conclusion ..................................................................................................................................... 85 8. Discussion ...................................................................................................................................... 88 8.1 Theoretical implications .......................................................................................................... 88 8.2 Limitations ............................................................................................................................... 89 8.3 Further research ...................................................................................................................... 90 8.4 Policy implications: promoting innovation amongst retailers ................................................ 91 8.5 Managerial implications: future challenges ............................................................................ 93 Reference list ..................................................................................................................................... 96 Appendix .......................................................................................................................................... 101 3 1. Introduction Retail has always been evolving, but even more so in today’s landscape. Fierce competition and uncertainty brought about by trends like globalization and digitalization cause changes to happen at faster paces and are more complex (Olsson, Paredes, Johansson, Roese, & Ritzén, 2019). Worsening economic conditions in the first decade of the twenty-first century created an even more turbulent retail environment. Consumers became more value-conscious, buying less and buying differently (Berry et al., 2010). Today, customers hold the balance of power. If they become dissatisfied with the service they are receiving, they have many alternatives readily available (Valacich & Schneider, 2012). Consequently, many well-known stores are struggling (Mende & Noble, 2019). Moreover, customers increasingly embrace online shopping, which causes trouble for brick-and-mortar retailers in particular (CBN insights, 2019). Retailers like Abercrombie & Fitch and Foot Locker have closed their store sites, whereas others such as The
Recommended publications
  • How to Design a Service G
    European Journal of Marketing How to Design a Service G. Lynn Shostack, Article information: To cite this document: G. Lynn Shostack, (1982) "How to Design a Service", European Journal of Marketing, Vol. 16 Issue: 1, pp.49-63, https://doi.org/10.1108/EUM0000000004799 Permanent link to this document: https://doi.org/10.1108/EUM0000000004799 Downloaded on: 02 October 2018, At: 05:51 (PT) References: this document contains references to 0 other documents. To copy this document: [email protected] The fulltext of this document has been downloaded 9302 times since 2006* Users who downloaded this article also downloaded: (1989),"A Proposed Model for New Service Development", Journal of Services Marketing, Vol. 3 Iss 2 pp. 25-34 <a href="https://doi.org/10.1108/EUM0000000002484">https://doi.org/10.1108/ EUM0000000002484</a> (2012),"Service blueprinting effectiveness: drivers of success", Managing Service Quality: An International Journal, Vol. 22 Iss 6 pp. 580-591 <a href="https:// doi.org/10.1108/09604521211287552">https://doi.org/10.1108/09604521211287552</a> Downloaded by Politecnico di Milano At 05:51 02 October 2018 (PT) Access to this document was granted through an Emerald subscription provided by emerald- srm:463825 [] For Authors If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.com Emerald is a global publisher linking research and practice to the benefit of society.
    [Show full text]
  • Service Blueprints: Definition 3 Minute Video
    Service Blueprints: Definition 3 minute video Summary: Service blueprints visualize organizational processes in order to optimize how a business delivers a user experience. Service design is the activity of planning and organizing a business’s resources (people, props, and processes) in order to (1) directly improve the employee’s experience, and (2) indirectly, the customer’s experience. Service blueprinting is the primary mapping tool used in the service design process. What Is a Service Blueprint? Definition: A service blueprint is a diagram that visualizes the relationships between different service components — people, props (physical or digital evidence), and processes — that are directly tied to touchpoints in a specific customer journey. Think of service blueprints as a part two to customer journey maps. Similar to customer-journey maps, blueprints are instrumental in complex scenarios spanning many service-related offerings. Blueprinting is an ideal approach to experiences that are omnichannel, involve multiple touchpoints, or require a crossfunctional effort (that is, coordination of multiple departments). A service blueprint corresponds to a specific customer journey and the specific user goals associated to that journey. This journey can vary in scope. Thus, for the same service, you may have multiple blueprints if there are several different scenarios that it can accommodate. For example, with a restaurant business, you may have separate service blueprints for the tasks of ordering food for takeout versus dining in the restaurant. Service blueprints should always align to a business goal: reducing redundancies, improving the employee experience, or converging siloed processes. Benefits of Service Blueprinting Service blueprints give an organization a comprehensive understanding of its service and the underlying resources and processes — seen and unseen to the user — that make it possible.
    [Show full text]
  • Exploring Service Blueprints for Multiple Actors: a Case Study Of
    Exploring Service Blueprints for Multiple Actors: A Case Study of Car Parking Services Thomas Wreiner, Ingrid Mårtensson, Olof Arnell, Natalia Gonzalez, Stefan Holmlid, Fabian Segelström Department of Computer and Information Science, Linköping University, 581 83 Linköping, Sweden [email protected] http://www.ida.liu.se/divisions/hcs/ixs/ Summary Service blueprints are usually included in listings of standard methods within service design. Still, little research has been conducted on service blueprints. The case study at hand explores how blueprints can be applied in a situation with three key actors, all with different motives and wishes. The case study is within the domain of car parking, a service which at a first glance may seem simple, but is rather complex when scrutinized. Three ways of blueprinting the situation are presented and discussed in the paper. Finally issues which arose from the blueprinting process are discussed in regard to implications for people creating blueprints. Introduction The use of various types of visualizations, such as service blueprints, is often held forward as one of the key characteristics of service design. However, little research has been done on how visualizations are used in service design (Segelström, 2009). In a joint project between Linköping University and the service design consultancy Transformator it was noted that the key service involved three main actors, which were clearly distinct from each other. As the research was visualized in form a service blueprint, it was found that it did not encompass the complexity of the situation. Explorations into new ways of including various types of data and the layout of the blueprint were made throughout the project.
    [Show full text]
  • THE CUSTOMER BUYING PROCESS - a Tediuos Affair Or a Pleasant Experience?
    Bachelor Thesis Interaction Design THE CUSTOMER BUYING PROCESS - a tediuos affair or a pleasant experience? u 2010-06-10 u Department of Culture and Society u K3, School of Communication and Art Design: Matilda Marcelius Marie Neubauer [email protected] [email protected] +46-704-35 05 34 +46-707-53 09 93 Tutor: Michael Svedemar Contents 1. Abstract ....................................................................................................................3 2. Introduction .............................................................................................................3 2.1 Problem statement .........................................................................................5 2.2 Focus and constraints ....................................................................................5 3. Design context and related theories .......................................................................6 3.1 How interaction design and service design integrates ...................................6 3.2 Service design ...............................................................................................7 3.3 The importance of the built environment – the servicescape ........................9 3.4 Spatial design ..............................................................................................10 4. Methods ..................................................................................................................13 4.1 Literature studies .........................................................................................13
    [Show full text]
  • Service Excellence in Management
    SERVICE EXCELLENCE IN MANAGEMENT EDIT ED BY: Erik Wästlund Bo Edvardsson Anders Gustafsson Mary Jo Bitner Rohit Verma SERVICE EXCELLENCE IN MANAGEMENT Proceedings of the QUIS13 International Research Symposium on Service Excellence in Management, June 10-13 2013, Karlstad Sweden ISBN: 978-91-7063-506-9 HOSTED AND PUBLISHED BY CTF, Service Research Center, Karlstad University, Sweden IN CONJUNCTION WITH Center for Services Leadership, W. P. Carey School of Business, Arizona State University, USA Center for Hospitality Research, School of Hotel Administration, Cornell University, USA Copyright (C) 2013. The copyright of each abstract and paper remains with its author(s) PREFACE QUIS is considered to be one of the world’s leading biannual symposiums on service research and management practice. QUIS gathers thought leaders from the global business and academic communities for an open exchange of insights and experiences. The best of interdisciplinary academic research and management practice is presented and discussed. The objectives of QUIS sharing and networking events are to: • Promote the continuing improvement of service excellence in all economic sectors around the world. • Share and advance the state of the art in theory and practice through presentations and discussion of scholarly research and successful business strategies. • Provide a forum for intensive global dialogue between researchers and executives and to offer guidance for future academic study. The first QUIS symposium took place in Sweden 1988. QUIS is held every second year and attracts leading researchers and executives from all over the world. The QUIS symposium usually draws attendees from more than 30 countries. Leading, managing and organizing for service excellence is a never-ending quest by organizations seeking to achieve outstanding performance in their fields.
    [Show full text]
  • The Challenge of Consumer Diversity in Servicescapes: an Investigation of Consumer and Service Provider Experiences
    University of Nebraska - Lincoln DigitalCommons@University of Nebraska - Lincoln Dissertations, Theses, and Student Research from the College of Business Business, College of Summer 6-12-2020 The Challenge of Consumer Diversity in Servicescapes: An Investigation of Consumer and Service Provider Experiences Abigail Nappier Cherup University of Nebraska - Lincoln Follow this and additional works at: https://digitalcommons.unl.edu/businessdiss Part of the Marketing Commons Nappier Cherup, Abigail, "The Challenge of Consumer Diversity in Servicescapes: An Investigation of Consumer and Service Provider Experiences" (2020). Dissertations, Theses, and Student Research from the College of Business. 58. https://digitalcommons.unl.edu/businessdiss/58 This Article is brought to you for free and open access by the Business, College of at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Dissertations, Theses, and Student Research from the College of Business by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. THE CHALLENGE OF CONSUMER DIVERSITY IN SERVICESCAPES: AN INVESTIGATION OF CONSUMER AND SERVICE PROVIDER EXPERIENCES by Abigail Nappier Cherup A DISSERTATION Presented to the faculty of The Graduate College at the University of Nebraska In Partial Fulfillment of Requirements For the Degree of Doctor of Philosophy Major: Business (Marketing) Under the Supervision of Professors Les Carlson and Andre F. Maciel Lincoln, Nebraska June 2020 THE CHALLENGE OF CONSUMER DIVERSITY IN SERVICESCAPES: AN INVESTIGATION OF CONSUMER AND SERVICE PROVIDER EXPERIENCES Abigail Nappier Cherup, Ph.D. University of Nebraska, 2020 Advisors: Les Carlson and Andre F. Maciel While consumer diversity continues to grow in importance, evidence suggests that firms have yet to align their thoughts and activities with diverse consumers’ needs.
    [Show full text]
  • A Framework for Smart Servicescape
    A Framework for Smart Servicescape: A Case of Smart Home Service Experience Kang, Hyo-Jin, Hanyang Univ., Seoul, South Korea, [email protected] Kwon, Gyu Hyun, Hanyang Univ., Seoul, South Korea, [email protected] Kim, Bora, Hanyang Univ., Seoul, South Korea, [email protected] Park, Eunohk, Hanyang Univ., Seoul, South Korea, [email protected] Abstract The rapid development of IoT technology has accelerated the growth of smart services. Despite the proliferation of smart services, academic research is still in its early stage particularly in terms of service experience and service design. Concerning a service experience viewpoint, it is essential to consider the context and environment of smart services, namely “smart servicescape,” as this can influence users’ entire experience. Moreover, the smart servicescape will have different characteristics due to the convergence of online and offline connected environments. With this background, this study aimed to propose a framework for the smart servicescape by identifying new dimensions that reflect the characteristics of smart services. Accordingly, an initial analytic framework of service experience blueprint was established on the basis of the conventional servicescape and service blueprinting. Twenty movie clips on smart home services officially produced by ICT corporations were collected, were analyzed through grounded theory, and were classified according to the analytic framework. Through a series of qualitative analysis, the framework structure was improved to make
    [Show full text]
  • Unit 1 MARKETING of SERVICES – Service Is the Action of Doing Something for Someone Or Something. It Is Largely Intangible (I
    Unit 1 MARKETING OF SERVICES – Service is the action of doing something for someone or something. It is largely intangible (i.e. not material). A product is tangible (i.e. material) since you can touch it and own it. A service tends to be an experience that is consumed at the point where it is purchased, and cannot be owned since is quickly perishes. A person could go to a café one day and have excellent service, and then return the next day and have a poor experience. In this Unit we will be understand the following about service:- Key Economic Indicators about India What is Services? Introduction - Growth of the Service Sector The Concept of Service - Characteristics of Services Classification of Services Designing the Service Introduction Key Economic Indicators about India GDP: $691 billion Growth: Estimated 7-8 percent or higher in 2005-06; 7 percent in 2004-05 Breakdown: Services equal 50 percent of the GDP; industry and agriculture equal 50 percent Ranking: 10th largest economy in the world and one of its fastest growing; fourth largest in purchasing-power parity terms Per capita income: $640 in 2004-05, (almost double the figure of two decades ago). Of the 1.1 billion people, 39 percent live on less than $1 per day Purchasing power: In 2005, approximately 170-300 million people had growing purchasing power, thus creating a growing middle-class consumer population Youth Power: Over 58 percent of the Indian population is under the age of 20. That is over 564 million people, nearly twice the total population of the United States India At A Glance Population: 1.1 billion (Urban population - 28.4 percent) Retail Mkt.
    [Show full text]
  • A Study on Services Blueprinting and Services Gap Analysis with Special Reference to Tnstc Limited in Villupuram District
    A STUDY ON SERVICES BLUEPRINTING AND SERVICES GAP ANALYSIS WITH SPECIAL REFERENCE TO TNSTC LIMITED IN VILLUPURAM DISTRICT Ms. M.Rajeswari1, Mr. Mohamed Marzooth2 1,2Assistant professor Department of Management Studies IFET College of Engineering Villupuram, TamilNadu ABSTRACT Various techniques for measuring the customer satisfaction/dissatisfaction have been developed in the field of marketing since 1960s. In this project the use of customer satisfaction measurements in public transportation is analysed. The study was carried out in Tamil Nadu State Transport Corporation (TNSTC) Limited in Villupuram district. The study is related to customer satisfaction. A survey was taking among the customer to know their satisfaction level provided by TNSTC Ltd in Villupuram. The challenge today is not retaining the customers but fully satisfying them in competitive market is the need for the study. This survey will be helpful for the organization for identifying the areas of dissatisfaction of the customers. Questionnaire was framed based on SERVQUAL. The various statistical tools like percentage analysis, chi-square correlation are used to tabulate the data there by deriving suggestions and conclusions. The various factors involved are personal needs, past experience, word of mouth communication, services of other service providers, customer competency, communication, promises, image, equity and social trends. The data analysis shows that customers are not satisfied with the communication system. It is suggested that the organization can improve communication between the customers and can take necessary steps. Keywords: Services Blueprinting, SERVQUAL, Services Gap, Critical Driver, Empathy. I. INTRODUCTION Bus services play a major role in the provision of public transport. These services can take many forms, varying in distance covered and types of vehicles used, and can operate with fixed or flexible routes and schedules.
    [Show full text]
  • Leveraging Service Blueprinting to Rethink Higher Education When Students Become ‘Valued Customers,’ Everybody Wins
    AP PHOTO/L.G. P PHOTO/L.G. AP A TTERSON Leveraging Service Blueprinting to Rethink Higher Education When Students Become ‘Valued Customers,’ Everybody Wins Amy L. Ostrom, Mary Jo Bitner, and Kevin A. Burkhard October 2011 WWW.AMERICANPROGRESS.ORG Leveraging Service Blueprinting to Rethink Higher Education When Students Become ‘Valued Customers,’ Everybody Wins Amy L. Ostrom, Mary Jo Bitner, and Kevin A. Burkhard October 2011 Contents 1 Introduction and summary 7 The service lens 15 Service blueprinting 29 Service blueprinting applications in higher education 39 Other uses of service blueprinting in higher education 45 Public policy implications 51 Appendix: Implementing the service blueprinting technique Introduction and summary There is much discussion today about the need to transform higher education. Experts and researchers list numerous challenges: low student retention and graduation rates, the increasing cost of higher education, and concerns that gradu- ates don’t possess the skills required to compete successfully in today’s intercon- nected, global marketplace. Less than 60 percent of students who enter four-year institutions in the United States earn a degree within six years and the graduation rate at many institutions is much lower than that.1 Nontraditional students,2 who currently outnumber traditional undergraduate students, can face significant structural barriers to degree completion that can cost them additional time and money during their pursuit of a degree.3 In fact, college can be a financial burden for all types
    [Show full text]
  • Service Blueprinting: the ‘Rosetta Stone’ of Digital Transformation
    CONSULTING Service Blueprinting: The ‘Rosetta Stone’ of Digital Transformation How service design can enable transformation teams to speak the language of customer experience effectively With many new value propositions provided 'as a service', the We map the ‘as-is’ journeys that our customers experience end- world of commerce is increasingly moving away from being to-end, across channels. We conduct research with the business transactional and towards the more experiential – but it seems and customers, and mine existing data to capture and surface that transformation is no less challenging today than it was five insights, pain points and identify trends – for example; why years ago. customers are not converting, repeat business is down, churn is higher than expected or why the product or service is being We now live in a new type of service economy where the trolled on social media? We benchmark the best practice boundaries of existing business models are being disrupted within and outside the industry. Then we identify opportunities by new intermediaries powered by always-on cloud-based for how we improve processes, people's competencies, use technologies. When it comes to providing services, raising the data better, and deploy a range of technologies to deliver standard of the experience requires us to think more emotion- new or upgraded tools for the people who make the customer ally than rationally – how do things feel; how do they look; experience happen. how can I meet my customer's expectations? Combined, these people, process, data and technology capa- Of course, words like 'look', 'feel', and 'experience' come across bilities are the value levers that have the potential to improve as misty and ill-defined.
    [Show full text]
  • BLUEPRINTING and ITS EFFECT on SERVICE QUALITY an Empirical Case Study of Coffee Island
    Aristotle University of Thessaloniki School of Economic Sciences MSc in Logistics and Supply Chain Management BLUEPRINTING AND ITS EFFECT ON SERVICE QUALITY An empirical case study of Coffee Island Master Thesis Logistics and Supply Chain Management Author: Georgios Andreou Academic Supervisor: Boutsouki Christina Date: January 2017 1 Abstract The area of marketing and customer service has played a significant interest among researchers in the last several decades. More and more scholars and managers have become aware of the importance of customer’s experiences. In today’s fierce competition environment, it is not enough to just follow the traditional rules of service, but a slightly different way of thinking might be needed. It is recognized that many market players are working on enhancing customer’s overall experience during consumption, for example a successful coffee brand or even the successful operation of a certain coffee shop branch. Thus this paper aims to investigate how a blueprint can affect a business, how the identification of bottlenecks can help improve the experience they offer their customers, and why service quality is important. Methods/procedure/approach: In order to adequately support the purpose of the research, a model was developed based on previous theories and fundamental models in combination with Coffee Island’s specific features, aiming to find out the aspects customers could experience when having their coffee on a specific branch of Coffee Island. Due to the nature of the research, a quantitative research method and data collection was conducted to satisfy the needs of the paper. In order to gather the data, a questionnaire survey was conducted for the purpose of the study.
    [Show full text]