Erik Brynjolfsson (MIT Sloan School of Management), Yu Hu (Georgia Institute of Technology), and Mohammad S. Rahman (University of Calgary)
Recent technology advances in mobile computing and augmented reality are blurring the boundaries between traditional and Internet retailing, enabling retailers to interact with consumers through multiple touch points and expose them to a rich blend of offline sensory information and online content. In the past, brick-and-mortar retail stores were unique in allowing consumers to touch and feel merchandise and provide instant gratification; Internet retailers, meantime, tried to woo shoppers with wide product selection, low prices and content such as product reviews and ratings. But as the retailing industry evolves toward a seamless “omnichannel retailing” experience, the distinctions between physical and online will vanish, the authors suggest, turning the world into a showroom without walls. This will push retailers and their supply-chain partners in other industries to rethink their competitive strategies
The growing prevalence of location-based applications on mobile devices is a critical enabler. Mobile technology is well on its way to changing consumer behavior and expectations, the authors argue. By giving consumers more accurate information about product availability in local stores, retailers can draw people into stores who might otherwise have only looked for products online. The enhanced search capability is especially helpful with niche products, which are not always available in local stores. The availability of product price and availability information, the ability of consumers to shop online and pick up products in local stores, and the aggregation of offline information and online content have combined to make the retailing landscape increasingly competitive. Retailers used to rely on barriers such as geography and customer ignorance to advance their positions in traditional markets. However, technology is removing these barriers.
The authors point to several possible success strategies for companies operating in the new competitive environment, including providing attractive pricing and curated product-related content; harnessing the power of data and analytics; avoiding direct price comparisons; learning to sell niche products; establishing switching costs; and embracing competition. In an omnichannel world, the authors say, there is a premium on learning rapidly from consumers and catering to their needs.