HOW TO MANAGE THE TRANSITION IN THE RETAIL ENVIRONMENT

(1)

HOW TO MANAGE THE TRANSITION

IN THE RETAIL ENVIRONMENT

“The desired end: an omni-channel strategy”

(2)

2 Master thesis Msc Business Administration

Specialization Organizational & Management Control

HOW TO MANAGE THE TRANSITION IN THE RETAIL ENVIRONMENT

“The desired end: an omni-channel strategy”

Esther Nijboer Noorderhaven 8 9712 VK, Groningen + 31 6 30376553 e.a.m.nijboer@student.rug.nl s2398176 University of Groningen

Faculty of Economics and Business Master of Science Business Administration Specialization Organizational & Management Control

Supervisor: Drs. D.P. Tavenier Co-assessor: Prof. Dr L. M. Sloot

(3)

3

Preface

With this thesis I am finishing my master Organizational & Management Control at the University of Groningen. I am very proud and happy to finish this process, but it also means that a special period in my life comes to an end. Over the past few years, I have learned a lot during my study and I got the chance to develop myself as a person. I really enjoyed my study and time in Groningen and therefore I am very grateful to the University of Groningen for all the interesting and educational opportunities they have provided.

First of all, I would like to thank the experts in the field of omni-channel retailing: Samir Selimi, Jerry Stam and Christian van Someren for all their time, input and inspirational stories. The interesting interviews have made it possible to develop the omni-channel capability-maturity model and in the end to finish my thesis.

Next to them, I especially would like to thank Drs. D. P. Tavenier for his support, guidance and enthusiasm during this research. During the meetings he came up with a lot of practical examples, which gave me some new insights for this research. Next to him, I will thank Prof. L. M. Sloot for the interesting and helpful conversations in the very beginning of this process and also for being the co-assessor of my thesis.

(4)

4

Abstract

In recent years, the retail environment has undergone a disruptive change. Many retailers are making the transition towards an omni-channel strategy, because offering multiple channels to customers positively affects the performance of the retailer. This strategy requires a completely new business model, as the retailer offers multiple seamlessly integrated channels and places the customer in the centre of the attention. Prior literature does not make a clear distinction between the different stages and therefore it is difficult to diagnose the current state of the retailer. More importantly, there is not a clear picture of the desired future state of an channel strategy. Therefore, in this thesis an omni-channel capability-maturity model is developed. This is done by means of existing literature and semi-structured interviews with experts in the field of omni-channel retailing. This research is done in order to discover the capabilities which do categorize retailers as either multi-, cross-, or omni-channel retailer and in the end support retailers in making the transition towards an omni-channel strategy. A multiple case study is conducted at six consumer electronics firms in the Netherlands by means of desk research in order to test if the omni-channel capability-maturity model makes it possible to diagnose the current state of the consumer electronics retailers. The findings show that the capabilities of the channel capability-maturity model categorize retailers in specific stages towards an channel strategy. If a consumer electronics retailer would like to make the transition towards an omni-channel strategy they have to develop, implement and measure all the capabilities of the reshaped omni-channel capability-maturity model. Moreover, if they would accelerate the process towards an omni-channel strategy the leadership style should be centralized top-down and the corporate strategy should place the customer in the centre of the attention.

(5)

5

1. Introduction

Every 50 years, a disruption in the retail environment takes place (Rigby, 2011). In recent years, the growth of the Internet has radically changed the retail landscape (Sorescu, Frambach, Singh, Rangaswamy, & Bridges, 2011). When a retailer decides to add extra online sales channels, they are not a traditional brick-and-mortar retailer anymore. The online sales channel ensures an expanded opportunity for retailers to create a cognitively and esthetically rich shopping environment, which is not imitable in the traditional retail environment (Childers, Carr, Peck, & Carson, 2001).

Technological innovations and changing customer behaviour and habits have reinforced the change towards an omni-channel strategy: a shopping environment in which all different channels are seamlessly integrated and the organization places the customer at the core of all their operations (Hobkirk, 2013; Rigby, 2011). When offering an extra sales channel to customers, it does not necessarily mean that retailers are pursuing an omni-channel strategy as there are several stages in between. Firstly, in the multi-channel approach are multiple sales channels, but they are all operating independently and organizations apply a product-centric approach (Levy & Weitz, 2012; Kumar, 2010). In a cross-channel strategy the retailer starts to offer common branding and messaging (Strang, 2013). At the front-end, it looks like the operations are integrated, while at the back-end the channels are still operating independently with only some cross-channel synergies. The cross-channel organization still places the product in the centre of the attention. The emergence of offering multiple channels to customers does not completely eliminate the prior situation, but it reshapes two important aspects: the retail environment and it redefines consumer expectations (Rigby, 2011).

Nowadays, the traditional retail organization – that only offers an offline channel - still dominates the sales in the retail environment. Figure 1 displays that in 2012 the Dutch consumer spending was 65,9

(8)

8 billion and 17% of these purchases were made online

(Shopping2020, 2014). However, the future prospects of the online sales are promising, as 37 % of the Dutch consumer spending will be made online in 2020 (see figure 2). The retail environment will be reshaped, because the motivation to open online sales channels became greater. This has to do with the fact that e-commerce is realizing important annual turnover growth rates of about 30% for the last few years, whilst most other retail forms remained stable or even declined. Therefore, it is interesting to invest in the creation of an additional online sales channel (Lang & Bressolles, 2013). More specifically, the market share of traditional retailers declines rapidly:

In 2009, still 44,7 % of the retailers only offered a brick-and-mortar store, compared to 31,3 % in 2010 (Twinkle, 2010). Furthermore, prior research has indicated that offering multiple channels also has a positive impact on financial performance (Geyskens, Gielens, & Dekimpe, 2002). “A multi-channel shopper spends on average 15% to 30% more with a retailer than a one-channel customer. And omni-channel shoppers will spend over the 20 % more than multi-omni-channel customers” (Ortis, 2010, p.1 ). These numbers stress the importance for the retail organizations to take advantage of this new omni-channel business model.

Even as the retail environment is changing, it also redefines the shopping behaviour of the customer. Figure 3 shows that in 2011 54,5 % of the customers still bought their products only in a brick-and-mortar store, while in 2015 the cross-channel customer will dominate the market with 54,1 % (ABNAMRO, 2011). These developments are beneficial for retailers that are able to implement a seamless integration of online and offline operations. In this way, these retail organizations can

Figure 2: Offline and online sales 2012 and 2020 (Shopping2020, 2014)

(9)

9 outperform pure online retailers or retailers who only offer

a brick-and-mortar store.

There will not only be a shift from traditional retailers to omni-channel retailing, but there will also be shift in the nature of products that customer are buying online. In 2012, 56 % of the products purchased were intangible goods, such as flight tickets and accommodations, insurance and travel packages (see figure 1). Future prospects show that the online sales of tangible products will be tripled in 2020 (figure 4). The sales of tangible products will dominate the online sales and will increase towards 63% in 2020.

The current size and the growth rates of the online sales differ widely across sectors. Nowadays, the consumer electronics sector is the most prevalent with regard to online sales for tangible products (figure 5). Moreover, figure 5 shows that the market segments which show the highest compound annual growth rates (13%) for online sales in the non-food sector are clothing, home and garden and consumer electronics (Shopping2020, 2014). These growth rates show the importance for the retailers to offer online sales channels to their customers, otherwise they will lose market share. As the consumer electronics segment is already dominating in online sales for tangible products and the prospects show that the online sales are expected to double from 20 % in 2012 towards 40 % in 2020 (Shopping2020, 2014), consumer electronics constitute an interesting segment for this research.

Figure 4: Online sales of tangible and intangible goods (Shopping2020, 2014)

(10)

10 The opportunities of an omni-channel strategy are endless. Offering multiple channels does not only positively affect the financial performance, but for example it also enables the retailer to get access to new markets and it can increase customer satisfaction, share-of-wallet and customer loyalty (Neslin & Shankar, 2009; Zhang, Farris, Irvin, Kushwaha, Steenburgh, & Weitz, 2010). In addition, customer centricity makes it possible to create close and profitable relationships between retailers and their customers, which ensures that it is hard for competitors to understand copy or displace this way of doing business (Day, 2000). However, there are also some challenges retailers have to deal with, because a transformation towards an omni-channel strategy requires a radical change in the business model (Heinemann, 2008; Zhang et al., 2010). Therefore, a clear picture of the future state should be defined in order to reduce the uncertainty and ensures that the organization can move to a clear end (Lewin, 1951). A maturity model is a perfect tool to support retailers in making this transition. Especially, a capability-maturity model can describe the capabilities of each different stage towards an omni-channel strategy (de Bruin, Rosemann, Freeze, & Kaulkarni, 2005). In this model the most important areas to achieve the omni-channel strategy are included. According to Chen and Popvich (2003), creating a customer-centric approach requires an integrated and balanced approach to technology, people and processes. However, the shift from intangible to tangible goods reinforces that the retailers significantly have to adjust their logistical operations. Besides, the customer touch points in the customer journey are becoming more important for an omni-channel retailer. Therefore, this research is focused on the adjustments that a consumer electronics retailer has to make in the key areas technology, customer, organization and logistics in order to become an omni-channel retailer.

(11)

11 currently belong and which capabilities are needed to make the transition towards an omni-channel strategy that will positively affect the outcomes of their operations.

Therefore, the following research question will be covered in this study: What capabilities do consumer electronics retail organizations have to develop, implement and measure in order to facilitate the transition towards an omni-channel strategy within 3 to 5 years to at least maintain their market share?

(12)

12

2. Literature review

In the literature review, the creation of the omni-channel capability maturity model is explained. First of all, there is some theory about organizational change, followed by an introduction about management control systems. Hereafter, the maturity models are introduced and there is some elaboration about the development of these models. It concludes with the development of an omni-channel capability maturity model. The first paragraphs are based on prior literature, but as the existing literature of the omni-channel strategy is scare there are conducted interviews with experts in the field of omni-channel retailer to define the capabilities of the omni-channel capability model. The extended version of the interviews is described in appendix I.

2.1. Organizational change

In recent years, many retailers are making a shift from a traditional business approach towards an omni-channel approach. Changing to an omni-channel strategy requires a completely new business model, as the retailer will offer multiple seamlessly integrated channels and place the customer in the centre of the attention and therefore the traditional business model may not be valid any more (Heinemann, 2008; Shah , Rust, Parasuraman, Staelin, & Day, 2006; Zhang, 2009). Organizational change is the process by which organizations move from their present state to some desired future state by finding new or improved ways of using resources and capabilities to increase organization’s ability to create value and hence it performance (Jones, 2013; Porras & Silvers, 1991). Specifically, action research is focused on generating and acquiring knowledge that managers can use to define organization’s desired future state and to plan a change program that allows the organization to reach that state (Clark, 1972; Brown, 1972). The main steps for action research are displayed in figure 6 and this study focuses on the first two steps. The first step in action research requires managers to recognize the problems they face in the current state. In general, the need for change arises when the organization perceives a gap between the desired and the actual performance. The next step is to identify where the organization needs to be, its desired future state. A clear picture of the future state will reduce the uncertainty and ensures that the organization can move to a clear end (Lewin, 1951).

Figure 6: Steps in action research

(13)

13 There are several types of change to reach the desired future state. In most cases, a distinction is made between two types of change: incremental and radical change. Retail organizations are familiar with small incremental changes, which involve a constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate to changes taking place in the environment (Lindblom, 1959). Retail organizations are operating in a dynamic environment and should continuously adjust their way of doing business to better meet the customer expectations. In contrast, the transition towards an omni-channel strategy requires a radical change process (Rigby, 2011; Shah et al., 2006). Radical change involves a bold attempt to quickly find new ways to be effective, it has impact at all the levels of the organization and ensures that organizations have to make a radical shift in ways of doing things which often requires new goals and structure (Jones, 2013).

2.2. Management control systems

Radical change ensures that formal systems are not valid anymore, it disrupts and undermines existing management control systems (Nadler, 1981; Rigby, 2011). When an organization is facing radical change, control can support the behaviour of managers and employees in ways which lead to the attainment of the desired end (Otley & Berry, 1980). Therefore, control mechanism is an important means that can support the managers of the organization by making the transition towards an omni-channel strategy. “Management control systems are defined broadly to include everything managers do to help ensure that their organization’s strategies and plans are carried out or, if conditions warrant, that they are modified” (Merchant & van der Stede, 2012, p. XII). Merchant and van der Stede (2012) distinguishes four types of control: action control, personnel control, cultural control and results control. Action control constrains or directs employees’ decisions and actions choices. Personnel controls are used by managers to select, train and motivate employees. In turn, cultural controls are used by managers to create or maintain an organization’s preferred practices and procedures and results control involves monitoring and reporting the state(s) of an organization and its outcomes (Merchant & van der Stede, 2012).

(14)

14

Figure 7: Four steps of results control (Merchant & van der Stede, 2012)

Often the terms critical success factors and Key Performance Indicators (KPI) are used interchangeably, but there is a crucial difference. The critical success factors refer to the performance dimensions and the KPI’s are the most critical performance measures. This study focuses on defining the dimensions as this is an important requirement to involve the next step.

2.3. Maturity models

When there is a continuous pressure for retail organizations to gain and retain competitive advantage, ways to improve their business become increasingly important. Prior research indicated that maturity models are means to support the organization by making a transition (de Bruin et al., 2006). Maturity models define several stages that describe the development in a simplified way (Wendler, 2012). There are different types of maturity models, namely the maturity grids, hybrids & linkert-like questionnaires and capability-maturity models (CMM). The maturity grids provide descriptions for each activity of each maturity level. The hybrids & linkert-like questionnaires offer statements of “good practices” and the respondent has to indicate a score the relative performance of an organization on this practice and a CMM describes the capabilities needed to reach maturity and is therefore most appropriate for this study (Fraser, Moultrie, & Gregory, 2002).

In order to create a capability maturity model de Bruin et al. (2005) described six phases (see figure 8), which should be followed in a strict order, to develop a general maturity-model. The first four stages relate to designing the model, the last two phases are focused on generalizability and growth of the model and therefore, this research focuses on the first four phases.

Figure 8: Phases to develop a maturity model (de Bruin et al., 2005)

1. Defining the difmension(s) 2. Measuring performance in the chosen dimensions 3. Setting performance targets for employees to attain for each of the measures 4. Providing rewards for target attainment to encourage the behaviors that will lead to the desired results

1.

(15)

15 In the first step, the scope of the model is determined. In this case it is the transition from single channel retailers towards omni-channel retailers. The second phase elaborate on the design of the model that is the basis for further development and application is determined (de Bruin et al., 2005). In the third phase the capabilities should be developed as they indicate what needs to be measured. Once the model is developed, it should be tested for relevance and rigor (de Bruin et al., 2005). The development of the omni-channel CMM starts with defining the maturity levels, hereafter examines the key areas and the capabilities for each maturity level are described. Finally, the KPI’s should be developed, but this step is beyond the scope of this research (see figure 9).

Figure 9: the development of the omni-channel CMM

2.4. Maturity levels of the omni-channel capability-maturity model

(16)

16 are speculations about a no-channel phase, which is considered as an ultimate future state. The different stages in the retail environment are shown in figure 10.

Figure 10: Different stages in the retail environment

2.4.1. Traditional retailers

In the traditional setting, the retailer sells via one channel: the brick-and-mortar store. The traditional retailer has to fulfil three important imperatives: stock the products which the customer need, cultivate awareness of what is available in-store and when the customer enters the store it should be easy and exciting for them to buy. The presentation of in-store merchandise makes it possible for customer to test, try and experience products and take them home immediately. In addition, the retailer can provide customers with gratification of all senses (Rigby, 2011). The sales associate provides customers with information about products and assist them in experience the product (Enders & Jelassi, 2000).

2.4.2. Multi-channel retailers

Retailers began to see the importance of adding an online channel in the early 90s, and the advantages an online channel has over traditional brick-and-mortar stores (Rigby, 2011). The first phase of the transition in the retail environment is called multi-channel retailing, where a retailer is selling through more than one channel (Kumar, 2010; Levy & Weitz, 2012; Strang, 2013). An important characteristic of the multi-channel approach is that there is often little in common between what is available in the different channels. Each channel offers multiple independent touch points to the consumer and the focus is product-centric. The transition towards multi-channel retailing is driven by retailers that are trying to expand their sales and acquire new customers (Strang, 2013)

2.4.3. Cross-channel retailers

(17)

17 experience, but perceives the multiple channels as part of the same brand. However, at the back-end the retailer is still operating in separate functional siloes with some cross-channel synergies and this causes inefficiencies and even an inconsistent customer experience (Strang, 2013; Wilson, 2013; Zhang et al., 2010). The channels are not seamlessly integrated and there is still a product-centric focus. Moreover, the cross-channel experience is also driven by retailers which were trying to expand their sales (Strang, 2013).

2.4.4. Omni-channel retailers

The transition to an omni-channel strategy is being driven by customers. The customer desires a seamless customer experience, due to the increasing use of for example smartphones, tablets and social media (Strang, 2013; van Someren, 2014). Therefore, omnichannel retailing reflects the fact that retailers are able to interact with customers through countless channels—websites, physical stores, kiosks, direct mail and catalogues, call centres, social media, mobile devices, gaming consoles, televisions, networked appliances, home services, and more – which are all seamlessly integrated (Hobkirk, 2013; Rigby, 2011). In addition, the most important aspect of omni-channel retailing is the shift from a product-centric into a customer-centric approach (Selimi, 2014a; van Someren, 2014; Stam, 2014a). The retailer has to place the customer in the centre of the attention and therefore should provide more customized and personalized offerings in order to build customer relations (Bardwell, 2013; Shah et al., 2006).

2.4.5. No-channel retailers

Finally, there are some speculations about the no-channel organization. This is considered as the ultimate future state of retail, which is still an endeavour instead of reality and thus cannot be measured within this study. In this phase, the retailer places the customer in the centre of the attention and there is a seamless customer experience, but the concept of channels is abandoned. When the idea of channels is abandoned, it does not have to matter anymore which channel the customer uses. For example, the small differences in for example the delivery costs should be eliminated. This new business model requires a new mind-set and new capabilities, leaving the concept of the channel-organization in the past (PwC, 2014; Stam, 2014a; van Someren, 2014).

(18)

18

2.5. Key areas in the omni-channel capability-maturity model

Key areas identify a cluster of related activities that achieve a set of goals which are important to achieve an omni-channel experience. Key areas refer to most important processes to achieve this goal (Paulk, Curtis, Chrissis, & Weber, 1993). So, not all the processes within the company are involved in assessing the maturity of the company towards an omni-channel strategy. It is important that the final stage is well-defined and therefore the focus is on the areas that are crucial to make the transition from a product-centric approach towards a customer centric approach. According to Chen and Popovich (2003) organizations should internally focus on and change the aspects of people, processes and technology in order to become customer-centric. Moreover Shah et al. (2006) argue that the organization should focus on strong leadership commitment, organizational realignment, systems and process support and revised financial metrics. Moreover, as the omni-channel strategy places the customer in the centre of the attention, it is important to emphasize this aspect and focus on what are the customer touch points in the customer journey (Stam, 2014a; van Someren, 2014). In addition, the transition towards an omni-channel strategy has major implications for the logistics of an organization and therefore this is also an important aspect to take in account (Strang, 2013; Selimi, 2014b). Based on these assumptions, the key areas that form the basis of the omni-channel CMM are technology, organization, logistics and customer, whereby the key area organization covers both aspects people and processes (Stam, 2014a; van Someren, 2014). These parts of the retailers’ business model require the most significant changes to become omni-channel players (Selimi, 2014a; Stam, 2014a; van Someren, 2014) All the key areas are equally important and an integrated and balanced approach towards these key areas make it possible that the retailer becomes customer-centric (Stam, 2014a; van Someren, 2014).

(19)

19

2.5.1. Corporate strategy

When an organization is facing a radical change, a strong corporate strategy will facilitate the transition towards the desired end as this strategy will reflect the new business paradigm with its vision, mission and value propositions (Dewar & Dutton, 1986; Milgrom & Roberts, 1995). When assessing an organization it is important to take the corporate strategy in consideration, because it reflects some important aspects which also influences the way of doing business. By its nature, retailers do have a strong tactical approach, because things have to be done daily. Retail organizations are operating in a dynamic and changing environment and as a result the long-term approach is very short compared to other industries. However, it is still very important for a retail organization to have a strategic approach, because it performs different functions. It creates identity, the retailer can differentiate itself from others, it is a means for criteria for results, it serves as framework for daily operations and it motivates employees. Retail organizations are mainly operating following a specific formula. Such a formula is based upon marketing mix variables, which should fit to the strategic approach of the organization (van der Kind & Quix, 2008). Van der Kind and Quix (2008) stated that public, place, product, price and promotions are the most important external marketing mix variables which form the basis for a formula of retail organizations. Selimi (2013) mentioned that there are five key marketing mix variables which are relevant for either physical and digital channels, namely price, product, service, access and experience (see figure 11). As it is important that the marketing mix variables are relevant for both channels, these variables are considered for this research. Based on these variables, retailers can differentiate itself from competitors. The retail formula can mostly be recognized by these five marketing mix variables, whereby the retailer is dominating on one of these variables and differentiates on another variable. The retailer is operating on par with competitors with regard to the other three variables (Selimi, 2013).

(20)

20

2.5.2. Logistics

To offer omni-channel strategy for an organization with tangible products it requires major changes with regard to the supply chain and especially related to the logistical process behind the organization (Aubrey & Judge, 2012). The retailer can realize an omni-channel strategy when they make changes with regard to pick-up and delivery, return policy and shipping. A retailer can realize an integrated customer experience by offering multiple delivery and pick-up options in order to meet customer expectations and demands. In addition, multiple return options make it easier for customers to return their products and this will positively influence the customer experience (Agatz, Fleischmann & van Nunen, 2008, Strang, 2013). Finally, multiple shipping options enable retailers to meet customers’ complex fulfilment demands and to reduce the delivery time to the customers (Motorola, 2013).

2.5.3. Customer

The technology makes it possible that the retailer can reach the customer via several touch points. The customer expectations and habits are continuously changing and the customer becomes more demanding. Therefore, the customer is an important key area in order to map the progress towards omni-channel retailing (Stam, 2014a; Strang, 2013; van Someren, 2014). According to Chen & Popovich (2003) it is more profitable to retain customers than acquiring new customers and therefore customer relationship becomes crucial in the omni-channel retail environment. Three elements to build relationships with customers include: pricing and promotions, loyalty program and after-sales service. In order to create relationships with customers personalized pricing and promotions play an important role (Rigby & Ledingham, 2004). Another means that enable retailers to create customer relationships are loyalty programs. Loyalty programs make it possible to identify individual customers and provide them with personalized incentives (Leenheer & Bijmolt, 2008). Lastly, after-sales service does provide organizations with a perfect opportunity to build loyalty and customer relations, since it enriches the customer experience (Rigby & Ledingham, 2004).

2.5.4. Technology

(21)

21 internal stakeholders (Hammer & Champy, 1993). Three aspects with regard to technology which are important for an omni-channel strategy are: the positioning of customer data, the purchase behaviour of customers and inventory visibility. In order to meet the customer needs, it is important to focus on the positioning of data. Being customer-centric requires a centralized database in which a complete overview of each customer is visible to all organizational departments (Xu, Yen, Lin, & Chou, 2002). Besides, a complete overview of the purchase behaviour of the customer is necessary to make it possible for the retailer to be relevant and provide a personalized customer experience (Xu et al., 2002). To deliver a great customer experience, technologies should enable customers to check the inventory across all channels (Ruhi & Turel, 2005).

2.5.5. Organization

The key area organization is focused on the internal aspects that enable the retailer to operate with a customer-centric approach. For making the transition towards an omni-channel strategy this aspect is focused on leadership, structure and focus of staff. When organizations face radical change it requires a centralized structure with strong, top-down, leadership support within the organization, in order to overcome resistance and being able to implement these disruptive changes within the organization (Normann, 1971; Milgrom & Roberts, 1995; Chen & Popovich, 2003; Shah et al, 2006). In order to become customer-centric, the retailer should structure its operations around the customer, rather than around the product (Chen & Popovich, 2003). Lastly, the focus of the staff should shift from selling products to whoever will buy, focus on market share growth and new product development towards a focus on customer satisfaction and serving customer needs, thereby building relationships with customers (Shah et al., 2006).

2.5.6. Key performance indicators

(22)

22

Product-centric KPI’s

Customer centric KPI’s

- Number of new products - Profitability per product

- Market share by products or sub brands

- Share of wallet of customers - Customer satisfaction - Customer lifetime value - Customer equity

Table 1: Examples of product-centric and customer-centric KPI’s (Shah et al., 2006)

2.6. The capabilities of the omni-channel capability-maturity model

In the next phase, the capabilities for each maturity level are developed. Capabilities are key practices to determine to which maturity level the organization belongs or whether an organization has effectively implemented the key area of a specific stage (Paulk et al., 1993). A top-down approach is used to develop the capabilities of the omni-channel capability-maturity model. Such an approach works well if the domain is relatively naïve and there is little evidence of what is thought to represent maturity, as is the case with omni-channel retailing. With a top-down approach, definitions based on an omni-channel strategy are written first. These definitions are developed in the section key areas and are combined into a preliminary model which is displayed in figure 12. Based on these definitions

(23)

23 capabilities for each maturity level are developed and the goal is that these capabilities are mutually exclusive. The development of the omni-channel CMM should make it possible to diagnose the current state of a retailer, but it also creates a clear picture of the desired future state. In this way, the first two steps of action research (see figure 6) are carried out and this knowledge can support managers to make the transition towards an omni-channel strategy.

2.6.1. Multi-channel strategy

In this section, all the capabilities for the multi-channel strategy are developed and these are based on the elements in the preliminary model (see figure 12). For a complete picture of the capabilities for a multi-channel strategy see appendix II.1

2.6.1.1. Logistics

In a multi-channel approach the multiple channels are all operating independently. This has implications for the delivery and pick-up options, because customers can only choose the pick-up and delivery options of the channel in use (Bardwell, 2013; PwC, 2014; Strang, 2013). In addition, if consumers decide to return their product it is only possible to return this product via the channel of purchasing. Other channels do not have the necessary information and data to handle this return and since channels are competing for sales and thus are completely disintegrated, they are not willing to handle these returns (Chen & Popovich, 2003; PwC, 2014; Shah et al., 2006). The multi-channel organization has separate distribution centres for each independent channel. The different channels do still follow a traditional supply chain. Therefore, shipment of online products is only possible from the distribution centre directly towards the customer, or for in-store products, from the distribution centre towards the store (Goodwill, 2014; PwC, 2014).

2.6.1.2. Customer

(24)

24 sales channel, which provides customers with the restriction to contact another channel’s customer service when experiencing problems with their products (Chen & Popovich, 2003; PwC, 2014; Strang, 2013).

2.6.1.3. Technology

In a multi-channel approach, customer data is gathered and stored around functional divisions for each specific channel. As a result, information about the customer is collected and stored multiple times, but there is no integration between the different channels. Therefore, the customer has only access to the purchase behaviour of the channel in use. This results in an incomplete picture of the purchase behaviour of customers, or even multiple tracks of customer data for just one customer (PwC, 2014; Strang, 2013). Since each channel is operating independently, the inventory information is also only visible for the channel in use. This non-integrated way do not allow the customer to check the inventory across channels and causes many cross-channel conflicts (PwC, 2014).

2.6.1.4. Organization

In a multi-channel approach, the different channels are managed in a decentralized manner. The owner of each channel can adjust its retail mix to serve the needs of different market segments (Zhang et al., 2010). As a result, the organization operates in functional siloes, maintaining divisions of inventory management, merchandising, marketing, finance, analytics and product development in each channel. Also each channel has its own objectives, management, staff, systems and associated individual profit and loss statements (PwC, 2014). Through the product-centric paradigm, the focus of the staff is still on selling as many products to whoever is willing to buy through each channel. Different channel thus compete to increase the number of transactions of each customer (PwC, 2014; Shah et al, 2006; Zhang et al., 2010). This way of working results in an expensive channel-focused and complex organization with little rewards for offering an exciting customer experience across the multiple channels.

2.6.2. The cross-channel organization

This section provides an overview of all the capabilities of the cross-channel strategy. The capabilities are based on the elements in the preliminary model (see figure 12). Appendix II.2 gives a complete picture of all the capabilities for a cross-channel strategy.

2.6.2.1. Logistics

(25)

cross-25 channel organization ensures that there are multiple pick-up and delivery options that suits to the preferences of the customer. Even more, customers have the opportunity to return their products via channel of preference (Accenture, 2010; Strang, 2013; Wilson, 2013). However, if the customer would like to return a product by post the shipping costs are on behalf of the customer (Selimi, 2014c). Besides, a cross-channel retailer is operating from one or multiple centralized distribution centre(s) in order to distribute products for the use of multiple channels (Smith, Beelen, Edwards, Eringfeld, & Nath, 2012; Wilson, 2013).

2.6.2.2. Customer

Due to the fact that cross-channel retailers rely on common branding and messaging, pricing and promotional activities are aligned across all channels. However, since full integration of customer data is not yet achieved, retailers are not able to provide their customers with personalized promotions, so those pricing and promotional activities are still focused on the mass (Neslin, Grewal, Leghorn, Shankar, Teerling, Thomas, Verhoef, 2006; Strang, 2013). The common branding and messaging reinforces a change with regard to the loyalty program. In a cross-channel organization the loyalty program is still focused on customer acquisition and retention, but the loyalty programs are aligned across channels resulting in just one program across different channels (Selimi, 2014c). Moreover, as the customers experience is integrated at the frond-end, it is possible for customers to contact the organization for after-sales service with the channel of their preference. However, the data integration is not complete and this causes data duplication and inefficiencies or even an inconsistent customer experience (Wilson, 2013; Zhang et al., 2010).

2.6.2.3. Technology

(26)

26

The cross-channel organization is still operating in a decentralized manner, but this is to some extent combined with a top-down mandate to streamline the cross-channel synergies (Zhang et al., 2010). Due to the decentralized approach, the retailer still operates in functional siloes, maintaining divisions of inventory management, merchandising, marketing, finance, analytics and product development, but there are some cross-channel synergies between these divisions (PwC, 2014; Goodwill, 2014). The organization faces difficulties operating this decentralized structure, because it creates duplicates teams and creates inefficiencies in the business processes, causes internal conflicts across channels and often leads to inconsistent customer experiences due to a lack of coordination in the different sales activities across channels (Zhang et al., 2010). The focus of the staff in cross-channel organizations is still on product-centricity, but as the customer becomes more demanding they are also partially focused on customer satisfaction (Selimi, 2014c). They are trying to expand sales within the different channels, by providing customers with an integrated customer facing front-end. The focus is still mainly on increasing the transactions and this has partial to do with the fact that their performance is still measured with the use of product-centric measures (Shah et al., 2006; Strang, 2013).

2.6.3. The omni-channel organization

This section provides an overview of the final and desired stage of the channel CMM: the omni-channel strategy. The capabilities are based on the elements in the preliminary model (see figure 12). Appendix II.3 gives a complete picture of all the capabilities for an omni-channel strategy.

2.6.3.1. Logistics

(27)

27 options to meet online orders with inventory in store, or enable manufacturers to fulfil customer orders when experiencing stock-outs in their own inventory (Forrester, 2014; Goodwil, 2014; PwC, 2014; Selimi, 2014b)

2.6.3.2. Customer

An omni-channel organization is based on customer-centricity and serving customer needs. The underlying philosophy in a customer-centric approach is to focus on customers, or to explore how many products can be sold to a particular customer. By following this approach, the organization has to structure around customer segments, relationships and profitability of individual customers (Kumar, 2010). In order to achieve the most value out of customer relations, organizations strongly build on customer retention and providing their most profitable customers with the best experience, in order to retain those customers within the organization (Kumar & Reinartz, Customer Relationship Management: A Databased Approach, 2005; Reinartz, Krafft, & Hoyer, 2004). The omni-channel organization has to inspire the customer trough all channels during the whole customer journey. Unlike mass-promotions, the omni-channel organization make use of personalized, targeted promotions based on demography, customer segments and the preferred channel of the customer (Ortis, 2010; Rigby, 2011) The main focus of an omni-channel retailer is creating an integrated loyalty program with a high situational relevancy (Ortis, 2010; Selimi, 2014c).Using such tools at each point in the customer journey, retailers can identify sets of targeted customers defined by narrow parameters and create appealing interactions. The trick would be to identify each segments unique paths and pain points to create tailored solutions and excite each customer during each point in the customer journey (Ortis, 2010; van Someren, 2014). The centralization of the customer-database makes it possible that all channels can provide personal after sales-service, without negatively influencing the customer experience. Customers thus have the choice which channel they prefer in order for the best after-sales service they want (Ortis, 2010; Rigby, 2011; van Someren, 2014).

2.6.3.3. Technology

(28)

28 2013). Another point, which enables the customer centricity approach, is to leverage key customer data at the moment the customer is ready to make a purchase decision. The integrated way of data storage makes it possible to create a complete picture of the purchase behaviour of the customer (Forrester, 2014). The technological foundation will ultimately allow retailers to go beyond merely offering the same products to each customer. Omni-channel retailers should be able to deliver a personal shopping experience which is closely aligned to the shopping needs and habits of the independent customer (Bardwell, 2013). In an omni-channel experience it is important to be relevant for each independent customer and therefore it is also required to take additional information into account. Additional data, such as social media, makes it possible to be more relevant at the moment of the purchase decision (Selimi, 2014c). Another important aspect of the customer-centric approach of an omni-channel experience is the inventory visibility throughout the entire supply chain. Inventory visibility means that customers can see the inventory of web stores and stores at both the website and in-store. When customers look at the online web shop for the inventory in-store, they don’t have to waste time to go to the store without the certainty that the product they want is in stock (Rigby, 2011) In addition, the omni-channel retailer allows customers to check the inventory across all channels in-store (Selimi, 2014c).

(29)

29

3. Methodology

In this section, the scope of this research is described and hereafter there would be elaborated more about the multiple case studies. Hereafter, an explanation is given as how to data is collected and analysed and finally the section concludes with an elaboration on how to reshape the omni-channel CMM.

3.1. Scope

There is a transition going on in the retail environment, which triggers traditional organizations to morph into an omni-channel organization. Since there is little knowledge in the field of the distinction between multi-, cross or even omni-channel strategy, a theory development approach is used to create a clear picture which capabilities distinguish each stage. “Theory development is built upon a business phenomenon that is not yet been addressed in academic literature or the literature field is still very exploratory” (van Aken, Berends & van der Bij, 2012, p. 14).

The goal of this research is on generating and acquiring new knowledge that can be used by managers in order to facilitate the transition towards an omni-channel strategy. This study is focused on the development of the omni-channel CMM that can diagnose the current state of the retailer and it clearly defines the desired future state. As the omni-channel capability-maturity model is already developed, in the fourth phase it should be tested in practice for relevance and rigor (de Bruin et al., 2005). Hereby should be mentioned that the development of the KPI’s lie outside the scope of this research, as the capabilities should be designed first in order to make the KPI’s work. The model and associated capabilities should be tested in practice by means for validity, reliability and analytical generalization in the consumer electronics sector. These means are related to the four tests (construct validity, internal validity, external validity and reliability) mentioned by Yin (2009) that are relevant to judge the quality of case study research. However, according to Yin (2009) internal validity only concerns explanatory case studies and as the development of the omni-channel CMM is exploratory by nature it is irrelevant for this research. As this research is focused on one segment the generalizability and growth of the model is beyond the scope of this research and also the actual implementation of the omni-channel strategy is also not covered in this research.

3.2. Multiple case studies

(30)

30 towards an omni-channel strategy. The eight steps of Eisenhardt (1989) are maintained to build theory from case study (see appendix III). The basic propositions are the capabilities for each maturity level and these are tested in practice by means of multiple case studies. The unit of analysis of this research are consumer electronics retailers.

Selection of cases is an important aspect of building theory from case studies (Eisenhardt, 1989). According to Eisenhardt (1989) there is no ideal number of cases, but a number between 4 and 10 cases usually works well. Therefore, this study is carried out at six electronics firms. The case studies, retailers within the consumer electronics sector, are carefully selected based upon that they are operating with relatively the same marketing mix variables (product, public, price, place and promotions) which form the basis of their retail formula (van der Kind & Quix, 2008). Media Markt, Dixons, EP, Coolblue, Kijkshop and all offer a broad selection of consumer electronics products, have a low involvement, are mostly competing based upon price, are located in city centres and the promotions are mostly based upon advertisements and folders. The other marketing mix variables which are relevant for both channels, physical and digital, show that Media Markt, Kijkshop and BCC are competing on price, while Coolblue and EP are dominating on service and Dixons is stuck-in-the-middle. As there are only a limited number of cases, including some polar types (consumer electronica firms that are dominating on service versus dominating on price) in which the process of interest is ‘transparently observable’ contributes to this research (Pettigrew, 1988). The six consumer electronics firms are all located in the Netherlands. Information which is based upon operations which were outside the boundaries of the Netherlands is abandoned.

3.3. Data collection

(31)

31 Lastly, recent publications about the company in newspapers, academic papers and other sources will be searched for expressions of multi-channel, cross-channel or even omni-channel retailing.

Investigating the corporate strategy of the retailers include assessment on five key marketing mix variables: price, product, service, access experience. When the retailer is dominating on one of these variables they get assigned 5 points for this variable. Besides, when the retailer differentiates on another variable they obtain 4 points and as they are playing on par with the other variables 3 points are assigned.

For each concept in the preliminary model, capabilities to assign retailers to a specific maturity level are developed: (see appendix II). If a capability is present, based on the available information, a plus sign should be allocated to that capability. However, if the capability is not available, a minus sign should be allocated. In exceptional cases, when there are difficulties or doubtful cases, a plus-minus sign should be assigned. To conclude, when all the capabilities are combined to form a total score, the numbers of plus signs are noted for each stage. In total, the retailer is assessed on twelve elements and therefore there is a maximum score of 12 points which is equal to a score of 100 %. Looking at the individual key areas, each retailer can score a maximum of 3 points, which is also equal to a total score of 100 % per key area. The total scores are treated as ordinal data, as they represent different categories: multi-, cross- or omni-channel. The ordinal ranking scale has mutually exclusive and collectively exhaustive capabilities and there is an order between them: cross-channel transcends multi-channel and in their turn omni-channel surpasses cross-channel.

During the data collection the researcher makes use of multiple sources of evidence (e.g. documentation, interviews, observations), which ensures an increase in construct validity. To build theory from case studies, there is a frequent overlap of data collection with data analysis. This allows the researcher to take advantage of flexible data collection. In building theory, it is important to elaborate extensively on the selected cases to react rather than to sift out what may seem important, because it is often difficult to know what will and will not be useful in the future (Eisenhardt, 1989). Therefore, the extended version of the results are attached in appendix IV, which serve as case study database and chain of evidence in order to increase the reliability and construct validity of this study.

3.4. Data analysis

(32)

32 First of all, the data is analysed based on the 4 key areas (technology, customer, organization and logistics), where was searched for within-group similarities and with intergroup differences. Hereafter, the three consumer electronics firms which have the highest score with regard to omni-channel strategy and the other three were selected in pairs to list the similarities and differences. This contributes to the emergence of new patterns and insights and in the end creates a complete omni-channel capability-maturity model with respect to validity, reliability and generalizability. In addition, the results are also reviewed by means of semi-structured interviews with two experts in the field of omni-channel strategy. Each interview was recorded and subsequently transformed into an interview transcript (Appendix I.5 and I.6). The experts verify if the omni-channel capability-maturity model is complete, and they tested the concepts with respect to validity, reliability and generalizability. This qualitative type of research offers the ability to obtain in-depth information about the rigor and relevance of the developed model (Cooper & Schindler, 2008). Moreover, the in-depth information is helpful to further interpret the results, which also form a basis for the discussion. Semi-structured interviews are chosen, because it provides direction to the interview, but allows the researcher to ask additional questions when deemed valuable or necessary for this research. Answers can be ‘probed’, by letting the interviews build on their responses, or explain them. This can be helpful in order to understand the meanings respondents ascribe to phenomena (Saunders, Lewis, & Thornhill, 2007). The semi-structured interviews with the experts contribute to this research in two ways. Firstly, they enhance the creative potential of this study. Multiple views often have complementary insights which add to the richness of data and their different perspectives increase the likelihood of capitalizing on any novel insights which may be in the data. Secondly, the convergence of observations from multiple investigations enhances confidence in the findings (Eisenhardt, 1989) and increases the construct validity (Yin, 2009).

3.5. Shaping the omni-channel capability-maturity model

(33)

33

4. Results

This section elaborates on the test of the omni-channel CMM in the consumer electronics segment. The results of the six consumer electronics retailers are fount by desk research and the case study database with the extended version of the results are attached in appendix IV. It is important to notice that the results of Kijkshop are based on the pilot store in Tilburg, a store that is focused on the integration of multiple channels. First of all the corporate strategy of each retailer is mentioned, hereafter the key areas logistics, customer, technology and organization are discussed separately and finally the conclusion of the results is described.

4.1. Corporate strategy

The corporate strategy influences the way of doing business and therefore it is important to take this into account when looking at the maturity towards an omni-channel strategy. As can be seen in figure 13 there are only two marketing mix variables that are dominating in the consumer electronics sector. Media Market, Kijkshop and BCC are dominating on price and on the other hand Coolblue and EP are dominating on service. The consumer electronics organizations do all differ from each other as they are differentiating on dissimilar variables. For example, Media Market differentiates on product whereas BCC differentiates on service. Besides, Coolblue differentiates on experience, while EP differentiates on access. These minor differences influence the way consumer electronics retailers are operating and ensure that they divergence. Dixons is stuck-in-the-middle as the organization is not operating with a clear corporate strategy and is not dominating on one of the variables and differentiates itself on three variables (price, product and experience).

Figure 13: Corporate strategy consumer electronics firms

0 1 2 3 4 5

Price Product Service Acces Experience

(34)

34

4.2. Logistics

When looking at the logistics, there are clear differences between the retailers. Figure 14 gives an overview of the maturity of the retailers towards an omni-channel strategy. As can be seen, all consumer electronics retailers are to some extent pursuing an omni-channel strategy with regard to logistics. EP is leading, because they are for 66,7 % omni-channel and 33,3 % cross-channel. On the second place are Coolblue and BCC, which are for 66,7 % omni-channel and 33,3 % multi-channel. Dixons is for 33,3 % channel and 66,7 % cross-channel, whereas Kijkshop is 33 % omni-channel, 50 % cross-channel and 17 % multi-channel and Media Markt is for 33,3 % omni-omni-channel, 33, 3 % cross-channel and 33,3 % multi-channel.

Figure 14: Maturity of logistics towards an omni-channel strategy

(35)

35

Table 2: The logistic capabilities within the consumer electronics sector

The main difference is that the costs of shipping are on behalf of the customers at Dixons and EP, which make them cross-channel players. Media Markt, Coolblue and BCC are more tolerant and they are responsible for the shipping costs when a customer decides to return the product and therefore they are pursuing an omni-channel strategy. Meanwhile, it is difficult to categorize Kijkshop as either a multi-channel or cross-channel. In most cases, it is possible to return products via the channel of preference whereby the customer has to pay the shipping fees. However, as Kijkshop is making use of drop shipment some products were delivered directly by the fabricant and these products can only be returned via the channel of purchase. The major distinction in the logistics perspective is made by the shipment options. Media Markt, Coolblue and BCC are characterized as multi-channel, because they are operating from different DC’s for each independent channel. Dixons is operating from one DC for both channels and is therefore a cross-channel retailer. Finally, EP and Kijkshop are pursuing an omni-channel approach, because they are operating from one DC for both omni-channels and they are also making use of drop shipment.

4.3. Customer

(36)

36 retailers are not making use of any loyalty program (see table 3) and therefore there is not assigned a plus sign for this capability to one of the retailers.

Figure 15: Maturity of customer towards an omni-channel strategy

Table 3 gives more insights about the capabilities of the key area consumer. This research reveals that not any of the consumer electronics retailers are pursuing an omni-channel strategy with respect to pricing and promotions, because none of the retailers are offering personalized pricing and promotions across channels. Coolblue, Kijkshop and BCC are performing a cross-channel strategy as they are

(37)

37 offering mass-market pricing and promotional activities which are aligned across all channels. Media Markt, Dixons and EP are lagging behind as they are making use of different promotional and pricing activities across channels. It is striking that exactly these retailers do have a more decentralized approach and therefore each store is allowed to set their own prices and to tailor the promotional activities to the local needs and habits, which ensures that there are differences across channels. The retail organizations are more distributed with regard to the capability after-sales service. Even here, Coolblue is leading, because they are providing their customer with personalized after-sales service via the channel of preference and therefore pursuing an omni-channel strategy. This is not surprising as customer satisfaction is of highest priority for Coolblue. For example, if a customer makes use of the after-sales service in-store, they keep customers personally informed about the progress of the process by email. Most of the consumer electronics retailers (Dixons, EP, Kijkshop and BCC) are cross-channel, because they are offering mass after-sales service via the channel of preference of customers. Furthermore, Media Markt is still pursuing a multi-channel approach, as they are making a strict distinction between online and offline after-sales service. If a customer has bought a product online, they have to contact the customer service online. Also, if a customer has purchased a product in-store, they have to contact the customer service of the specific store.

4.4. Technology

Figure 16 displays that the omni-channel CMM makes it possible to categorize consumer electronics retailers in different stages towards an omni-channel strategy in the field of technology. Kijkshop is leading, because they are for 66,7 % omni-channel and 33,3 % multi-channel and on the second place is Coolblue as they are for 33,3 % omni-channel and 66,7 % cross-channel. Dixons and BCC are pursuing each strategy for 33,3 % and Media Markt is for 33,3 % cross-channel and 66,7 % multi-channel. EP is running late as they are pursuing a multi-channel strategy for 100 %.

(38)

38

Figure 16: Maturity of technology towards an omni-channel strategy

Coolblue is leading with regard to the purchase behaviour as they also collect personalized purchase information in-store and is therefore a cross-channel player. All other retailers are still multi-channel players, as they only collect purchase information when a customer buys their products online. Finally, a distinction is made between the different retailers with regard to the inventory visibility. Kijkshop is the leading, as they provide the customer with inventory visibility across all channels, even in-store.

(39)

39 In the pilot store, they have interactive touch screens, which show the inventory of brick-and-mortar stores as well as the availability of the online products. Most other retailers (Media Markt, Dixons, Coolblue and BCC) do provide the customers with excellent inventory visibility in the online webshop, but lack to show this information in-store and are therefore cross-channel retailers. EP is still multi-channel, as they do only provide the customer with inventory visibility of the channel in use. The online channel does not offer the possibility to check the inventory in-store.

4.5. Organization

The key area organization categorizes the consumer electronics retailers in different stages towards an omni-channel strategy. As is displayed in figure 17, it is clear that Coolblue is leading with regard to the key area organization as they are for 100 % omni-channel. They are followed by BCC (66,7 % omni-channel and 33,3 % cross-channel) and hereafter Kijkshop (33,3 % omni-channel and 33,3 % cross-channel and 33,3 % multi-channel). Media Markt is for 33 % omni-channel, 17 % cross-channel and 50 % multichannel and they are followed by Dixons which is for 83 % cross-channel and 17 % multi-channel. EP is running late as they are for 50 % cross-channel and 50 % multi-channel.

Figure 17: Maturity of organization towards an omni-channel strategy

(40)

40 for the organizations Media Markt, Dixons and EP, and therefore a plus-minus sign is assigned on both maturity levels multi-channel and cross-channel. In all cases, these difficulties arise as the online channel is managed centrally and the brick-and-mortar store is managed in a decentralized manner. This ensures that the discrimination power of the omni-channel CMM decreases, but this distinction has to be made as the retailers cannot be assigned to either multi-channel or cross-channel.

Table 5: The organization capabilities within the consumer electronics sector

(41)

41

4.6. Conclusion omni-channel capability-maturity model

Previous results show that the omni-channel CMM has enough discrimination power to make a distinction in all key areas towards an omni-channel strategy. As a result, the omni-channel CMM makes it possible to diagnose the current state of the consumer electronics retailers towards an omni-channel strategy.

Figure 18 reveals that Coolblue is leading overall with regard to an omni-channel strategy as they are for 58 % omni-channel, 25 % cross-channel and only for 8 % multi-channel. Secondly, is BCC with 42 % omni-channel, 33 % cross-channel and 17 % multi-channel. Hereafter, Kijkshop is follows as they perform for 33 % an omni-channel approach, for 38 % a cross-channel approach and for 25 % a multi-channel approach. On the fourth place is Dixons, which is for 17 % omni-channel, 54 % cross-channel and 21 % multi-cross-channel. Hereafter is EP, which is for 17 % pursuing an omni-cross-channel approach, 29 % a cross-channel approach and 46 % a multi-channel approach. Finally, is Media Markt, because they are only performing for 17 % an omni-channel strategy, for 21 % a cross-channel strategy and for 54 % a multi-channel strategy. The total percentage per retailer is 92 % and this has to do with the capability loyalty program as this is not performed by one of the retailers.

(42)

42 Now, it is interesting to compare these results with the corporate strategy. As Dixons is stuck-in-the middle with their corporate strategy it is difficult to make statements about the combination of their strategy and the categorization towards an omni-channel strategy and therefore they are abandoned. When looking at the corporate strategy and the overall results, it is not surprising that Coolblue is leading, as their corporate strategy already places the customer in the centre of the attention. In that case, EP should also have a higher overall score, because they also are dominating on service, but this is not the case as EP is located on the fifth place with regard to the overall results.

When investigating the capabilities, in the overall results as well as in the key areas technology, customer and organization, it is clearly observable that Coolblue, Kijkshop and BCC are more advanced towards an omni-channel strategy than EP and Media Markt. The major differences emerge for the capabilities pricing and promotions, positioning of customer data, leadership and structure, because with regard to all these capabilities Coolblue, Kijkshop and BCC are more mature towards an omni-channel strategy (see appendix V). However, the results indicate that the leadership style of EP and Media Markt influences the way pricing and promotions are performed, because the decentralized structure allows the brick-and-mortar stores to set their own prices and create their own promotional activities. Furthermore, when analysing the results it is striking that there is not a consumer electronics retailer, which is pursuing an omni-channel strategy with regard to the capabilities pricing and promotions and purchase behaviour of the customer.

HOW TO MANAGE THE TRANSITION IN THE RETAIL ENVIRONMENT