E Commerce Effects on Brick and Mortar Peer Reviewed Journals

Inquiry Article (ISSN: 2637-4595)

Online and Brick-and-Mortar Strategy in Fashion Manufacture: Co-Existence or Cannibalization? Book iii - Issue 2

• ¹ Full Professor in Innovation Strategy at the Department of Economic science and Direction "Thousand. Fanno", Academy of Padova, Italy
• ² Ph.D Pupil in direction at the Section of Economics and Direction "Thou. Fanno", University of Padova, Italia

Received:February 18, 2019; Published: February 26, 2019

*Corresponding author:F Belussi, Full Professor in Innovation Strategy at the Department of Economics and Direction "Thousand. Fanno", University of Padova, Italy

DOI: x.32474/LTTFD.2019.03.000157

Abstract PDF

Abstruse

Since the 1990s the Internet affected unlike industries and forced firms to change their business organisation models and pushed toward the adoption of new strategies. The same happened in fashion industry, where e-commerce, personal computers, and smartphones created the opportunity for fashion firms to exist closer to their customers, adopting CRM, and multichannel or omnichannel strategies. The master aim of this written report is to analyze the potential conflicting presence of online and brick-and-mortar strategies in the mode industry. We used a representative sample of xix large firms in Europe, operating in the retailing brand way industry. Our information analysis shows how leading firms, facing a disruptive technology (the emergence of e-commerce), have been able to absorb information technology, in a context of co-beingness between online and brick-and-mortar strategies.

Keywords:Innovation; Fashion Industry; Brick-and-Mortar; Commerce Online; Business Model

Introduction

Since the 1990s, many firms working in retailing adopted innovations spurred from Internet, such as e-commerce, to better service their customers. After a while, the entire style industry started using the online aqueduct, either as sectional channel or adopting multichannel or ominchannel strategies. Scholars focused on the adoption of e-commerce in way, studying the market place structure [i-3], the use of the Internet, and the development of multichannel or omichannel selling modes [4-7]. Analyzing the changes occurred in the retailing manufacture, they showed the emergence of new concern models among firms operating in the market [6,8-xi].

The aim of this work is to provide some evidence about the result of a disruptive engineering similar due east-commerce, showing that this is still non cannibalizing the market of fashion. In department 2 we will shortly nowadays the main research questions, in section 3 we will go through a short literature review. In department 4 we will present the methodology adopted. In section 5 we volition nowadays and discuss our data, and, finally, in section 6 we volition conclude this paper.

The Aim of this Study and the Chief Research Questions

The aim of this study is to show the disruptive effect of the entry of new technologies (e-commerce) in the way industry. Are nosotros assisting to the failure of the main incumbents? Are firms operating in the fashion market suffering because of the presence of the east-commerce? Are existing big incumbents in the fashion manufacture able to blot the new technology? All these questions can be summarized merely in one master research question: practice we accept a cannibalization process between online and brick-and-mortar business models? In order to provide an answer, nosotros collected data about the international investments made by a sample of 19 large fashion retailing firms operating in Europe.

Literature Review

Christensen, in his book "The innovators dilemma" [13], used the term confusing technologies to explain why companies, that stay at the top of their manufacture, fail when they confront a technological change. He provided bear witness nigh the fact that information technology is costly for existing firms to prefer a new innovation and/or change the market. In contrast, Tripsas [xiv], using the history of the typesetter industry, provided some bear witness almost the fact that incumbents may survive, existence able to absorb the new technology, due to their technical capabilities in learning from the new technology and in developing complementary assets. Many scholars agree on the fact that the introduction of radical and breakthrough innovations tends to stimulate the modify of the incumbent business models [15-25]. Today, at that place is a general consensus on the idea that the transformation of a firm's business model is crucial for firms' renewal [26].

During the 1990s, in mode retail, we saw the rise of new cyberspace-based firms [27], merely simultaneously a big reorganization of the firms' value bondage occurred. Increasingly, due to the complexity of ICT adoption, users developed an unpredictable pattern of hybrid forms [28-31]. Thus, nowadays, we may find not only the ascension of new internet-based firms (e.m. the German language Zalando or the French Vent-Privée), but too new "reorganized" traditional mode brand retailers [9-12]. Socrescu et al. [vi] and Vorhoef et al. [8] accept underlined how ICT allowed firms to be closer to their customers, increasing brand awareness and customers' loyalty [4-7]. The employ of the multichannels modality, allowed firms to develop new concern models, integrating in their operative activity the online business, selling on-line [iv,32,33] through ample catalogues and through the shops (where on-line orders could be collected). In more contempo years, the "omni-channel" opportunity become more significant, thanks to the use of mobile apps linked to different devices: smartphones, tablets, and other devices [34-36].

An interesting contribution to the explanation why "hybrid" business concern model (on-line and offline) are successful has been provided by Bernstein et al. [24]: firms practise non benefit very much from online sales (in terms of profits' growth), only consumers practice; thus, traditional retailers have to adopt the online new commercial channels for strategic purposes.

Methodology

Starting from information bachelor in the FDI Markets database, provided by the Fiscal Times Grouping, which collect individual firm FDI operations, we selected a sample of the largest retailers firms, operating the in fashion retail industry in Europe, sampling both luxury and depression costs large retailers. The unit of measurement of assay is the FDI specific investment. Then, using Thomson Reuters database, nosotros add the information on yearly sales, and number of shops opened and airtight in the world. Where some data where incomplete, we filled the gap looking at the annual financial report. We included in our sample 19 large retailers. When information technology was possible, we unbundle information for the specific brand of the group. The flow analyzed was 2008-2016.

Data Assay

Table 1: List of fashion retailers by sales (2008 - 2016) millions of dollars.

n.d. : no data are available

*Data bachelor on Thomson Reuters

**Data from FDI Markets Database

***Inditex group

Source: authors' elaboration on Thomson Reuters data

Table 1 shows the list of the largest investing visitor and the revenues expressed in millions of US dollar. The largest firms analyzed are Louis Vuitton (luxury segment), Nike, H&Chiliad, Adidas and Zara. Their sales oscillate from 40 billion to 17 billion. The typical firm in the luxury marketplace is smaller with sales ranking from 4 to ii billion (Prada, Hugo Boss, and Michel Kors). All firms, in this flow, showed an increasing growth tendency, with the exception of Geox. The biggest firms in terms of number of shops are H&K (4351), Louis Vuitton (3948), Levi Strauss &Co (2900), Adidas (2811) and Zara (2002). In our database is as well included a large Japanese retailer, Uniqlo. In the menstruation observed all firms showed a very positive increase in the number of shops opened (Adidas opened 927 new shops, Bershka 534, Pull&Conduct, 417, Massimo Dutti and Stradivarius 569). Even if the introduction of e-commerce affected the market, the quondam brick-and-mortar business organization model is not dying. As it is shown, all firms (with the exception of Primark) adopted the e-commerce and transformed themselves into on-line/offline retail organizations. They both adopted new models of selling, opening on average each year more than 12% of new shops.

Table 2: Number of shops opened and closed per each firm in the earth, the total number of shops at the end of the period, and e-commerce presence.

i: our analysis on firms' web sites. Source: authors' elaboration on Thomson Reuters data.

Thus, fifty-fifty if new players entered the market place (such equally Amazon, Zalando, Yoox, and many others), big incumbents did not neglect. Sales through due east-commerce are disclosed by firms in the financial reports. Zara, Adidas and Hugo Boss, alleged a pct of e-commerce sales on total sales between 5 and 7% in the final years (Tabular array two).

Conclusion

The aim of this paper was to analyse the impact of east-commerce on traditional retailing. In the first part of the paper, we went through a brusque literature review, showing how e-commerce is an innovation which can securely transform the fashion industry. In the same vein, this literature highlights how this topic can exist analysed from different approaches (e.thou. business concern model, innovation, and others). In the second part of this work we showed some data obtained by two dissimilar databases. Data support our idea that there is no cannibalization amid the online and brick-and-mortar channels. This work has some limitations. The number of firms chosen for this analysis in not too large. Then, some other limitation is due to the fact that official databases contain merely few information about online business.

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