Abstract
This article applies a configurational approach to study the fit between retail format, business strategy, and multi-channel setup. Its empirical material consists of five case studies, and a data set of 74 sporting goods retailers in Sweden. Our results show that a retailer can create strategic advantages when its multi-channel setup fits with its business strategy, and that retail format is important for explaining differences in growth and profit, the former being assigned to e-commerce and the latter to physical stores. Moreover, the study reveals that to some extent online channels also have positive performance implications for physical store retailers.
1. Introduction
In the last fifteen years, marketing channel options such as social media, search engines, and price comparison sites have supplemented traditional marketing channels such as sponsoring, print advertising, events and TV commercials (Dholakia et al., 2005; Rangaswamy and Van Bruggen, 2005). This change has led to new types of combinations, and the traditional way of doing business and marketing within the retail sector has met new forms of competition. Indeed, when product features are easily copied, and production costs and margins are constantly under pressure, it is said that well managed and sound multi-channels are a source of competitive edge – to stand out from the rest (Payne and Frow, 2004; Rodríguez-Díaz and Espino-Rodríguez, 2006; Rosenbloom, 2007; Sharma and Mehrotra, 2007). Keeping pace with the advent of the Internet and e-commerce, streams of research have devoted efforts to investigating, for example, the optimal blend of online and offline channels (Friedman and Furey, 1999; Kumar and Venkatesan, 2005; Rosenbloom, 2007), and how the addition of online channels might offer extra edge to, or hinder, firm performance (Cheng et al., 2007; Webb and Lambe, 2007). Furthermore, the performance implications of retailing online versus offline, as well as differences between generalists and specialist retailers, have been examined thoroughly (Min and Wolfinbarger, 2005). Nevertheless, we believe that the present literature on the link between retailers’ strategy, retail format and its marketing channels is somewhat dated (e.g. Kabadayi et al., 2007; Vorhies and Morgan, 2003), and as a consequence the dramatic change in the retail sector towards e-commerce and the use of online marketing channels has not been particularly well captured. Grewal et al. (2004) find no evidence that we can easily apply research on offline retailers to guide online retailing, and we argue that there are still very few studies made after the breakthrough of e-commerce that explore the performance implications of matching (or mis-matching) the multi-channel setup to retailers’ strategy and retail format.