Demand pull and technology push perspective in technology-based

innovations for the points of sale: The retailers evaluation

Eleonora Pantano
a,b,n
, Milena Viassone
c
a
Department of Mechanical, Energetics and Management Engineering, University of Calabria, via P. Bucci, cubo 46C, 87036 Arcavacata di Rende, CS, Italy
b
Department of the Built Environment, Unit USSUrban Science and Systems, The Urban Planning Group, Technical University of Eindhoven, Postbus 513,
5600 MB Eindhoven, The Netherlands
c
Department of Management, University of Turin, C.so Unione Sovietica, 218/bis-10134 Torino, Italy
a r t i c l e i n f o
Article history:
Received 7 April 2013
Accepted 24 June 2013
Available online 26 July 2013
Keywords:
Retailing
Innovation management
Technology management
Demand pull
Technology acceptance
a b s t r a c t
Despite the consumers' increasing demand of technology-based innovations for making stores more
appealing and the huge availability of advanced technologies, there is still a lack of research on the
retailers' and employees' points of views towards the introduction of these systems. In fact, an efcient
innovation should take care of both the nal users/consumers' and the retailers/employees' needs and
expectations. Hence, the aim of this study is to advance our knowledge on retailers' pull of new
technologies for improving their job in accordance with the most recent systems, as well as on the
main characteristics of these innovations for dening a new integrative framework of analysis and
development.
& 2013 Elsevier Ltd. All rights reserved.
1. Introduction
The innovation issue is acquiring importance also for marketing
science studies, by providing newpractices and standards for devel-
oping newtools able to (i) increase consumers' experience, (ii) reply
to environmental changes in market trends fast, (iii) develop new
strategies for increasing market share, and (iv) exploit successfully
the extant resources (Hauser et al., 2006; Pantano and Viassone,
2012). In particular, the current advances in technologies are able to
enhance both consumers' shopping activity and retailers' job
(Pantano and Di Pietro, 2012; Zhu et al.,2013). For instance, new
interactivesystems(suchastouchscreendisplays) areabletoprovide
more customized information on available products, as well as
applications for clients' mobile devices that can support consumers
in product searching inside the stores. Similarly, other mobile
applications may provide automatic payment modalities for allow-
ing consumers to save time and reducing the lines at the cash desks.
Hence, the huge availability of advanced technologies that
could be introduced in points of sale and consumers' interests
towards new systems which are able to support and enhance
shopping experience (Chiu et al., 2010; Oh et al., 2012) forces
retail-oriented rms to innovate for maintaining and increasing
the business protability.
For this reason, understanding what consumers and retailers
expect acquires importance for the successful adoption and diffusion
of innovations. Despite the large number of technologies for points of
sale and the potential benets emerging from the introduction of
these advanced systems, still only a limited number of retailers
adopted them with different strategies (Pantano and Viassone,
2012). A justication might rely on the uncertainty, risks, huge
monetary investments and late returns on investment involved in
the innovation process, with consequences for technology failure
(Evans, 2011; Alkemade and Suurs, 2012; Pantano et al., 2013), which
could discourage retailers to afford the technology-based innovations
adoption process. For instance, uncertainty for retailers would be
related to the consumers' acceptance of the technology, and the level
of system usage, as well as the risk of obsolescence (in terms of
obsolescence of components, threats of substitution with newer
technology, and damages by users; Pantano and Di Pietro, 2012;
Pantano et al., 2013; Zhu et al., 2013). Hence, the diffusion and
utilization may be affected by several externalities able to reduce the
exploitation of all benets of the innovation.
Retailers are only adopters of the technology, that has been
developed by other R&D rms; thus their decision concerns only
the introduction/adoption and according to a certain strategy.
Although past studies identied consumers' needs as the driver
of product innovation (Von Hippel and Katz, 2002; Bonner, 2010),
while identifying what consumers expect to nd in the stores
concerning new technologies for supporting their experience
and helping retailers to identify the best innovation, there is still
a lack of research on what retailers expect and need from a new
technology, with emphasis on the extent to which the new
Contents lists available at ScienceDirect
journal homepage: www.elsevier.com/locate/jretconser
Journal of Retailing and Consumer Services
0969-6989/$ - see front matter & 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.jretconser.2013.06.007
n
Corresponding author at: University of Calabria, Department of Mechanical,
Energetics and Management Engineering, via P. Bucci, cubo 46c, 87036 Arcavacata
di Rende, Cosenza, Italy. Tel.: +39 049225; fax: +39 0494110.
E-mail addresses: eleonora.pantano@unical.it, e.pantano@tue.nl (E. Pantano),
milena.viassone@unito.it (M. Viassone).
Journal of Retailing and Consumer Services 21 (2014) 4347
technology could improve the quality of employees' job and to the
extent to whichthey should use it for the business protability.
Past studies considered the research question related to the
inuence of demand in generating innovation in addition to
selecting it (Di Stefano et al., 2012). To achieve this task, efcient
measurements of retailers' needs are required for understanding
the retail innovation process and how technology providers can
capitalize the innovation development.
The aim of this paper is to advance our knowledge on the
demand of technology-based innovations for stores based on the
retailers' perspective, and on how these ones start from the rm's
internal characteristics. To achieve this goal, the study focuses on a
qualitative investigation involving 47 small-size retail-oriented
rms, based on a content analysis. The rst part of the paper is
devoted to the denition of expectations and to the role of these
ones on the technology-based innovation adoption process,
whereas the second one investigates retailers' perspective in terms
of needs and expectation through a qualitative analysis by high-
lighting the main consequences for the innovating process in
retailing in order to dene a new integrative framework of analysis
and development.
2. Theoretical background
2.1. Technology push perspective for innovating in retailing
The last decade has seen a huge deal of effort in the develop-
ment of the best technology for improving the traditional points of
sale such us interactive displays and smart mirrors, new systems
for searching and purchasing products, etc. (Evans, 2011; Pantano
and Di Pietro, 2012; Bodhani, 2012).
According to the technical characteristics, the most recent
technologies can be classied in 3 main categories: (i) touch
screen displays/in-store totems, (ii) systems for mobiles (mobile
applications), and (iii) hybrid systems. The systems included in the
rst category are focused on technologies belonging to the point of
sale, such as the virtual garment tting systems (rst introduced
in online retail shops, and then, adapted also for physical points of
sale), which allow consumers to virtually try clothes through 3D
body scanning systems (Choi and Cho, 2012) or the Self-Service
Technologies (SSTs; e.g. the automatic cash desks), based on
automated and interactive interfaces that consumers can exploit
without the assistance of an employee (Zhu et al., 2013), with
benets for reducing costs, and the quality of service efciency
(Lin and Hsieh, 2011; Lee et al., 2012; Elliott et al., 2012). The
second category includes systems for consumers' own mobile
phones. These technologies provide interactive contents and
services for enriching consumers' in-store shopping experience,
by providing detailed and customized information, such as auto-
matic payment modality or automatic item searching according to
their own wish list, the possibility to virtually compare the chosen
product with others, etc. (Rudolph and Emrich, 2009; Bennet and
Savani, 2011). In fact, many brands are providing free mobile
applications for supporting consumers in nding the best product
while shopping in physical stores. Since the systems in the third
category are based on retailers' own technologies that users can
move around the store, these ones can be considered hybrid. In
fact, they are usually based on RFID (Radio Frequency Identica-
tion) systems able to read the bar code of the item and to
subsequently provide more details, to recognize consumer's prole
and match the prole with available purchases, to recommend
products, etc. (Wong et al., 2012). Other meaningful examples are
intelligent shopping trolleys, which consist of traditional shopping
trolleys enriched with systems able to interact with consumers
through ease-of-use interfaces, provide more information, localize
the consumer's position and propose the best path for reaching the
selected items, etc. (Black et al., 2009). The main advantage of
these technologies is their capability of providing more useful
information for supporting consumers' in-store experience, by
allowing them to save time through enriched and customized
information, useful functions, and entertaining tools.
The most recent technologies are mainly characterized by the
context-awareness, the system ability to adapt its behavior accord-
ing to users' behavior (e.g. the ability to recognize client's position
in the store and suggest him/her the path or the proximity of such
products) and to overcome the traditional desktop technologies
characterized by the response based only on the environmental
stimuli (Kurkovski, 2005; Choi et al., 2011).
2.2. Demand pull perspective for innovating in retailing
Since innovation providers and consumers may view innova-
tion in different ways, innovation might fail in providing the
right solution for consumer needs (Kunz et al., 2011). Innovations
in products and services must accurately respond to end-users
needs for succeeding in the marketplace (Von Hippel and Katz,
2002). Despite the necessity to respond to market desires, this
activity is usually expensive, time consuming, and complex. Hence,
deep understanding of clients' expectations becomes a critical
factor for innovating successfully (Bonner et al., 2010).
Expectations represent the wished level of performance
(Ryding, 2011). In fact, consumers create their beliefs about a
product, brand, service, etc. by comparing it to their initial
expectations (Ryding, 2011). For instance, the expectation con-
rmation model has been developed for deeply investigating
consumers' satisfaction and repeat decision towards a new tech-
nology (Bhattacherjee, 2001; Min and Shenghua, 2007). It posits
that user's intention to continue using a certain system is inu-
enced by his/her level of satisfaction with the system and
perceived usefulness, and the extent of his/her conrmation of
expectations (Bhattacherjee, 2001). Hence it is strictly linked to
the comparison between the post-purchase evaluation and the
pre-purchase expectations. This is especially evident in the case of
products/services where expectations may change with time
(Chou et al., 2010), such as the expectations regarding information
technologies that can change in relation with the increasing users'
abilities and interests.
According to recent works, retail environment is changing due
to increasing competition and consumers' demand with greater
expectations (Ryding, 2011). Past studies showed how the current
retailers' strategies towards the usage of advanced technologies
in the points of sale do not satisfy totally consumers' expectations
(Pantano and Viassone, 2012). Therefore, understanding what
consumers expect by designing the service that ts the expecta-
tions and delivering this service allows retailers to fulll the gap
between clients' expectations and effective perception of the
service with benets for satisfaction and loyalty (Ryding, 2011).
Concerning advanced technologies in retailing, consumers mainly
expect that these ones will improve their shopping activities, by
providing new tools, services and functions for saving time while
purchasing (Pantano and Viassone, 2012).
Past studies on consumers' usage of innovative advanced
technologies in points of sale underlined the important role played
especially by (i) the trust in the technical system, which acquires
a vital value when the technology substitutes face-to-face inter-
action with the retailer such as in the electronic channel (Pantano
and Di Pietro, 2012; Chattaraman et al., 2012; Park et al., 2012;
Raq et al., in press.), (ii) the enjoyment while using this innova-
tion (Venkatesh, 2000; Wang, 2012), and (iii) the inuence of
others (i.e. relatives, partners, and friends; Chong et al., 2009;
Pantano and Di Pietro, 2012). In fact, these variables are able to
E. Pantano, M. Viassone / Journal of Retailing and Consumer Services 21 (2014) 4347 44
inuence consumers' intention to use and the effective use of
technical innovation, which requires providing fun, trust and use
by a certain numbers of friends/relatives/etc. For this reason,
current research is focusing on the best interfaces required for
making the humancomputer interaction more intuitive and
enjoyable, by enhancing the feeling of presence through 3D
graphics. Indeed, the current advances in 3D graphics and virtual
reality techniques offer novel and realistic (virtual) interfaces that
can be easily integrated in real environments for enhancing the
sensorial inputs and enhancing consumers shopping experience,
with benets for the satisfaction process (Bullinger et al., 2010).
Since the innovation to be introduced in stores should respond to
both to consumers' preferences and retailers' needs and expectations,
from a retailers' point of view this process is even more complex.
In fact, the technologies to be introduced should reply to 2 different
clients' typologies: nal consumers, with emphasis on their accep-
tance, and retailers. Hence, the judging capacity of the decision-maker
(e.g. retailer) plays a key role in the success of the adoption strategy.
Some studies showed how some past technologies have been com-
mercialized without a complete understanding of the requirements
that are compulsory for ensuring success (Bandarian, 2007). Moreover,
other past works on technologies adoption in the points of sale
focused only on consumers' perspective, with some exceptions con-
cerning the analysis of the rm's position in the S-curve (which
represents the life cycle of an innovation) for promoting innovation
process (Zawislak et al., 2009); thus deeply understanding retailers'
expectations also would provide new insights for developing/select-
ing/adopting the best technologies.
3. Methodology of research
The current study aims at investigating retailers' expectations
towards advanced-technology-based innovations to be introduced
in points of sale. To achieve this task, the research involved 47
subjects from different small-size rms, recruited between
December 2012 and February 2013 in different Northern Italian
regions. This number is a representative sample for our explora-
tory research, which aims at deeply achieving the point of view of
retailers. In particular, the sample consists only of representatives
of Small Medium Enterprises, due to the large presence of SMEs in
Italy by representing 99% of the total rms. The qualitative
research based on in-depth interviews which support the emer-
ging of new variables necessary for advancing our knowledge of
retailers.
Respondents were decision-makers towards choice of adopting
a technology in their points of sale. Interviews have been struc-
tured in two different parts: the rst useful to identify the main
characteristics of the rms (e.g. number of stores, age, etc.) while
the second one is mainly devoted to the investigation of adoption
and the subsequent satisfaction towards technology-based inno-
vations for points of sale by retailers. Table 1 shows the sample
characteristics.
4. Key ndings
Each interview has been coded and loaded through the MaxQda
software for content analysis.
The rst investigation is based on frequency analysis for
understanding the value, the importance and the frequency of
the emerging retailers' expectation towards new technologies to
be adopted in the points of sale (Table 2).
We also carried out a subsequent analysis based on the
evaluation of association structures between various variables that
emerged in each interview (the variables that occurred together)
in order to deeply understand retailers' expectations and the
importance of each expectation. In particular, in this analysis we
focused on the sample that did not introduce innovations yet
(Table 3).
Despite the still limited diffusion of technology-based innova-
tions in points of sale, this analysis shows huge retailer interest in
innovation.
Table 1
Sample demographics.
Demographics Percentage (%)
Corporate age (Years)
Less than 5 25
Between 5 and 10 51
More than 10 23
Omiss. 1
Number of points of sale
12 77
5 13
Corporate interest towards new technologies
Scarce 13
Sufcient 17
Moderate 11
Good 25
Excellent 34
Technology adoption process
Already adopted 23
Not adopted 76
Omiss. 1
Retailer's personal experience in retailing (years)
Less than 1 3
Between 1 and 3 4
Between 3 and 5 2
Between 5 and 10 9
More than 10 26
Table 2
Frequency value of each need/expectation emerging from the content analysis.
Need/expectation Denition
Frequency
value
No lines Retailers expect that the new possible technology will reduce the line in the store (especially at the cash desk) 15
More clients Retailers expect that the new possible technology will attract more clients 22
Reducing personnel
costs
Retailers expect that the new possible technology will reduce the costs of employees (for instance by reducing the number) 22
Improving job
performance
Retailers expect that the new possible technology will improve the employees' job performance in the stores 25
Benets: enhancing
supply chain
Retailers expect that the new possible technology will enhance the supply chain, the interaction with stakeholders and the
management of the stocks
26
Reducing management
costs
Retailers expect that the new possible technology will reduce the management costs, by providing advanced software for the
integration of the different functions involved in retailing
26
E. Pantano, M. Viassone / Journal of Retailing and Consumer Services 21 (2014) 4347 45
5. Discussions
The results of this paper conrm the limited diffusion of new
technologies applied to points of sales, as anticipated by Pantano
and Viassone (2012), in contrast with the large consumer interest
towards the introduction of technology-based innovations in the
stores (Oh et al., 2012).
Despite the high interest shown by retailers in technology-
based innovations in points of sale (59% of the sample declare
a good or excellent interest towards new technologies; 70% of
them showgood or excellent interest in new technologies and 49%
have good or excellent knowledge of new technologies), our
ndings emphasize how the experience of retailers is still scarce;
in fact, only 23% of the sample already adopted advanced tech-
nologies. A justication might lie in the retailer dimensions (most
of the retailers, around 53%, who do not adopt new technologies
have one or two points of sales). Therefore, there is a high number
of potential retailers who could adopt technology-based innova-
tions in the future. Presumably, due to the costs, time consumption
and complexity involved in the application of these technologies
(Alkemade and Suurs, 2012; Pantano et al., 2013; Zhu et al., 2013),
they are not currently able to exploit the advantages of these
innovations on scale-economy basis (i.e., with reference to com-
munication/advertising/information to their customers). Indeed,
our results suggest no evidence for scale-economy, even if the
impacts of technology-based innovations for various aspects of the
business are positive. Interviewed retailers have no standards for
designing space and time within which the best-suited innova-
tions can be located, that are not limited to the physical common-
alities of the possible technologies. They afrmed the actual
impossibility to adopt this kind of technology due to the economic
difculties in investing in them or due to their opinion of the
sector that still does not require innovating. They also did not
understand the demand pull of innovating in retail domain totally.
To date, main technologies adopted by interviewed retailers are
automatic cash desks, automatic systems able to purchase and
elaborate orders, to read and deduct them when they are deliv-
ered, and vertical computerized storehouses. Furthermore, the
ones who adopted these technologies declared their choice on
the basis of the promise of management cost reducing, in terms of
reducing personnel and improving the communications within the
supply chain. Only 22 retailers expect that the new possible
technologies are able to attract more clients. Despite past studies
highlighting the advantages of these technologies for enhancing
the quality of service efciency (Lin and Hsieh, 2011; Lee et al.,
2012; Elliott et al., 2012), retailers have not introduced innovations
with the purpose of reducing the waiting time for customers.
Accordingly, among the main expectations of retailers from the
introduction of technology-based innovations, the proposal of
entertainment or recreational tools for customers for improving
the shopping experience seems to be lacking. Hence, in contrast to
consumer-centric perspective that posits clients' needs as the key
factor for successfully innovating (Bonner et al., 2010; Kunz et al.,
2011), our sample sheds light on the exploitation of a retailer-
centric approach, which still lacks expectations. As a consequence,
although Italian small size retailers' knowledge of advanced
technologies is acceptable, their preparedness seems to be still
insufcient from a demand pull perspective.
Our analysis indicates to what extent the decision to invest
in innovation underlines the retailers' technological limits. For
technology-based innovations, retailers showa critical approach in
the adoption modalities. Hence, there is a very poor diffusion that
does not meet consumers' expectations.
6. Conclusions and implications
Integrating ideas from innovation management, technology
management, and marketing research, this explorative research
shows how the diffusion of technology-based innovations is
inuenced by retailers' expectations and their propensity to invest,
providing useful results on retailers' perspective that could inte-
grate the current studies mainly focusing on consumers' point
of view.
Although from our analysis the role of a retailer aware of the
importance of technology-based innovations for making stores
more appealing and for attracting new customers emerges, the
retailers' scarce preparedness in putting this in practice charac-
terizes the current innovation strategies in the retail domain.
Furthermore, the scarce correspondence between the motivations
driving retailers to adopt these technologies and customers'
expectations emphasized by the results of this paper conrms
the difculty in deeply understanding customers' expectation and
in developing services able to t these expectations. Thus, the
current usage of advanced technologies in points of sale does not
totally satisfy consumers' expectations, as anticipated by Pantano
and Viassone (2012).
Many innovations fail to diffuse through the market without
retailers' strong preparedness and the support of critical players in
their adoption, such as end-users, who would show positive
attitude towards innovations (Chiu et al., 2010; Oh et al., 2012;
Pantano and Di Pietro, 2012). In fact, customers could be reluctant
to use certain technologies if information about them is not readily
and widely accessible. Thus, consumers are reluctant to adopt
those innovations that lack support from retailers and other
consumers. On the other hand, retailers do not invest in support-
ing the innovation until it has sufciently diffused and been
adopted. Hence, technology-based innovations need the support
of an adoption network for enhancing their diffusion and meeting
consumers' needs. For this reason, government should support
their implementation through incentives, especially in a period
that asks for a recovery of consumers.
Starting from these results, it is possible to draw paths of action
both for the potential retailers interested in adopting new tech-
nologies in their points of sale and for those who have already
adopted them. First of all, retailers who have to decide whether to
apply these technologies should spend time on advancing their
knowledge on consumers' preferences and their attitude towards
a certain typology of innovation, as well as possible advantages
emerging from the subsequent technology adoption, whereas
retailers who already adopted these technologies should make
their clients be aware of the emerging benets, according to their
expectations. For instance, the communications might focus on
time saving, by pushing on the most inuencing motivational
factors for consumers; at the same time the communication might
stress all functionalities and characteristics of the innovations in
Table 3
Characteristics of rms that did not introduce innovations yet.
Percentage (%)
a
12 POS (point of sale) 53
Retailers' good interest in new technologies 38
Retailers' personal experience in retailing between
5 and 10 years
32
Retailers' excellent interest in new technologies 32
Retailers' good knowledge of new technologies 28
Corporates' excellent interest in new technologies 23
Retailers' excellent knowledge of new technologies 21
a
As more than one characteristic could be mentioned by respondents, total
sum might be more than 100%.
E. Pantano, M. Viassone / Journal of Retailing and Consumer Services 21 (2014) 4347 46
order to attract housewives and children/families who might
spend more time inside the store.
A correct application and communication of the technology-
based innovations can further elicit an increase in sales (due to the
higher information provided that can affect purchase decisions),
customer's satisfaction and loyalty (these technologies can
improve personalization, thus allowing meeting consumers' needs
effectively) and add value to physical products and in-store
experience for clients.
The future diffusion of technology among retailers will drama-
tically change the concept of the point of sale. This does not mean
that the traditional point of sale will disappear. Almost certainly,
traditional terminals of points of sale will remain dominant with
many retailers, but new technologies and especially mobile points
of sale will grow to complement the traditional terminals in
specic segments. They will be able to address peculiar needs to
generate new customer experience and further value for retailers,
by offering a more integrated store solution.
Although this work offers important issues and enriches
existent literature, there are some limitations which should be
taken into account. In fact, our research is an exploratory study
mostly based on a limited size sample and our model nds
application only in Northern Italy. It is possible to further develop
this research by analyzing, on a wider sample, the real motivations
that prevent retailers from adopting new technologies and by
investigating how they have communicated with customers in
successful case studies, in order to predict the innovations diffu-
sion for retailer-based rms and the new store concept emerging
by the adoption of advanced technologies.
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