Blurring the Lines between Physical and Digital Spaces: Business Model Innovation in Retailing

What is it about?

Decision making requires managers to constantly estimate the probability of uncertain outcomes and update those estimates in light of new information. This article provides guidance to managers on how they can improve that process by more explicitly adopting a Bayesian approach. Clear understanding and application of the Bayesian approach leads to more accurate probability estimates, resulting in better informed decisions. More importantly, adopting a Bayesian approach, even informally, promises to improve the quality of managerial thinking, analysis, and decisions in a variety of additional ways.

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Why is it important?

------------------------------------------------------- Contribution to Academic Scholarship ------------------------------------------------------- Decision making requires managers to constantly estimate the probability of uncertain outcomes and update those estimates in light of new information. This article provides guidance to managers on how they can improve that process by more explicitly adopting a Bayesian approach. Clear understanding and application of the Bayesian approach leads to more accurate probability estimates, resulting in better informed decisions. More importantly, adopting a Bayesian approach, even informally, promises to improve the quality of managerial thinking, analysis, and decisions in a variety of additional ways. ------------------------------------------------------- Contribution to Management Practice ------------------------------------------------------- This study suggests that retailers need to embrace an experimental approach and continuously review possible physical store formats in their efforts to transcend the distinctions between physical and digital retail spaces. The proposed discovery-driven process to an omni-channel business model will depend on the starting point, i.e., the availability of the physical location and the customer base. Collaboration and partnerships are necessary to co-create and deliver value to the customer in such a process. ---------------------------- Author Perspective ---------------------------- Retailing has gone through such a tectonic shift due to the digital technologies that established practices and capabilities needed for adequate management are no longer applicable. The very question of how does the future of a retailing business looks like in the digital age often crosses my mind. Therefore, my research into the blurring lines of physical and digital retail spaces is driven by the noticeable impact that digital technologies have on retailers' business models.