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Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems
Journal of Retailing and Consumer Services ∎ (∎∎∎∎) ∎∎∎–∎∎∎
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Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems Haluk Demirkan a,n, Jim Spohrer b a Center for Information Based Management, Milgard School of Business, University of Washington-Tacoma, 1900 Commerce Street, Box 358420, Tacoma, WA 98402-3100, USA b IBM University Programs World-Wide, IBM Almaden Research Center, San Jose, CA 95120, USA
art ic l e i nf o
Keywords: Self-service systems Service innovation Virtual shopping
a b s t r a c t Growing movements to urban places, increasing unemployment, decreasing buying power, rising real estate cost and demanding consumers for convenience and price are creating challenges for retailers. This paper reviews a sample list of retail channels, and proposes a systematic framework for conceptualizing the data-driven, and mobile- and cloud-enabled intelligent self-service systems to improve virtual shopping. With adoption of intelligent self-service systems, – more service oriented, more instrumented (from sensors to smart phones for monitoring consumers' behaviors), interconnected (patterns of interactions), and intelligent (algorithms help recognize patterns) – retail organizations can provide more cost effective quality retail service experiences to consumers. & 2014 Elsevier Ltd. All rights reserved.
1. Introduction According to research, almost all players in the U.S. retail ecosystem today (e.g. mall developers, retailers, vending operators and consumer product manufacturers) are facing key demographic, economic, and technological changes (Bethlahmy et al., 2012). For example, consumers are moving to urban areas significantly (Dobbs et al., 2011); high unemployment continues to depress consumer spending; e-Commerce retail growth of 16% continues to significantly outpace total consumer spending, which grew by 5% in Q2 (Fulgoni et al., 2013); mobile phones have become the new retail showrooms; and the Millennial generation expects an engaging, personalized digital shopping experience. These developments are creating lots of new and advanced challenges for the retail organizations about vacancy rates, sales declines, enhancing customer experiences, reduce labor and construction costs, deepen brand differentiation, optimize small urban formats, and justify investment in innovation. Emerging technology solutions are creating new opportunities to address these challenges. During the past decade, the growth in service development and delivery options based on technology has been remarkable. Today, more and more organizations are choosing to provide self-service system options for their customers and employees for better, more efficient and customized services. Their main goals are
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Corresponding author. Fax: þ 1 253 692 4523. E-mail addresses: [email protected] (H. Demirkan), [email protected] (J. Spohrer).
to reduce costs, to increase customer satisfaction and loyalty, and to reach new customer segments (Bitner et al., 2002). Potential benefits of successful development and implementation of such systems can be tremendous. For example, IBM shifted 99 million service telephone calls to a web based system, which resulted in cost savings of $2 billion (Bryson et al., 2004). Although the potential benefits of successful system incorporation are enticing, the benefits cannot be realized unless customers use these new systems (Meuter et al., 2006). For example, McKinsey & Company reports that one firm projected a $40 million savings from moving its billing and service calls to the web. However, it suffered a $16 million loss, as a result of lower customer use and technology failure, service partners' penetration issues, and the absence of crossselling opportunities. To be of maximal value in today's global service based economy, we need superior, robust, self-service systems that can assimilate, organize, design and deliver high quality services to consumers and to end users. In context of retail services, self-service systems for online shopping are among the fastest growing applications in the 21st century. There is rapid growth in self-service in retail services that allows consumers to take on the traditional role of a service worker in the provision of a service (Castro et al., 2010). Self-service seems to be an inevitable trend, as the operation of complex systems shifts from dedicated human operators to customers pushing buttons— examples include making personal phone calls, riding an elevator, and now even driving a car (Benenson et al., 2008). Self-checkout is one of the most widespread applications of self-service technology. With self-checkout systems, customers can scan, bag, and pay for their own items. Given that there are over 60 billion transactions
http://dx.doi.org/10.1016/j.jretconser.2014.02.012 0969-6989 & 2014 Elsevier Ltd. All rights reserved.
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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H. Demirkan, J. Spohrer / Journal of Retailing and Consumer Services ∎ (∎∎∎∎) ∎∎∎–∎∎∎
One of yesterday’s problems
Today’s possible solution Dynamic price tag management Shelf coupons Advertising Consumer interaction 4P analytics Product Place Promotion Price
Fig. 1. From yesterday's problem to today's solution.
a year in retail stores alone, 68 percent of which are in grocery, gas and convenience stores, the potential savings are significant as a large number of these transactions could easily be done with selfservice applications (Atkinson, 2005). Another possible application of self-service solutions is to provide customers with a digital mall and virtual shopping experience. Bethlahmy et al. (2012) estimates that this is almost $7billion market for retail service providers. Fig. 1 depicts a simple application of digital signage that is just one of the many components of selfservice system that proposes to replace cumbersome shelf tags with dynamic retail screens spanning the edge of the shelf. According to Avalos (2011) from Intel Corp, digital signage has demonstrated a continuing ability to reach large audiences in a targeted way at a point where it really matters: at the point of sale or, at a very minimum, when consumers can easily alter their travel plans to go to a point of sale (e.g., a pet owner watching digital signage at a vet's office). Other media – newspapers, magazines, TV – do not have the strength of place or the flexibility to deliver such targeted messages to specific audiences. Add to this, a growing sophistication in how brands want to manage the consumer experience. A photo taken in a retail store, there are 195 price tags and 48 “specials” tags hanging off the price tags. Micro Digital Signage would replace the paper price tags with a unique digital display that is the height of the shelf edge—as well as the length of the shelf edge. In a simple calculation, there are 20,055 stores in top 20 US retailers with store inventory 20,000–55,000 skus with average 40 foot aisles, 11 aisles/store and 5 shelves/shelf section. Hybrid solutions are also possible with augmented reality systems that put information in places (Spohrer, 1999). In literature, there are a number of studies that assess the application of self-service technologies to increase productivity and efficiency (Gelderman et al., 2011; Walker et al., 2002; Zeithaml and Gilly, 1987), and to provide better customers access and convenient channels (Meuter et al., 2003), to better meeting customer demand and increasing satisfaction (Bitner et al., 2002; Lee and Yang, 2013). Also, a number of studies review customer adoption of self-service technologies (Dabholkar and Bagozzi, 2002; Parasuraman, 2000; Tsikriktsis, 2004). When utilization of self-service systems is rapidly increasing, any related issues and problems are also growing. Some of these problems are: (1) erroneous or missing data can be a show-stopper for a self-service consumer, (2) easy-of-use is mostly under the control of vendor, (3) not having a personal touch, (4) data privacy. One of the primary challenge is that most of these systems have been developed “as self-service technologies” with “goods” thinking logic, not “as systems” with service dominant logic (Lusch and Vargo, 2006). We need to rethink the best ways to design, build and utilize self-service systems, not just the self-service technologies.
The convergence of Information and Communication Technology (ICT) – emergent smart systems, Web applications, cloud computing, mobile solutions, RFID, big data, social networks, highperformance computing, global high-speed communications, and advanced sensing and data analysis – is creating opportunities to organize these technologies into service relationships by configuring retail self-service systems that include people, processes, technology, organizations, information, language, laws, regulations, metrics, measures, models, etc. to co-create new value between providers and receivers (Demirkan, 2013; Spohrer et al., 2007). Cloud enabled sustainable intelligent self-service systems, coupled with the sensors and cameras – big data – and the emergent mobile solutions, demonstrate unprecedented potential for delivering highly automated intelligent sustainable retail services. In this article, we propose an Intelligent Self-Service Systems Framework (ISSS) that provides opportunities for retail organizations to deploy platform, technology and location independent, reduced risk and context-rich cloud solutions, and to increase virtual shopping experience. Our work contributes the “Dynamic Capabilities Reference Model”. The framework is founded on theoretical research on organizations' processes and capabilities for managing and thriving in environments characterized by turbulence (Teece et al., 1997). It is also founded on practical experiences with services systems, ISO 9126, and other efforts in resilient systems. The framework aims to cover aspects necessary for both management and technical solutions arising in long-term evolution of successful selfservice systems for retail. In the next section, the foundations of ICT enabled retail services are described along with a list of challenges and issues. Section 3 presents the Intelligent Self-Service Systems Framework that could help pave the way to a scalable prototype/test-bed of a dynamic capability driven self-service system for retail. Finally we provide suggestions for future research and practice.
2. Challenges for self-service solutions in retail A critical enabler of self-service systems is the convergence of Information and Communication Technology (ICT). Growing knowledge of ICT design, execution, storage, transmission and reuse knowledge is creating opportunities to configure information technologies into service relationships that create new value (Chesbrough and Spohrer, 2006; Spohrer and Maglio, 2008). More specifically, ICT provides the means to improve the efficiency, effectiveness, and innovativeness of organizations through: (1) make it possible for commoditization of none-core competencies (e.g. outsourcing, out-tasking); (2) improving the collaboration (e.g. inter- and intra-organizational workflows and business
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
H. Demirkan, J. Spohrer / Journal of Retailing and Consumer Services ∎ (∎∎∎∎) ∎∎∎–∎∎∎ Table 1 Sample list of shopping channels. In-store shopping Human interaction Face to face customer service Feel and check out the product Easier and faster return Option of trying on clothing or accessories and seeing how they look on your body or face shape Nice to feel the materials of non-clothing items such as furniture or other household items
Smart vending machines Cashless payment Networked location data Video and touchscreen communication Mobile and facial recognition Remote experts Point-of-purchase marketing opportunity Targeted advertising impressions
Micro-markets Unattended, networked convenience stores with open shelves for snacks, coolers for drinks and fresh foods, and freezers Consumers select, scan, and pay for their own purchases at video-enabled kiosks with cash, payment cards, or mobile devices. Managed by security cameras and placement in venues with a known or controlled population
e-Commerce Overcome Geographical Limitations Eliminate Travel Time and Cost Gain New Customers With Search Engine Visibility Lower Costs from real estate, personnel, advertising & marketing Provide Comparison Shopping Create Targeted Communication Remain Open All the Time
Online mobile shopping (M-commerce) Convenience Performing price checks Redeeming digital coupons Online reviews Location specific marketing Secure processing Mobile wallet, Direct link with mobile banking
Social shopping Word of mouth is still powerful and online Exchange shopping tips with others Quick product and service discovery Recommendations Shopping communities Recommendation engines
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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Table 1 (continued ) Virtual stores/digital malls Touchscreen or gesture technology Interactive information, games, entertainment, video Mobile and social promotions 3D or augmented reality for immersive experiences Remote experts to handle questions and service Following the customers' behaviors with sensors & cameras Smart digital signage for advertising, marketing & shopping Anonymous viewer to determine genders and age ranges
Table 2 Sample challenges, issues and opportunities for self-service systems.
High involvement of people in delivery. Many services in retail include high involvement of people for delivery and usage. Human are the primary resources and
stakeholders. While people can be unpredictable in their behavior, the plan, design, delivery and support of the any self-services requires variability, heterogeneity or nonstandardization (Danaher, 1998) Self-services are more or less intangible. Services that are provided by self-service systems are mostly something one cannot touch or feel, although they may be associated with something physical, for example a digital signage or a kiosk or a server. While installing a network cable (includes process of delivering a service in addition to the cable) is less intangible, a help desk operation, training, systems design is more intangible (Lovelock and Gummesson, 2004; Peppard, 2003) Inability to inventory. Unlike products, retail services also cannot be stored in inventory for later use. Therefore, management of demand and capacity, and pricing decisions are very crucial in the provision of services (Edvardsson et al., 2005) Inseparability. Many services are produced and consumed simultaneously. For example, delivery of customer service through technology is provided and utilized immediately. A bad service cannot be saved for a later quality check. So it requires shorter response times. Another important point is that most of the services are cocreated with customers (Zeithaml and Bitner, 2002) High customer contact. Customer contact is much higher due to the service co-creation process. This will also result of role interactions rather than things. A service provider may become a customer in the delivery process (Krajewski and Ritzman, 2002) Complexity. Simultaneity of production and consumption of services occur in complex service environments due to interaction of people, processes, technology and shared information Commoditization of hardware (e.g., on-demand, utility computing), software (the software-as-service model), and even business processes as services has become a major phenomenon in today's economy. Unfortunately, there is limited research on modeling commoditization decision processes, assessing the risks (e.g. disaster, security) and examining the service quality associated with outsourcing options There are a variety of partner engagement models that may need to be simultaneously supported by the infrastructure. Measurable returns for all stakeholders must be achieved even while adding new services or while there are lulls in services innovation. Web-enabled, on-demand software services may be either tightly or loosely coupled with the central infrastructure; for loosely coupled services, external links and returns must be managed carefully to adhere to service level agreements There are constant challenges to keep service levels consistent with partner agreements which are periodically renegotiated. Adding new partners, changing the retail service orientation, keeping manufacturer in the loop when there are changes, keeping pace with different partner's products and services and managing the consortia agreement in alignment with the self-service system's performance is challenging Collaboration. Almost all services are delivered to customers with collaboration of distributed service providers. In a simple scenario, store managers, store associates, retail corporate, suppliers, system integrators, advertising & marketing agencies, onsite support, content management, transaction processes etc. need to seamlessly collaborate in order to provide good experience to shoppers. These interactions require common languages. For example, within a single self-service system, data and software services can be highly distributed and deployed among multiple computing platforms and service providers. Most organizations must also compete on a global scale, participating in distributed collaborative commerce by conducting electronic business through contact with distributed service providers. A multiorganizational manufacturing supply chain provides an example of this type of collaboration, creating a virtual organization where business is conducted through distributed systems integration with complex, high-volume, transactional and data warehousing activities that must be concerned about requirements such as security, auditability, availability, and service level agreements (Foster et al., 2001)
processes); (3) decreasing the risk of information security breaches; (4) facilitation of new types of services (e.g. Google, online banking); (5) separation of production and consumption of a service, thus storability, transportability, and access to knowledge-based services (e.g. tax software, online classes); (6) coordination of service systems (e.g. online broker systems, information markets, open innovation platforms); (7) reduction of the costs of service production (e.g. semi- and fully automated call centers); (8) improvement of customer-perceived service quality (e.g., ability to standardize elements of service as well as customize to the individual when appropriate); and (9) integration of customers into service creation and delivery (e.g., online educational services, health information systems, business-to-business solutions) (Allen et al., 2010; Davenport, 2005; Garcia-Murillo and MacInnes, 2003; Garrison, 2000; Maglio et al., 2006; Soper et al., 2007). Technology is a big piece of today's service delivery mechanisms, whereby customers produce services for themselves without assistance from firm employees (Meuter et al., 2006). Technology-based
self-service includes touch screens in department stores, information kiosks at hotels, self-scanning in grocery stores and libraries, telephone and online banking and shopping on the internet (Chua and Dyson, 2004). Also some automakers, retailers, and universities are starting to offer their ATMs. Large discount stores such as Staples, Best Buy and Kmart are installing in-store kiosks that offer access to the internet. Today, retailers need to provide multi channels in order to reach out to customers and to be competitive (Table 1) (Bethlahmy et al., 2012; Avalos, 2011; Schaefer and VanTine, 2010). Most banks are delivering their service offerings over the telephone, through ATMs, and online. Universities offer education remotely through broadcast, with CDs and online with e-learning mechanisms. While some of the self-service systems have been implemented very successfully (e.g. Amazon.com with its books sales, and Southwest Airlines with their online ticket sales), there are unique and very important challenges that arise from today's service delivery mechanisms. The service systems are uniquely complex as exemplified in Table 2.
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
H. Demirkan, J. Spohrer / Journal of Retailing and Consumer Services ∎ (∎∎∎∎) ∎∎∎–∎∎∎
Many retail organizations attempt to overcome these challenges and issues through improved efficiency, quality and speed of their operations, through mergers and networks that adapt their resource base to changing needs, and through rapid services and product innovations (Lewis, 2004). In other words, they attempt to manipulate what are perceived as the controllable variables within their service system. However, they often discover that these manipulations lack the necessary scope—mainly because their service system is much more complex than they anticipated. Changes to the scale of service delivery may impact service quality in unanticipated ways, the introduction of a new service may create demand for different or even more services, and service innovations may unintentionally shift the market from a product to a service quality focus (Demirkan and Goul, 2006). Unanticipated consequences result in unnecessary costs, lack of responsiveness to customers, and missed opportunities for innovation.
3. Intelligent self-service systems (ISSS)
1
Integration Quality of Service: Security, management, monitoring Data and information architecture
2
Intra-Service System Executions
Service provider
Service consumer
Can the adoption of smart systems—more service oriented cloud solutions, more instrumented (from sensors to smart phones for monitoring health), interconnected (local and global epidemiological patterns can be pooled), and intelligent (algorithms help recognize patterns and suggest appropriate individual and collective responses from lots of data) systems enable retailers to provide better shopping experience to customers, and to reduce the cost of their operations? A fundamental premise of Intelligent Self-Service Systems (ISSS) is that organizations can co-create their service offerings with consumers, and break siloed business processes into modular independent services that can be reused on-the-fly in looselycoupled dynamic business service choreographies, and they can source those choreographies and execute them by using virtual resources. Business-to-business collaboration is a type of virtual environment with requirements for security, auditability, availability and service level agreements as well as the need for seamless integration with existing resources and applications. ISSS includes conceptual models of an intra- and inter-organizational business process, service and resource execution architectures with cloud services, inter-organizational supply chain, mobile smart services, big data enabled business intelligence and knowledge management services and Web 2.0 & 3.0 solutions (Fig. 2). The cloud services execution architecture is a three-layered intraorganizational platform that manages services relevant to each
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layer's role. It is assumed that similar platforms exist at all organizations engaged in business value chain. There are a number of support processes, such as security access control and ensures that certain consumers have the authority and privilege to use particular resources and/or specified levels of services; control and management ensures the high availability, reliability, load balancing and quality of computer services. Inter-organizational service system executions are enabled with service-oriented architecture and infrastructure. This interorganizational supply chain provides an example of collaboration, where business is conducted through integrated distributed systems involving complex, high-volume, transactional and decision activities, by providing the visibility and streamlining the information flow. RFID can be utilized to track product and service inside the ISSS. Big data enabled business intelligence and knowledge management services enable organizations to collect, analyze and disseminate large amounts of structured and unstructured data for actionable decisions. Web 2.0 and 3.0 solutions are also another component of this framework that enable social shopping experience. Smart sensors and cameras (sensor management and video analytics) collect consumers' data to manage traffic (e.g. real-time accurate data on people moving through store entrances, detect of gender, distinguish employees and consumers), queue (e.g. waiting people in each line, count customers that abandon the line, alert sales associates based on wait line), interaction (e.g. measure and manage service times) and zone (e.g. which areas did consumers browse, impacts of seasonal events and marketing promotions). A summary of business value chain for a consumer's behavior is briefly demonstrated in Fig. 3. In this scenario, the shoppers are key users of digital mall. The ISSS supports all phases of their shopping experience (e.g. browse, investigate, transact and finally extend relationship beyond the store visit). Consumers have their experience with personal and/or in-store devices. The second primary actor is the store manager. ISSS supports her/his action based tactical and operational decision making processes to improve the store operations. It also helps the store associate stay informed by providing extensive product information and helps him deliver a personalized service to the shopper. The Retail Corporate comprises ERP and e-Commerce systems that support ISSS in supporting in-store and virtual-store services. Retail operations such as showing store catalog, product information, searching for the right product, purchasing a product are supported by the Retail Corporate. ISSS supports promotion and marketing of
Consumers Consumer Interface
Business Processes & Workflows (BP) Orchestrating Choreographies
Semantics and Service Level Agreements Service Oriented Architecture (SOA) Orchestrating Software, Dataand Applications Composite service
Software services
Atomic service
Inter-Service System Executions
SLAs SLAs SLAs
Inter-Service System Executions
SLAs
Components Semantics and Service Level Agreements Service Oriented Infrastructure (SOI) Orchestrating Virtualized Resources Application Resources and Assets
Fig. 2. Sample building block of Intelligent Self-service System. (Adapted from Demirkan, 2013).
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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Fig. 3. Summary of Business Value Chain for a Digital Mall.
products by the Retail corporate and Regional operations. ISSS is an effective vehicle for delivering personalized promotions, coupons, advertisements to the consumer. ISSS also offers advantages to product and service suppliers. Product and service suppliers can deliver product and service specific content that helps promoting uptake of offerings. With service-orientation, ISSS eases the integration of the store with the backend systems for the System Integrators. ISSS is a very powerful vehicle for in-store advertisement. Deployment of smart devices throughout the store implies that there is significant screen space that could be used for promotion of brands. Summary of value propositions for the partners are
Price Tag Automation Planogram Simplification Heat Map Integration with
Retailer Service Retailer Service Retailer Service
Advertising
Near Field Communication Purchases Inventory Image Analysis Promotion/Coupon Automation
Video Analytics at the point of selection
Directed Manufacturer Advertising Click-thru/Touch-thru Advertising Social Media Connex (Ratings,
Retailer Service Retailer Service Retailer/Manuf. Service Retailer/Manuf. Service Manuf. Service Manuf. Service Consumer Service
Tweet)
Help Line Product Chat Multi-Language Support
Consumer Service Consumer Service
One of the most practical and real challenges of designing and implementing a service-oriented solution is service identification (Zhang and Liu, 2006). To identify useful, reusable, composable
and discoverable business, technical and software services, it is appropriate to have a methodology to support examination of the business from multiple perspectives and to identify the basic building blocks of the enterprise. IBM Consulting Service's (Pohle et al., 2010) component business model methodology is an example of such a methodology that can help an organization to identify its business building blocks (Demirkan et al., 2009; Ernest and Nisavic, 2007; Frankel, 2003; Lee and Ramchandani, 2008). The outputs that are obtained from the application of this methodology can be used to define business process-level services that need to be supported by the service-oriented architecture. (See Fig. 4 for IBM's component business model.) In the ISSS, knowledge workers depend on their knowledge, tools and social-organizational networks to solve problems, be productive, continually develop, and generate and capture value, and perform their activities. In terms of service activities, selfservice systems are complex adaptive systems comprising people who are complex and adaptive (Spohrer et al., 2007). Since service systems consist of (semi-) automatic co-production processes in order to respond to market changes for fulfilling systematic service innovation, value co-creation requires three key resources: (1) people, (2) technology, and (3) information. In this case of self-service systems, they must be developed in terms of specific, complex processes. We adapted five core processes to investigate the sustainability issues of service-systems and develop design principles for self-service system as shown in Table 3 (Pavlou and El Sawy, 2006a, 2006b; Demirkan et al., 2010). Dynamic capability of a self-service system implies that the service system has long-term viability for all concerns, i.e., it meets service providers' objectives for scale, quality, production costs, margins and return on investment. Similarly, infrastructure service dynamic capability necessarily involves technology, policies, organization and coordination. In addition to economics issues, dynamic capability must address the following: oversight/management, service and software, technology, scalability and, of course, service variance, experience relevance and assessment.
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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Fig. 4. Mapping the enterprise as a network of business modules: an example from the retail industry. Source: Adapted from Ernest and Pohle et al. (2010). Table 3 Overview of dynamic capability—processes and capabilities. Process/capability (cross-referenced to Figs. 2 and 3)
Process description
1. Integrating patterns of interaction/ integrating capability 2. Coordinating activities/coordinating capability
The integration process helps implement the new configurations of operational competencies by developing the required patterns of interaction. The ability to synthesize different inputs through representation and interrelation into the ISSS The ability to manage dependencies among resources and tasks to create new ways of performing a set of activities. The coordination process organizes stakeholders for: Content and/or software services change management and version control thus facilitating content consistency checking/inconsistency detection; Managing platform migration including changes to content categories, navigation paths, etc.; Directing messaging to stakeholders including the user community The learning process drives innovative thinking and new knowledge generation to enhance existing services; it involves incorporating user community feedback and modifying, adding, deleting and synthesizing content and software services as indicated -capturing industry trends and needed software service categories for adding, updating or deleting skills, knowledge and experience categories and content The sensing process helps understand the environment, identify needs, and spot new opportunities. It requires tracking and monitoring service providers and receivers' activities, and technology performance to understand usage trends, navigation trends, etc. The reconfiguration process shapes existing resources and services into new configurations of operational competencies that better match the environment
3. Learning/learning capability
4. Sensing the environment/sensing capability 5. Reconfiguring services & resources/ reconfigurability
4. Research agenda Emerging intelligent self-service systems are creating new opportunities for further research.
of products and determined optimal merchandising after months of collecting sales data. Research should address how manufacturers can utilize virtual shopping methodologies with various modeling techniques (e.g. Discrete Choice Modeling) for rapid testing of various price and size combinations (Rizzo, 2012).
4.1. Portfolio and pricing optimization research 4.2. In-store eye-tracking Global macro-economic trends over the past several years have prompted a rise in the use of virtual testing methods to test new portfolio, pricing and product size strategies. Today, manufacturers test various merchandising alternatives or size/price combinations
As in-store environments are becoming increasingly cluttered, both manufacturers and retailers alike are seeking more information on what catches shopper attention—from end cap displays
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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and shelf violators to package designs and point of sales. Research should be undertaken to develop new methods and techniques that includes cognitive to enable interactive and online reporting for diagnostic refinement of stimulus to maximize their effectiveness. 4.3. Packaging and design research As packaging continues to play an important role in standing out on shelf in an increasingly cluttered retail environment, many manufacturers are embracing virtual testing to move beyond a “beauty contest” of design to actually quantify how new packaging, graphics, structure or the inclusion of other elements such as secondary and shelf/retail-ready packaging affect at-shelf shopper behavior. For example, disposal and environmental concerns or possible re-use applications of packaging are important to certain categories of customers. Additional research should be done to refine new ways for packaging and design for digital malls. 4.4. Category reinvention There are opportunities to create personal shopping stores and aisle in digital malls. New models and methods need to be developed for category reinvention for virtual shopping. 4.5. Point-of-sale (POS) and in-store marketing research Both manufacturers and retailers alike have adopted virtual shopping methods to understand what impact various signage, secondary displays and other in-store Point-of-Sale materials have on sales. In this context, how virtual shopping solutions can be utilized effectively to multiple creative executions to be tested virtually prior to deployment? 4.6. Privacy Privacy is one of the major concerns regarding to using digital malls with smart sensors and cameras. Research should be undertaken to investigate the opportunities and risks regarding to privacy. 4.7. Secure connectivity and payments Digital Malls need all the online and physical connections and security of regular retail and e-commerce, including indoor and outdoor Internet, wide area network and Wi-Fi; advanced POS; and cameras and video analytics. New models and methods need to be developed to address the security risk of data that resides in ISSS. 4.8. Business intelligence and analytic with big data The networked nature of Digital Malls allows logistics, merchandising, marketing, and operations to benefit from video analytics and e-commerce-like data on traffic, sales, shrinkage, campaign effectiveness, and shopper insights. New models, methods and algorithms are needed to analyze this data effectively and efficiently. 4.9. Data governance and ownership Significant amount of consumer, product, service, ads, etc. data are collected by ISSS. When there is a value network that includes members from manufacturers, retailers, suppliers, IT vendors (e.g. network service providers, digital sign providers, computing service providers, smart camera and sensor providers) and many others, who should host the data and who owns the data. Research is needed to analyze the data governance and ownership related issues.
5. Conclusions Retail services are having a lot of challenges that need to be addressed quickly. First, labor expense is the largest cost in retailing. Second, in too many cases customers leave without purchasing an item because they are unable to find a salesperson. And also, matching labor deployment to store traffic (rather than sales forecasts) is associated with larger basket values. Even modest improvements in employee scheduling and execution can result in an increase of 7% in revenue and 3% increase in operating income. Today, individual retailers (store managers) need to increase metrics on which they are judged. Retail corporations (various directors) need to increase sales, profitability ad conversation rates in order to stay in business. Malls (mall managers) need to increase traffic and sales, so they can charge higher rent. Resellers and partners (product manager) are looking ways to make money and increase their businesses. Virtual stores allow shoppers to click on product pictures using touchscreen or mobile devices and place orders for later home delivery. The convergence of e-Commerce operations, highresolution interactive surfaces, mobile codes and gesture technology have helped create these elements of the Digital Mall. The Intelligent Self-Service System framework provides opportunities for retail organizations to deploy platform, technology and location independent, to reduce risk and deploy context-rich cloud solutions, and to improve virtual shopping experience in digital malls. For many years, various versions of product development life cycles have been used to develop and maintain self-service solutions (Demirkan and Delen, 2013; Keith et al., 2013). The major limitations of standard design principles for product life cycle management when applied to self-service systems are. 5.1. Focus Current system development methodologies focus on goods (e.g. applications) not on services. They do not utilize most of the core theories and practices from the marketing and consumer behavior fields such as blue-prints, co-production, co-development and service innovation. One of the major questions is that how to capture users' dynamically changing requirements and expectations; support those with dynamic workflow choreographies (and business process processes). 5.2. Scope Self-service systems design must take into account that there are multiple channels that may need to be integrated in service deliveries; they can't have conflicts between the channels; they may need to share state among channels; speed and reliability of the channel integration may become the key for adaptive service delivery. 5.3. Standardization Until recently, standardization has been the key in order to get the benefits of economies of scale and cycle time reduction. Today, users are looking for more customization with personalized services. Also, users expect equal treatment and equivalent remedial strategies for service deliveries. Current methodologies cannot handle this conflict. 5.4. Quality and innovation In production methods, the goal is building quality systems with cost reduction through manufacturing efficiency. Today, it is
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems Haluk Demirkan a,n, Jim Spohrer b a Center for Information Based Management, Milgard School of Business, University of Washington-Tacoma, 1900 Commerce Street, Box 358420, Tacoma, WA 98402-3100, USA b IBM University Programs World-Wide, IBM Almaden Research Center, San Jose, CA 95120, USA
art ic l e i nf o
Keywords: Self-service systems Service innovation Virtual shopping
a b s t r a c t Growing movements to urban places, increasing unemployment, decreasing buying power, rising real estate cost and demanding consumers for convenience and price are creating challenges for retailers. This paper reviews a sample list of retail channels, and proposes a systematic framework for conceptualizing the data-driven, and mobile- and cloud-enabled intelligent self-service systems to improve virtual shopping. With adoption of intelligent self-service systems, – more service oriented, more instrumented (from sensors to smart phones for monitoring consumers' behaviors), interconnected (patterns of interactions), and intelligent (algorithms help recognize patterns) – retail organizations can provide more cost effective quality retail service experiences to consumers. & 2014 Elsevier Ltd. All rights reserved.
1. Introduction According to research, almost all players in the U.S. retail ecosystem today (e.g. mall developers, retailers, vending operators and consumer product manufacturers) are facing key demographic, economic, and technological changes (Bethlahmy et al., 2012). For example, consumers are moving to urban areas significantly (Dobbs et al., 2011); high unemployment continues to depress consumer spending; e-Commerce retail growth of 16% continues to significantly outpace total consumer spending, which grew by 5% in Q2 (Fulgoni et al., 2013); mobile phones have become the new retail showrooms; and the Millennial generation expects an engaging, personalized digital shopping experience. These developments are creating lots of new and advanced challenges for the retail organizations about vacancy rates, sales declines, enhancing customer experiences, reduce labor and construction costs, deepen brand differentiation, optimize small urban formats, and justify investment in innovation. Emerging technology solutions are creating new opportunities to address these challenges. During the past decade, the growth in service development and delivery options based on technology has been remarkable. Today, more and more organizations are choosing to provide self-service system options for their customers and employees for better, more efficient and customized services. Their main goals are
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Corresponding author. Fax: þ 1 253 692 4523. E-mail addresses: [email protected] (H. Demirkan), [email protected] (J. Spohrer).
to reduce costs, to increase customer satisfaction and loyalty, and to reach new customer segments (Bitner et al., 2002). Potential benefits of successful development and implementation of such systems can be tremendous. For example, IBM shifted 99 million service telephone calls to a web based system, which resulted in cost savings of $2 billion (Bryson et al., 2004). Although the potential benefits of successful system incorporation are enticing, the benefits cannot be realized unless customers use these new systems (Meuter et al., 2006). For example, McKinsey & Company reports that one firm projected a $40 million savings from moving its billing and service calls to the web. However, it suffered a $16 million loss, as a result of lower customer use and technology failure, service partners' penetration issues, and the absence of crossselling opportunities. To be of maximal value in today's global service based economy, we need superior, robust, self-service systems that can assimilate, organize, design and deliver high quality services to consumers and to end users. In context of retail services, self-service systems for online shopping are among the fastest growing applications in the 21st century. There is rapid growth in self-service in retail services that allows consumers to take on the traditional role of a service worker in the provision of a service (Castro et al., 2010). Self-service seems to be an inevitable trend, as the operation of complex systems shifts from dedicated human operators to customers pushing buttons— examples include making personal phone calls, riding an elevator, and now even driving a car (Benenson et al., 2008). Self-checkout is one of the most widespread applications of self-service technology. With self-checkout systems, customers can scan, bag, and pay for their own items. Given that there are over 60 billion transactions
http://dx.doi.org/10.1016/j.jretconser.2014.02.012 0969-6989 & 2014 Elsevier Ltd. All rights reserved.
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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H. Demirkan, J. Spohrer / Journal of Retailing and Consumer Services ∎ (∎∎∎∎) ∎∎∎–∎∎∎
One of yesterday’s problems
Today’s possible solution Dynamic price tag management Shelf coupons Advertising Consumer interaction 4P analytics Product Place Promotion Price
Fig. 1. From yesterday's problem to today's solution.
a year in retail stores alone, 68 percent of which are in grocery, gas and convenience stores, the potential savings are significant as a large number of these transactions could easily be done with selfservice applications (Atkinson, 2005). Another possible application of self-service solutions is to provide customers with a digital mall and virtual shopping experience. Bethlahmy et al. (2012) estimates that this is almost $7billion market for retail service providers. Fig. 1 depicts a simple application of digital signage that is just one of the many components of selfservice system that proposes to replace cumbersome shelf tags with dynamic retail screens spanning the edge of the shelf. According to Avalos (2011) from Intel Corp, digital signage has demonstrated a continuing ability to reach large audiences in a targeted way at a point where it really matters: at the point of sale or, at a very minimum, when consumers can easily alter their travel plans to go to a point of sale (e.g., a pet owner watching digital signage at a vet's office). Other media – newspapers, magazines, TV – do not have the strength of place or the flexibility to deliver such targeted messages to specific audiences. Add to this, a growing sophistication in how brands want to manage the consumer experience. A photo taken in a retail store, there are 195 price tags and 48 “specials” tags hanging off the price tags. Micro Digital Signage would replace the paper price tags with a unique digital display that is the height of the shelf edge—as well as the length of the shelf edge. In a simple calculation, there are 20,055 stores in top 20 US retailers with store inventory 20,000–55,000 skus with average 40 foot aisles, 11 aisles/store and 5 shelves/shelf section. Hybrid solutions are also possible with augmented reality systems that put information in places (Spohrer, 1999). In literature, there are a number of studies that assess the application of self-service technologies to increase productivity and efficiency (Gelderman et al., 2011; Walker et al., 2002; Zeithaml and Gilly, 1987), and to provide better customers access and convenient channels (Meuter et al., 2003), to better meeting customer demand and increasing satisfaction (Bitner et al., 2002; Lee and Yang, 2013). Also, a number of studies review customer adoption of self-service technologies (Dabholkar and Bagozzi, 2002; Parasuraman, 2000; Tsikriktsis, 2004). When utilization of self-service systems is rapidly increasing, any related issues and problems are also growing. Some of these problems are: (1) erroneous or missing data can be a show-stopper for a self-service consumer, (2) easy-of-use is mostly under the control of vendor, (3) not having a personal touch, (4) data privacy. One of the primary challenge is that most of these systems have been developed “as self-service technologies” with “goods” thinking logic, not “as systems” with service dominant logic (Lusch and Vargo, 2006). We need to rethink the best ways to design, build and utilize self-service systems, not just the self-service technologies.
The convergence of Information and Communication Technology (ICT) – emergent smart systems, Web applications, cloud computing, mobile solutions, RFID, big data, social networks, highperformance computing, global high-speed communications, and advanced sensing and data analysis – is creating opportunities to organize these technologies into service relationships by configuring retail self-service systems that include people, processes, technology, organizations, information, language, laws, regulations, metrics, measures, models, etc. to co-create new value between providers and receivers (Demirkan, 2013; Spohrer et al., 2007). Cloud enabled sustainable intelligent self-service systems, coupled with the sensors and cameras – big data – and the emergent mobile solutions, demonstrate unprecedented potential for delivering highly automated intelligent sustainable retail services. In this article, we propose an Intelligent Self-Service Systems Framework (ISSS) that provides opportunities for retail organizations to deploy platform, technology and location independent, reduced risk and context-rich cloud solutions, and to increase virtual shopping experience. Our work contributes the “Dynamic Capabilities Reference Model”. The framework is founded on theoretical research on organizations' processes and capabilities for managing and thriving in environments characterized by turbulence (Teece et al., 1997). It is also founded on practical experiences with services systems, ISO 9126, and other efforts in resilient systems. The framework aims to cover aspects necessary for both management and technical solutions arising in long-term evolution of successful selfservice systems for retail. In the next section, the foundations of ICT enabled retail services are described along with a list of challenges and issues. Section 3 presents the Intelligent Self-Service Systems Framework that could help pave the way to a scalable prototype/test-bed of a dynamic capability driven self-service system for retail. Finally we provide suggestions for future research and practice.
2. Challenges for self-service solutions in retail A critical enabler of self-service systems is the convergence of Information and Communication Technology (ICT). Growing knowledge of ICT design, execution, storage, transmission and reuse knowledge is creating opportunities to configure information technologies into service relationships that create new value (Chesbrough and Spohrer, 2006; Spohrer and Maglio, 2008). More specifically, ICT provides the means to improve the efficiency, effectiveness, and innovativeness of organizations through: (1) make it possible for commoditization of none-core competencies (e.g. outsourcing, out-tasking); (2) improving the collaboration (e.g. inter- and intra-organizational workflows and business
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
H. Demirkan, J. Spohrer / Journal of Retailing and Consumer Services ∎ (∎∎∎∎) ∎∎∎–∎∎∎ Table 1 Sample list of shopping channels. In-store shopping Human interaction Face to face customer service Feel and check out the product Easier and faster return Option of trying on clothing or accessories and seeing how they look on your body or face shape Nice to feel the materials of non-clothing items such as furniture or other household items
Smart vending machines Cashless payment Networked location data Video and touchscreen communication Mobile and facial recognition Remote experts Point-of-purchase marketing opportunity Targeted advertising impressions
Micro-markets Unattended, networked convenience stores with open shelves for snacks, coolers for drinks and fresh foods, and freezers Consumers select, scan, and pay for their own purchases at video-enabled kiosks with cash, payment cards, or mobile devices. Managed by security cameras and placement in venues with a known or controlled population
e-Commerce Overcome Geographical Limitations Eliminate Travel Time and Cost Gain New Customers With Search Engine Visibility Lower Costs from real estate, personnel, advertising & marketing Provide Comparison Shopping Create Targeted Communication Remain Open All the Time
Online mobile shopping (M-commerce) Convenience Performing price checks Redeeming digital coupons Online reviews Location specific marketing Secure processing Mobile wallet, Direct link with mobile banking
Social shopping Word of mouth is still powerful and online Exchange shopping tips with others Quick product and service discovery Recommendations Shopping communities Recommendation engines
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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Table 1 (continued ) Virtual stores/digital malls Touchscreen or gesture technology Interactive information, games, entertainment, video Mobile and social promotions 3D or augmented reality for immersive experiences Remote experts to handle questions and service Following the customers' behaviors with sensors & cameras Smart digital signage for advertising, marketing & shopping Anonymous viewer to determine genders and age ranges
Table 2 Sample challenges, issues and opportunities for self-service systems.
High involvement of people in delivery. Many services in retail include high involvement of people for delivery and usage. Human are the primary resources and
stakeholders. While people can be unpredictable in their behavior, the plan, design, delivery and support of the any self-services requires variability, heterogeneity or nonstandardization (Danaher, 1998) Self-services are more or less intangible. Services that are provided by self-service systems are mostly something one cannot touch or feel, although they may be associated with something physical, for example a digital signage or a kiosk or a server. While installing a network cable (includes process of delivering a service in addition to the cable) is less intangible, a help desk operation, training, systems design is more intangible (Lovelock and Gummesson, 2004; Peppard, 2003) Inability to inventory. Unlike products, retail services also cannot be stored in inventory for later use. Therefore, management of demand and capacity, and pricing decisions are very crucial in the provision of services (Edvardsson et al., 2005) Inseparability. Many services are produced and consumed simultaneously. For example, delivery of customer service through technology is provided and utilized immediately. A bad service cannot be saved for a later quality check. So it requires shorter response times. Another important point is that most of the services are cocreated with customers (Zeithaml and Bitner, 2002) High customer contact. Customer contact is much higher due to the service co-creation process. This will also result of role interactions rather than things. A service provider may become a customer in the delivery process (Krajewski and Ritzman, 2002) Complexity. Simultaneity of production and consumption of services occur in complex service environments due to interaction of people, processes, technology and shared information Commoditization of hardware (e.g., on-demand, utility computing), software (the software-as-service model), and even business processes as services has become a major phenomenon in today's economy. Unfortunately, there is limited research on modeling commoditization decision processes, assessing the risks (e.g. disaster, security) and examining the service quality associated with outsourcing options There are a variety of partner engagement models that may need to be simultaneously supported by the infrastructure. Measurable returns for all stakeholders must be achieved even while adding new services or while there are lulls in services innovation. Web-enabled, on-demand software services may be either tightly or loosely coupled with the central infrastructure; for loosely coupled services, external links and returns must be managed carefully to adhere to service level agreements There are constant challenges to keep service levels consistent with partner agreements which are periodically renegotiated. Adding new partners, changing the retail service orientation, keeping manufacturer in the loop when there are changes, keeping pace with different partner's products and services and managing the consortia agreement in alignment with the self-service system's performance is challenging Collaboration. Almost all services are delivered to customers with collaboration of distributed service providers. In a simple scenario, store managers, store associates, retail corporate, suppliers, system integrators, advertising & marketing agencies, onsite support, content management, transaction processes etc. need to seamlessly collaborate in order to provide good experience to shoppers. These interactions require common languages. For example, within a single self-service system, data and software services can be highly distributed and deployed among multiple computing platforms and service providers. Most organizations must also compete on a global scale, participating in distributed collaborative commerce by conducting electronic business through contact with distributed service providers. A multiorganizational manufacturing supply chain provides an example of this type of collaboration, creating a virtual organization where business is conducted through distributed systems integration with complex, high-volume, transactional and data warehousing activities that must be concerned about requirements such as security, auditability, availability, and service level agreements (Foster et al., 2001)
processes); (3) decreasing the risk of information security breaches; (4) facilitation of new types of services (e.g. Google, online banking); (5) separation of production and consumption of a service, thus storability, transportability, and access to knowledge-based services (e.g. tax software, online classes); (6) coordination of service systems (e.g. online broker systems, information markets, open innovation platforms); (7) reduction of the costs of service production (e.g. semi- and fully automated call centers); (8) improvement of customer-perceived service quality (e.g., ability to standardize elements of service as well as customize to the individual when appropriate); and (9) integration of customers into service creation and delivery (e.g., online educational services, health information systems, business-to-business solutions) (Allen et al., 2010; Davenport, 2005; Garcia-Murillo and MacInnes, 2003; Garrison, 2000; Maglio et al., 2006; Soper et al., 2007). Technology is a big piece of today's service delivery mechanisms, whereby customers produce services for themselves without assistance from firm employees (Meuter et al., 2006). Technology-based
self-service includes touch screens in department stores, information kiosks at hotels, self-scanning in grocery stores and libraries, telephone and online banking and shopping on the internet (Chua and Dyson, 2004). Also some automakers, retailers, and universities are starting to offer their ATMs. Large discount stores such as Staples, Best Buy and Kmart are installing in-store kiosks that offer access to the internet. Today, retailers need to provide multi channels in order to reach out to customers and to be competitive (Table 1) (Bethlahmy et al., 2012; Avalos, 2011; Schaefer and VanTine, 2010). Most banks are delivering their service offerings over the telephone, through ATMs, and online. Universities offer education remotely through broadcast, with CDs and online with e-learning mechanisms. While some of the self-service systems have been implemented very successfully (e.g. Amazon.com with its books sales, and Southwest Airlines with their online ticket sales), there are unique and very important challenges that arise from today's service delivery mechanisms. The service systems are uniquely complex as exemplified in Table 2.
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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Many retail organizations attempt to overcome these challenges and issues through improved efficiency, quality and speed of their operations, through mergers and networks that adapt their resource base to changing needs, and through rapid services and product innovations (Lewis, 2004). In other words, they attempt to manipulate what are perceived as the controllable variables within their service system. However, they often discover that these manipulations lack the necessary scope—mainly because their service system is much more complex than they anticipated. Changes to the scale of service delivery may impact service quality in unanticipated ways, the introduction of a new service may create demand for different or even more services, and service innovations may unintentionally shift the market from a product to a service quality focus (Demirkan and Goul, 2006). Unanticipated consequences result in unnecessary costs, lack of responsiveness to customers, and missed opportunities for innovation.
3. Intelligent self-service systems (ISSS)
1
Integration Quality of Service: Security, management, monitoring Data and information architecture
2
Intra-Service System Executions
Service provider
Service consumer
Can the adoption of smart systems—more service oriented cloud solutions, more instrumented (from sensors to smart phones for monitoring health), interconnected (local and global epidemiological patterns can be pooled), and intelligent (algorithms help recognize patterns and suggest appropriate individual and collective responses from lots of data) systems enable retailers to provide better shopping experience to customers, and to reduce the cost of their operations? A fundamental premise of Intelligent Self-Service Systems (ISSS) is that organizations can co-create their service offerings with consumers, and break siloed business processes into modular independent services that can be reused on-the-fly in looselycoupled dynamic business service choreographies, and they can source those choreographies and execute them by using virtual resources. Business-to-business collaboration is a type of virtual environment with requirements for security, auditability, availability and service level agreements as well as the need for seamless integration with existing resources and applications. ISSS includes conceptual models of an intra- and inter-organizational business process, service and resource execution architectures with cloud services, inter-organizational supply chain, mobile smart services, big data enabled business intelligence and knowledge management services and Web 2.0 & 3.0 solutions (Fig. 2). The cloud services execution architecture is a three-layered intraorganizational platform that manages services relevant to each
5
layer's role. It is assumed that similar platforms exist at all organizations engaged in business value chain. There are a number of support processes, such as security access control and ensures that certain consumers have the authority and privilege to use particular resources and/or specified levels of services; control and management ensures the high availability, reliability, load balancing and quality of computer services. Inter-organizational service system executions are enabled with service-oriented architecture and infrastructure. This interorganizational supply chain provides an example of collaboration, where business is conducted through integrated distributed systems involving complex, high-volume, transactional and decision activities, by providing the visibility and streamlining the information flow. RFID can be utilized to track product and service inside the ISSS. Big data enabled business intelligence and knowledge management services enable organizations to collect, analyze and disseminate large amounts of structured and unstructured data for actionable decisions. Web 2.0 and 3.0 solutions are also another component of this framework that enable social shopping experience. Smart sensors and cameras (sensor management and video analytics) collect consumers' data to manage traffic (e.g. real-time accurate data on people moving through store entrances, detect of gender, distinguish employees and consumers), queue (e.g. waiting people in each line, count customers that abandon the line, alert sales associates based on wait line), interaction (e.g. measure and manage service times) and zone (e.g. which areas did consumers browse, impacts of seasonal events and marketing promotions). A summary of business value chain for a consumer's behavior is briefly demonstrated in Fig. 3. In this scenario, the shoppers are key users of digital mall. The ISSS supports all phases of their shopping experience (e.g. browse, investigate, transact and finally extend relationship beyond the store visit). Consumers have their experience with personal and/or in-store devices. The second primary actor is the store manager. ISSS supports her/his action based tactical and operational decision making processes to improve the store operations. It also helps the store associate stay informed by providing extensive product information and helps him deliver a personalized service to the shopper. The Retail Corporate comprises ERP and e-Commerce systems that support ISSS in supporting in-store and virtual-store services. Retail operations such as showing store catalog, product information, searching for the right product, purchasing a product are supported by the Retail Corporate. ISSS supports promotion and marketing of
Consumers Consumer Interface
Business Processes & Workflows (BP) Orchestrating Choreographies
Semantics and Service Level Agreements Service Oriented Architecture (SOA) Orchestrating Software, Dataand Applications Composite service
Software services
Atomic service
Inter-Service System Executions
SLAs SLAs SLAs
Inter-Service System Executions
SLAs
Components Semantics and Service Level Agreements Service Oriented Infrastructure (SOI) Orchestrating Virtualized Resources Application Resources and Assets
Fig. 2. Sample building block of Intelligent Self-service System. (Adapted from Demirkan, 2013).
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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Fig. 3. Summary of Business Value Chain for a Digital Mall.
products by the Retail corporate and Regional operations. ISSS is an effective vehicle for delivering personalized promotions, coupons, advertisements to the consumer. ISSS also offers advantages to product and service suppliers. Product and service suppliers can deliver product and service specific content that helps promoting uptake of offerings. With service-orientation, ISSS eases the integration of the store with the backend systems for the System Integrators. ISSS is a very powerful vehicle for in-store advertisement. Deployment of smart devices throughout the store implies that there is significant screen space that could be used for promotion of brands. Summary of value propositions for the partners are
Price Tag Automation Planogram Simplification Heat Map Integration with
Retailer Service Retailer Service Retailer Service
Advertising
Near Field Communication Purchases Inventory Image Analysis Promotion/Coupon Automation
Video Analytics at the point of selection
Directed Manufacturer Advertising Click-thru/Touch-thru Advertising Social Media Connex (Ratings,
Retailer Service Retailer Service Retailer/Manuf. Service Retailer/Manuf. Service Manuf. Service Manuf. Service Consumer Service
Tweet)
Help Line Product Chat Multi-Language Support
Consumer Service Consumer Service
One of the most practical and real challenges of designing and implementing a service-oriented solution is service identification (Zhang and Liu, 2006). To identify useful, reusable, composable
and discoverable business, technical and software services, it is appropriate to have a methodology to support examination of the business from multiple perspectives and to identify the basic building blocks of the enterprise. IBM Consulting Service's (Pohle et al., 2010) component business model methodology is an example of such a methodology that can help an organization to identify its business building blocks (Demirkan et al., 2009; Ernest and Nisavic, 2007; Frankel, 2003; Lee and Ramchandani, 2008). The outputs that are obtained from the application of this methodology can be used to define business process-level services that need to be supported by the service-oriented architecture. (See Fig. 4 for IBM's component business model.) In the ISSS, knowledge workers depend on their knowledge, tools and social-organizational networks to solve problems, be productive, continually develop, and generate and capture value, and perform their activities. In terms of service activities, selfservice systems are complex adaptive systems comprising people who are complex and adaptive (Spohrer et al., 2007). Since service systems consist of (semi-) automatic co-production processes in order to respond to market changes for fulfilling systematic service innovation, value co-creation requires three key resources: (1) people, (2) technology, and (3) information. In this case of self-service systems, they must be developed in terms of specific, complex processes. We adapted five core processes to investigate the sustainability issues of service-systems and develop design principles for self-service system as shown in Table 3 (Pavlou and El Sawy, 2006a, 2006b; Demirkan et al., 2010). Dynamic capability of a self-service system implies that the service system has long-term viability for all concerns, i.e., it meets service providers' objectives for scale, quality, production costs, margins and return on investment. Similarly, infrastructure service dynamic capability necessarily involves technology, policies, organization and coordination. In addition to economics issues, dynamic capability must address the following: oversight/management, service and software, technology, scalability and, of course, service variance, experience relevance and assessment.
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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Fig. 4. Mapping the enterprise as a network of business modules: an example from the retail industry. Source: Adapted from Ernest and Pohle et al. (2010). Table 3 Overview of dynamic capability—processes and capabilities. Process/capability (cross-referenced to Figs. 2 and 3)
Process description
1. Integrating patterns of interaction/ integrating capability 2. Coordinating activities/coordinating capability
The integration process helps implement the new configurations of operational competencies by developing the required patterns of interaction. The ability to synthesize different inputs through representation and interrelation into the ISSS The ability to manage dependencies among resources and tasks to create new ways of performing a set of activities. The coordination process organizes stakeholders for: Content and/or software services change management and version control thus facilitating content consistency checking/inconsistency detection; Managing platform migration including changes to content categories, navigation paths, etc.; Directing messaging to stakeholders including the user community The learning process drives innovative thinking and new knowledge generation to enhance existing services; it involves incorporating user community feedback and modifying, adding, deleting and synthesizing content and software services as indicated -capturing industry trends and needed software service categories for adding, updating or deleting skills, knowledge and experience categories and content The sensing process helps understand the environment, identify needs, and spot new opportunities. It requires tracking and monitoring service providers and receivers' activities, and technology performance to understand usage trends, navigation trends, etc. The reconfiguration process shapes existing resources and services into new configurations of operational competencies that better match the environment
3. Learning/learning capability
4. Sensing the environment/sensing capability 5. Reconfiguring services & resources/ reconfigurability
4. Research agenda Emerging intelligent self-service systems are creating new opportunities for further research.
of products and determined optimal merchandising after months of collecting sales data. Research should address how manufacturers can utilize virtual shopping methodologies with various modeling techniques (e.g. Discrete Choice Modeling) for rapid testing of various price and size combinations (Rizzo, 2012).
4.1. Portfolio and pricing optimization research 4.2. In-store eye-tracking Global macro-economic trends over the past several years have prompted a rise in the use of virtual testing methods to test new portfolio, pricing and product size strategies. Today, manufacturers test various merchandising alternatives or size/price combinations
As in-store environments are becoming increasingly cluttered, both manufacturers and retailers alike are seeking more information on what catches shopper attention—from end cap displays
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and shelf violators to package designs and point of sales. Research should be undertaken to develop new methods and techniques that includes cognitive to enable interactive and online reporting for diagnostic refinement of stimulus to maximize their effectiveness. 4.3. Packaging and design research As packaging continues to play an important role in standing out on shelf in an increasingly cluttered retail environment, many manufacturers are embracing virtual testing to move beyond a “beauty contest” of design to actually quantify how new packaging, graphics, structure or the inclusion of other elements such as secondary and shelf/retail-ready packaging affect at-shelf shopper behavior. For example, disposal and environmental concerns or possible re-use applications of packaging are important to certain categories of customers. Additional research should be done to refine new ways for packaging and design for digital malls. 4.4. Category reinvention There are opportunities to create personal shopping stores and aisle in digital malls. New models and methods need to be developed for category reinvention for virtual shopping. 4.5. Point-of-sale (POS) and in-store marketing research Both manufacturers and retailers alike have adopted virtual shopping methods to understand what impact various signage, secondary displays and other in-store Point-of-Sale materials have on sales. In this context, how virtual shopping solutions can be utilized effectively to multiple creative executions to be tested virtually prior to deployment? 4.6. Privacy Privacy is one of the major concerns regarding to using digital malls with smart sensors and cameras. Research should be undertaken to investigate the opportunities and risks regarding to privacy. 4.7. Secure connectivity and payments Digital Malls need all the online and physical connections and security of regular retail and e-commerce, including indoor and outdoor Internet, wide area network and Wi-Fi; advanced POS; and cameras and video analytics. New models and methods need to be developed to address the security risk of data that resides in ISSS. 4.8. Business intelligence and analytic with big data The networked nature of Digital Malls allows logistics, merchandising, marketing, and operations to benefit from video analytics and e-commerce-like data on traffic, sales, shrinkage, campaign effectiveness, and shopper insights. New models, methods and algorithms are needed to analyze this data effectively and efficiently. 4.9. Data governance and ownership Significant amount of consumer, product, service, ads, etc. data are collected by ISSS. When there is a value network that includes members from manufacturers, retailers, suppliers, IT vendors (e.g. network service providers, digital sign providers, computing service providers, smart camera and sensor providers) and many others, who should host the data and who owns the data. Research is needed to analyze the data governance and ownership related issues.
5. Conclusions Retail services are having a lot of challenges that need to be addressed quickly. First, labor expense is the largest cost in retailing. Second, in too many cases customers leave without purchasing an item because they are unable to find a salesperson. And also, matching labor deployment to store traffic (rather than sales forecasts) is associated with larger basket values. Even modest improvements in employee scheduling and execution can result in an increase of 7% in revenue and 3% increase in operating income. Today, individual retailers (store managers) need to increase metrics on which they are judged. Retail corporations (various directors) need to increase sales, profitability ad conversation rates in order to stay in business. Malls (mall managers) need to increase traffic and sales, so they can charge higher rent. Resellers and partners (product manager) are looking ways to make money and increase their businesses. Virtual stores allow shoppers to click on product pictures using touchscreen or mobile devices and place orders for later home delivery. The convergence of e-Commerce operations, highresolution interactive surfaces, mobile codes and gesture technology have helped create these elements of the Digital Mall. The Intelligent Self-Service System framework provides opportunities for retail organizations to deploy platform, technology and location independent, to reduce risk and deploy context-rich cloud solutions, and to improve virtual shopping experience in digital malls. For many years, various versions of product development life cycles have been used to develop and maintain self-service solutions (Demirkan and Delen, 2013; Keith et al., 2013). The major limitations of standard design principles for product life cycle management when applied to self-service systems are. 5.1. Focus Current system development methodologies focus on goods (e.g. applications) not on services. They do not utilize most of the core theories and practices from the marketing and consumer behavior fields such as blue-prints, co-production, co-development and service innovation. One of the major questions is that how to capture users' dynamically changing requirements and expectations; support those with dynamic workflow choreographies (and business process processes). 5.2. Scope Self-service systems design must take into account that there are multiple channels that may need to be integrated in service deliveries; they can't have conflicts between the channels; they may need to share state among channels; speed and reliability of the channel integration may become the key for adaptive service delivery. 5.3. Standardization Until recently, standardization has been the key in order to get the benefits of economies of scale and cycle time reduction. Today, users are looking for more customization with personalized services. Also, users expect equal treatment and equivalent remedial strategies for service deliveries. Current methodologies cannot handle this conflict. 5.4. Quality and innovation In production methods, the goal is building quality systems with cost reduction through manufacturing efficiency. Today, it is
Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i
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about revenue expansion through innovative services. Also, the operational metrics are different in service-oriented development environment. The performance and cost per usage can be more important than traditional cycle time calculation. 5.5. Relationship building The original purpose of early information systems was the perform tasks by executing transactions. Service systems are more about building the long term value of the relationship rather than performing short term transaction executions. As new and improved management techniques are developed to address these challenges of complex, engineered self-service systems of the future, some researcher envision a transition from self-service to super-service (Campbell et al., 2011). References Allen, P., Higgins, S., McRaie, P., Schlaman, H., 2010. Service Orientaton: Winning Strategy and Best Practices. Cambridge University Press, New York, NY p. 2006 Benenson, R., Petti, S., Fraichard, T., Parent, M., 2008. Towards urban driverless vehicles. Int. J. Veh. Auton. Syst. 6 (1), 4–23. Atkinson, R.D., 2005. The Past And Future Of America's Economy: Long Waves Of Innovation That Power Cycles Of Growth. Edward Elgar Publishing Avalos, J., 2011. 22 Million Digital Signs By 2015. 10/10. Intel Corporation. Available at 〈https://aimsuite.intel.com/22-million-digital-signs-2015〉. Bethlahmy, J., Lock, H., Maddox, M., Finke, S., 2012. Digital Malls: The Next Generation of Self-Service Shopping. Cisco Report, September. Bitner, M.J., Ostrom, A., Meuter, M., 2002. Implementing successful self-service technologies. Acad. Manage. Executive 16 (4), 96–108. Bryson, J.R., Daniels, P.W., Warf, B., 2004. Service Worlds: People, Organisations, Technology. Routledge, London. Campbell, C.S., Maglio, P.P., Davis, M.M., 2011. From self-service to super-service: a resource mapping framework for co-creating value by shifting the boundary between provider and customer. Inf. Syst. e-Bus. Manage. 9 (2), 173–191. Chesbrough, H., Spohrer, J., 2006. A research manifesto for services science. Commun. ACM 49 (7), 35–40. Chua, B. B., Dyson, L.E., 2004. Applying the ISO 9126 model to the evaluation of an elearning system. In: Proceedings of the 21st ASCILITE Conference, 2004 in Perth, Western Australia. Available at 〈http://www.ascilite.org.au/conferences/ perth04/procs/pdf/chua.pdf〉. Dabholkar, P.A., Bagozzi, R.P., 2002. Anattitudinalmodeloftechnology-basedselfservice: moderating effects of consumer traits and situational factors. J. Acad. Market. Sci. 30 (3), 184–201. Danaher, P.J., 1998. Customer heterogeneity in service management. J. Serv. Res. 1 (2), 129–139. Castro, D., Atkinson, R., Ezell, S., 2010. Embracing the Self-Service Economy. The Information Technology & Innovation Foundation, April. Davenport, T.H., 2005. The coming commoditization of processes. Harvard Bus. Rev. 83 (6), 100–108. Demirkan, H., 2013. Smart Healthcare Systems Framework: More Service Oriented, Instrumented, Interconnected and Intelligent. IEEE IT Professional, 38–45, September/October. Demirkan, H., Delen, D., 2013. Leveraging the capabilities of service-oriented decision support systems: putting analytics and big data in cloud. Decis. Support Syst. Electron. Com. 55 (1), 412–421. Demirkan, H., Goul, M., 2006. Towards the service-oriented enterprise vision: bridging industry and academics. Commun. Assoc. Inf. Syst. 18 (26), 546–556. Demirkan, H., Goul, M., Gros, M., 2010. A reference model for sustainable e-learning service systems: experiences with the joint university/teradata consortium. Decis. Sci. J. Innovative Educ. 8 (1), 151–189. Demirkan, H., Kauffman, R.J., Vayghan, J.A., Fill, H-G., Karagiannis, D., Maglio, P.P., 2009. Service-oriented technology and management: perspectives on research and practice for the coming decade. Electron. Com. Res. Appl. J. 7 (4), 356–376. Dobbs, R., Smit, S., Remes, J., Manyika, J., Roxburgh, C., Restrepo, A., 2011. Urban World: Mapping the Economic Power of Cities. McKinsey Global Institute, March. Available at 〈http://www.mckinsey.com/insights/urbanization/urban_world〉. Edvardsson, B., Gustafsson, A., Roos, I., 2005. Service portraits in service research: a critical review. Int. J. Serv. Ind. Manage. 16 (1), 107–121. Ernest, M., Nisavic, J.M., 2007. Adding value to the IT organization with the component business model. IBM Syst. J. 46 (3), 387–403. Foster, I., Kesselman, C., Tuecke, S., 2001. The anatomy of the grid: Enabling scalable virtual organizations. Int. J. High Perform. Comput. Appl. 15 (3), 200–222.
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Please cite this article as: Demirkan, H., Spohrer, J., Developing a framework to improve virtual shopping in digital malls with intelligent self-service systems. Journal of Retailing and Consumer Services (2014), http://dx.doi.org/10.1016/j.jretconser.2014.02.012i