How digital will retail become?

Johan Hagberg began his PhD studies around the turn of the millennium. The dotcom bubble had just burst and digitalisation was by no means a hot topic. However, Borås native Johan Hagberg saw something beyond the news headlines. The major mail order companies were fully embracing digitalisation.

"My thesis was a description of the companies that were driving digitalisation from the mid-1990s until somewhere around 2006. Since I obtained my PhD, my research has focused on various aspects of technological development within retail," explains Johan Hagberg, who became a professor in 2019.

The bricks-and-mortar store remains central

The School is currently running a number of research projects concerning digitalisation and consumption. This is a hot-button issue, since many suggest that retail is facing a paradigm shift that will see the demise of the physical store.

"There are many prophecies about retail doing the rounds right now. But all the books I’ve read, from the 1910s onwards, say something along the lines of ‘everything used to be really stable, but now it’s all in turmoil’. This whole process is actually moving quite slowly. Of course digitalisation has had a major impact on the whole retail sector. But 20 years later, around 90 per cent of overall retail still takes place in physical stores," says Johan Hagberg.

Digital platforms growing

One trend is that the major digital platforms, which offer many different products and services, are increasingly hoovering up market share.

"Historically, we’ve seen retail go from the dispersed to the centralised via shopping streets and shopping centres. Now we’re seeing the same movement in a digital context. It is said that around half of all e-commerce in the USA now goes via Amazon, and in China Alibaba has an even greater share of the market. Here in Sweden, examples such as Zalando and Cdon have broadened their offering, but in the long term ICA is probably a more likely platform builder. Then we’re also seeing a move in the other direction, with the digital actors opening physical stores. Amazon, for instance, recently bought up Wholefoods."

Invest in both

So what is the advice for retailers who want to be well placed for the future?

"I think they should think more in terms of combinations – with an extra focus on personal service, increased automation, more stores and more e-commerce. Actors such as ICA and IKEA are deeply rooted in their physical stores, but at the same time they lead the field in digitalisation. We’re going to see more variation in the roles of the physical stores, and in the digital arena the key will be to assemble a range of services that make life easier for consumers," concludes Johan Hagberg.

This is an article from the School's Magazine 2019