The Main Factors of Driving the Uptake of online Shopping Technology in Supermarket World -A Research Based on Musgrave in Ireland

The main factors of driving the uptake of online shopping technology in supermarket world

-A research based on Musgrave in Ireland

Student Name: XiaoLu Qin

Student Number: 115220564

Module: IS 6215 Business Research and Communication Skills

Lecturer: Dr. Fergal Carton

Submission Date: 2/17/2016

1. Introduction

The concept of supermarket was introduced in the year 1930 when the first true supermarket King Kullen was opened in the U.S (Bezawada et al. 2012). Since then, supermarket has rapidly penetrated into people’s daily life and it becomes the commonest place where people purchase daily necessity. Due to the improvement of technology and changing customer needs, the operation of supermarket has changed a lot over last several decades. For example, the products offered by supermarkets become more diverse, and online shopping technology is increasingly adopted by quite many supermarket chains in recent years (Gajanayake et al. 2011). This research will address the online shopping technology in Ireland’s supermarket industry and investigate the main factors that drive retailers to widely implement online shopping technology. To provide an in-depth understanding, the well-known supermarket chain Musgrave in Ireland will be targeted.

2. Literature Review and Research Gap

2.1 Industry Environment

Gaur and Young-Hoon (2014) identify that the intense competition in supermarket industry forces retailers to make changes on their operation to better attract consumers. In addition, Anupindi et al. (2015) demonstrate that companies’ strategies are greatly influenced by industry environment. Following these ideas, it is necessary to research whether the implementation of online shopping technology in Ireland’s supermarket industry is also driven by changing industry environment. Among different frameworks that analyze industry environment, Porter’s (2008) Five Forces Framework is one of the most widely used frameworks (See Figure 1).

[pic 1]

Figure 1. Porter’s Five Forces Framework

Source from: Porter (2008)

Exiting rivalry looks at the competition in the industry, and it requires companies to clearly identify their main competitors (Shin 2010). Then, threat of new entrants examines the extent to which new players can easily enter the industry (Porter 2008). Threat of substitute products is brought by similar products that can meet consumers’ similar needs (Wheelen and Hunger 2008). The bargaining power of buyers examines the extent to which buyers can put the company under pressure (Porter 2008). Finally, the bargaining power of suppliers looks at whether suppliers can easily negotiate the price with companies (Baack and Boggs 2008).

Even though Porter’s framework is widely used by companies, it still receives some criticism. For example, Caroline and Li (2008) argue that buyers, competitors and suppliers identified by Porter are unrelated, and they do not interact. In addition, Hill (2010) claims that Five Forces Framework more addresses external factors and it ignores companies’ internal factors. Finally, Johnson et al. (2013) demonstrate that in nowadays, a significant number of companies operate in multi-industry, and Porter’s framework fails to explain the multi-industry conglomerate.

2.2 Consumer Behaviour

Kinsey and Senauer (2015) identify that changing consumer behaviour plays a very important role on business strategy because companies need to update their products and technologies so changing consumer needs can be satisfied. Therefore, it is necessary to investigate whether the uptake of online shopping technology in Ireland’s supermarket industry is influenced by consumers. According to Lynn et al. (2011), consumer behaviour studies the process that people select, use and dispose a product or service. The aim of consumer behaviour studies is to generate a good understanding of how consumers make their decisions on purchase (Lynn et al. 2011). Foxall (2015) identifies that consumer behaviour is influenced by many factors, including a company’s marketing mix and consumers’ personal factors.

Several scholars investigated consumer behaviour in supermarket industry. For example, Kim and Park (2015) conduct a research and identify the main factors that raise consumer complaints on supermarket. As Kim and Park (2015) find, 78% of consumers claim that it is wasting time to queue at cashier. This may explain why online shopping technology is increasingly popular because consumers can simply pay online which greatly save their time. In addition, Ranaweera and Prabhu (2013) develop a research and find that 69% of consumers believe that the online shopping technology adopted by supermarket retailers greatly enhances the convenience of purchasing as they do not need to go out when they need to buy daily necessity.

2.3 Research Gap

From the Literature Review, it can be found that previous scholars have very different ideas on why online shopping technology is used by supermarket retailers. For example, Gaur and Young-Hoon (2014) think intense competition is the main factor while Kim and Park (2015) think changing consumer behaviour is an important reason. However, it is a fact that all these studies do not look at Ireland’s supermarket industry, and this leaves a gap for this research. In addition, only two aspects are identified by previous scholars, so it is necessary to investigate whether other factors also drive Ireland’s supermarket retailers to adopt online shopping technology. Therefore, it is essential to develop this research.

3.0 Research objective and questions

Quite many studies show that the uptake of online shopping technology in retailing industry brings many benefits to retailers. For example, Kim and Park (2015) find that convenient shopping channel greatly enhanced consumer loyalty, thereby leading to higher sales. Nevertheless, some scholars claim that online shopping technology is less helpful for supermarket industry. For example, Kinsey and Senauer (2015) demonstrate that unlike other products such as clothes, consumers purchase vegetables or fruits from supermarkets and when they buy these types of products, it is better for them to go to the store and select fresh ones. Under this case, online shopping technology may not work well. With these different voices, this research aims ‘to investigate the relationship between the uptake of online shopping and increased sales in supermarket industry in Ireland’.