Exploring Business Model Innovation in the Norwegian Grocery Market

Abstract

This paper focuses on the under-explored dynamics between physical grocery stores and e-grocery through the lens of business model innovation. While e-grocery is expected to grow, we still know little about how it will affect the existing physical stores - and how these actors are reacting to this potential threat. We draw upon in-depth interviews with senior executives from grocery companies, academics, and experts. The data has been subsequently discussed in the light of market literature and the study’s' theoretical framework. We find that e-grocery and physical grocery operate with two very different business models, where neither would benefit from emulating the other. While some of the physical chains have been developing e-grocery as add-on services, they are not profitable because they are not compatible with the current business model. Seeing this, physical shops are primarily concerned with competing with other physical shops to survive the growth of e-grocery despite of the development from pure e-grocery players. However, these sustaining actions might over time turn consumers digital, as the reduction of number of physical stores might spark the change in consumer behavior needed by e-grocery to accelerate its growth.