Carrot-or-Stick: How to Trigger the Digitalization of Local Owner Operated Retail Outlets?

Abstract

Local Owner Operated Retail Outlets (LOOROs) are threatened in their very existence by the digitalization pressure from online and offline competitors on the one hand and by changing shopping habits of their customers on the other. Despite all digitally-enabled opportunities to regain competitive power, LOOROs still hesitate to adopt digital tools and applications. Politicians, city managers and retail lobbies seek for triggers to support the local structures and to push the digitalization efforts of local retailers. Building on Andreoni´s "Carrot-and-Stick Approach", this study examines the impact of the availability of resources (carrot) and the perception of pressure (stick) on the use of digital applications among 223 owners of LOOROs from 26 cities in Germany. Our findings show that LOOROs are receptive for "Carrot-and-Stick". LOOROs seek for orientation while suffering under a shortage of time and capacities and seem to be disconnected from the development of their competitors and their customers.

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