Strategy Formation Conceptual Model in Digital Transformation Of Fashion Retail Organizations

Digital transformation as a new environmental paradigm is rapidly changing the internal and external dimensions of the business environment. Traditional businesses face more challenges in this new technology-motivated situation. The complexity and high uncertainty of the business environment, the need for more knowledge and experience in transformation management, the high cost of technology adoption, and internal resistance to change are obstacles to decision-making for digital transformation in traditional industries like the fashion retail industry. Lack of information and knowledge of management for reinventing their business model and forming their digital transformation strategies require solutions. To manage the situation strategically, organization leaders need a conceptual model to design their thinking about the path of digital transformation, reduce the ambiguity in their strategic decision-making process, and reduce the waste of resources in their organizational digital transformation. The model would help the organization understand the strategy formation process in digital transformation.

This is an applied developmental study with a descriptive approach. This study developed a new conceptual model using the five-step method of the grounded theory literature review. In this research method, the findings of the existing studies are investigated using content analysis and open and axial coding in the fundamental theory method. The distinction of this method is the possibility of introducing a model and framework derived from the findings of previous studies, which ultimately led to the design of a conceptual model of strategy formation for the digital transformation of fashion retail.

By mining the existing body of literature, 36 studies were systematically screened, and based on content analysis and open and axial coding in a grounded theory approach to the articles' findings, 75 codes and 27 main categories were extracted. In the next stage, the categories were prioritized using the Shannon entropy technique based on the frequency of article codes. The final presented model has three main parts: drivers, dimensions, and consequences of strategy formation in the digital transformation of fashion retail.

Industrial digital transformation drivers include customer push for digitalization, pressure of competitors' progress, and supply chain push. Internal drivers are digital transformation leadership competency, employee readiness, digital technology capacity, financial expectancy, and strategic capacity for digital transformation. Digital technology penetration, sustainability, social and economic trends, and legal requirements are megatrends driving digital transformation. The customer push and the widespread influence of information technology in all aspects of human life are the most crucial drivers of the external environment. The organization's strategic capacity and technological infrastructure are essential internal drivers in forming a digital transformation strategy, which implies the necessity of digital acceptance in context and digital competency in the organization to start the transformation process. These drivers stimulate and direct the digital transformation process in the fashion retail organization. Organizations have no control over these drivers but need to know drivers and their dynamics for the strategy designing stage. The dimensions of digital transformation strategy in fashion retail organizations include customer experience, data and technology management, executive processes and operations redesigning, digital organization, employee experience, and digital supply chain management. Due to retail industry specifications, among the seven dimensions of the digital transformation strategy, customer digital experience, digital technology management, and data management need more investment and attention, and redesigning digital business models according to new opportunities and challenges should be considered. Organizations need strategy, plan, and budget to transform these dimensions.The consequences of digital transformation strategy formation in fashion retail organizations were also classified as value co-creation, financial performance improvement, competitive position and customer satisfaction, organization sustainability, smartness, and increasing efficiency and effectiveness. Although there are multiple consequences of digital transformation in retail organizations, The value co-creation between customers and the retail industry is an essential consequence resulting in emerging innovative products and services. Also, it will direct the fashion retail industry to join the sharing economy and circular economy in the future.