Journal of Retailing and Consumer Services 20 (2013) 225–233

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Journal of Retailing and Consumer Services

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Obsolescence risk in advanced technologies for retailing:

A management perspective
Eleonora Pantano n, Gianpaolo Iazzolino 1, Giuseppe Migliano 1
Department of Mechanical, Energy and Management Engineering, University of Calabria, Via P. Bucci, cubo 46C 87036 Arcavacata di Rende CS, Italy

a r t i c l e i n f o abstract

Article history: In recent years, a great deal of research focused on the introduction of advanced technologies for
Received 31 July 2012 making traditional stores more appealing and attractive, with several benefits for the retail process.
Received in revised form Since the introduction of these innovative systems involves several risks that can have a negative
3 December 2012
impact on business profitability, this paper aims at investigating to what extent it is possible to reduce
Accepted 2 January 2013
Available online 1 February 2013
these risks by proposing an explorative framework for a successful risk management strategies in retail
context. Key results of this research concern the importance of the risk management also for retail
Keywords: sector, with emphasis on the introduction/adoption decision of innovative technologies in the points of
Risk management sale, with consequences for retail-oriented industries. To achieve this task, the current study
Retailing
synthesizes findings from several fields such as management, marketing, and computer science.
Technology management
& 2013 Elsevier Ltd. All rights reserved.
Technology obsolescence risk
Innovation management

1. Introduction adopting technology-based innovations for the points of sale. In fact,

Capacity of innovating has become a critical factor for firms and
organizations in order to improve competitiveness, sales growth,
efficiency and productivity (Guan et al., 2006). Hence, innovation
capability of the firms needs to be improved in order to adopt new
advanced systems more quickly than competitors (Wang et al., 2008).
For this reason, the global pressure has increased the competitive
spirit of enterprises through innovating, and it has reduced the life-
cycle of new technologies.
Abernathy (1985) suggested describing innovations on the basis of
the impact of these on the firm’s existing technological and market/
business knowledge. Hence, these innovations can be incremental or
radical (disruptive) according to the importance of the caused changes
(Marquis, 1969; Damanpour and Wischnevsky, 2006; Sen and
Ghandforoush, 2011). Radical innovations are new functionalities or
new technologies that have not been previously identified and they
emerge from a discontinuous process, whereas incremental innova-
tions or adaptations are an improvement of existing functionalities by
reducing cost, improving efficiency, etc. (Sen and Ghandforoush,
2011).
Due to the advantages of innovating and the consumers’ expecta-
tions of novel technologies for improving their shopping experience
(Pantano and Laria, 2012), also retailing may take advantages by
n
Corresponding author. Tel.: þ39 0984492235; fax: þ39 492277.
E-mail addresses: eleonora.pantano@unical.it, e.pantano@tue.nl (E. Pantano),
gp.iazzolino@unical.it (G. Iazzolino), giuseppemigliano@gmail.com (G. Migliano).
1
Tel.: þ39 0984492235; fax: þ39 492277.
this sector can exploit the current advances in technology for making
the points of sales more efficient and appealing by introducing
innovative and interactive systems (Pantano and Laria, 2012;
Pantano and Servidio, 2012; Breugelmans and Campo, 2011). These
innovations provide benefits for both consumers by supporting the
decision-making process and retailers by providing updated informa-
tion on clients behaviours and market trends (Sorescu et al., 2011,
Vieira, 2010; Shankar et al., 2011). On the one hand, these technol-
ogies allow consumers to (i) achieve information and customized
contents on favourite products, services, sales, promotions, etc., (ii)
compare and choose among alternatives, (iii) search for items, and
(iv) calculate total purchases, by providing more convenient experi-
ences in terms of time saving and providing entertainment (Hsiao,
2009; Yoon and Kim, 2007; Bharadwaj et al., 2009). On the other,
these technologies provide constantly updated information on market
segments, preferences, needs, while shopping, etc., which can be
exploited for the development of more efficient (direct) marketing
strategies (Pantano and Laria, 2012). Hence, they are able to improve
the traditional points of sale by enriching the provided information
through the most recent advances in 3D graphics, as well as to
provide retailers with information on consumers’ in-store behaviour.
To date, the most powerful innovative technologies are RFID
(Radio Frequency IDentification) systems (reader and writer for
providing additional information on products), storefront displays
enriched with virtual reality elements (i.e. virtual mannequins), smart
shopping trolleys capable of supporting consumers during the
in-store experience, and recommendation systems for mobiles

0969-6989/$ - see front matter & 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.jretconser.2013.01.002
226 E. Pantano et al. / Journal of Retailing and Consumer Services 20 (2013) 225–233
(Kowatsch and Maass, 2010; Reitberger et al., 2009; Breugelmans and
Campo, 2011).
Since the introduction of these technologies dramatically
changes the retail process, in terms of store atmosphere, client–
vendor relationship, quality of service, and consumers’ shopping
experience, several risks can be encountered with possible nega-
tive consequences on business profitability, concerning the con-
sumers’ acceptance and effective usage, the monetary investment
and late returns on investment, the risk of frequent physical
damages and obsolescence of the technical components, etc.
Hence, the aim of this paper is to investigate to what extent it
is possible to reduce these risks by proposing a new framework
for technology risk management in retail context. The study
provides an explorative and valuable analysis of obsolescence
risks concerning the introduction of a new technology in the
points of sale, by highlighting useful tools for scholars and
practitioners for better understanding the critical role of risk
management for introducing effective innovations in the points of
sale. In particular, the first part of the paper investigates risk
analysis with emphasis on the obsolescence from a management
perspective; whereas the second focuses on the major risk issues
involved in most current innovations to figure out the new
framework for an efficient risk evaluation for innovations adop-
tion in the retail context.
Key results of this research concern the importance of risk
management regarding the introduction of innovative technolo-
gies in retailing, with consequences for retail-oriented industries,
by synthesizing findings from different fields such as manage-
ment, marketing, and computer science.
2. Theoretical background
2.1. Obsolescence risk management
Despite the benefits generated by technological innovations,
innovation process is characterized by uncertainty, which affects
also the processes that lead to the technological innovations, by
making innovating a complex process difficult to assess accu-
rately (Wang et al., 2008; Alkemade and Suurs, 2012).
Since rapid advances in technology imply huge investments
and late possibility of returns on investments, the adoption of
innovations is strictly linked to the uncertainty concerning both
the nature of technological changes and the threats of further
technological developments able to reduce dramatically the
technology life-cycle (Fanelli and Maddalena, 2012; Hekkert
et al., 2007). Similarly, uncertainty concerns the occurrence of
risks that are unpredictable events able to affect firm’s objectives
(ANSI/PMI, 2008). In this scenario, an efficient risk management
may lead to several organizational benefits including the identi-
fication of more favourable alternatives, by increasing the con-
fidence for achieving the objectives, the chance of developing
more successful strategies, the reduction of unexpected threats,
risks and problems, and the more detailed estimations, with the
subsequent reduction of uncertainty (Ward and Chapman, 2004).
In fact, the new management strategies are devoted to reduce the
risks prompted by the dynamic forces that are rapidly modifying
the competitive environment such as the frequent advances in
technology, the rapid growth and diffusion of technology among
consumers and competitors, the increasing number of alterna-
tives available for consumers, the increasing effort in innovation,
and the increasing the reliance of providers of innovation.
In particular, efficient risk management strategies allow firms to
(i) recognize potential threats of the market, (ii) identify the main
consequences on resources and business profitability, and (iii) modify
the subsequent behaviour (McGaughey et al., 1994; Alhawari et al.,
2011). Since the business competitive battle with competitors is
largely influenced by the firm ability to predict future actions and
establish the best strategy to challenge ever-changing circumstances
(Verona and Ravasi, 2003), efficient risk management strategies are
compulsory for achieving a sustainable competitive leadership posi-
tion (Holzmann and Spiegler, 2010).
In particular, the risk management process consists of three
main phases: (i) risk identification, (ii) risk estimation, and
(iii) risk evaluation (Rowe, 1977; Charette, 1990). Concerning risk
identification, this phase includes the definition of threats occur-
ring in a particular scenario; the risk estimation phase reduces
uncertainly involved in business activities by evaluating the
consequences and impact of a certain risk; whereas the last phase
involves actions able to reduce risk and increase risk acceptance.
Although a detailed and comprehensive list of risks is hard to
understand and manage, there are some tools for supporting
managers’ decision-making (Hillson, 2002). For instance, the risk
identification phase may exploit few fundamental practices such
as Risk Breakdown Structure (RBS), which emerges as one of the
most useful tools for effective risk identification. It is a hierarch-
ical structure that splits potential source of risks into layers of
increasing detail and describes sources of risks in a certain
context and details each risk starting from a root node represent-
ing a general risk source to deeply understand the source in
depth, thus it can also be exploited for risk assessment (Hillson,
2002, 2003). While the risk estimation phase may involve analysis
tools such as probability–impact grid analysis. This represents the
risks estimation through the attribution of ‘‘high’’, ‘‘moderate’’
and ‘‘low’’ rate. It consists of the definition of a grid with two
dimensions: probability of occurrence of event (in columns) and
impact of risks on the object of evaluation (in rows). The risk
estimated value is calculated as follows (Ward, 1999):
rating ¼ probability  impact
in fact, it is possible to classify the different kind of encountered
risks and rank them through multicriteria methodologies
(Iazzolino et al., 2012) for reducing their negative effect on firm
performance. Owing to this evaluation, the organization is able to
adapt its behaviour in order to perform actions for mitigating the
encountered risks, with emphasis on the risks with the ‘‘high’’
rating. In fact, the risks characterized by this rate have the
strongest impact on the firm profitability and thus, they require
more attention by the managers.
Hence, risk management strategies allow understanding and
reducing the critical issues emerging from the introduction of a
new technology, such as the introduction of Enterprise Resource
Planning (ERP) systems (Aloini et al., 2007), with benefits for the
financial activities (i.e. bank choice of risk management system)
(Danielson et al., 2002; Iazzolino and Fortino, 2012).
Furthermore, the risk management is strictly linked to the ‘‘life’’
of a certain technology, by managing the investment decisions and
the threats involved in each phase of the ‘‘life’’. In fact, the
technological life-cycle (TLC) illustrates the evolution of technical
and market characteristics (such as changes in sales) (Anderson and
Tushman, 1990; Solomon et al., 2000; Narayanan, 2000). It consists
of five main phases: introduction, growth, maturity, decline and
phase-out. While each phase has peculiar characteristics, not each
technology follows all phases (Solomon et al., 2000). In fact, few
technologies may have a false start and die out. The main causes of a
false start can be the sudden introduction of a superior competing
technology, the improvement of a competing technology, the
identification of a problem associated with the technology, failure
in achieving the critical mass that enables economies of scale to be
achieved, and the lack of a unique and compelling application for
the technology (Solomon et al., 2000). After the decline phase, the
phase out represents the death of a certain technology, implying that
 E. Pantano et al. / Journal of Retailing and Consumer Services 20 (2013) 225–233
it has become obsolete. For this reason, some authors hypothesized
also another phase that represents the obsolescence of the system
(Concho et al., 2011). Hence, when the technology becomes out of
use or out of date; the first is linked to the loss of technology utility
value relative to customer expectation, whereas the latter is linked
to the presence of technology on the market from a long lasting
period (Rai and Terpenny, 2008). Hence, the obsolescence-based risk
management (shortly obsolescence risk management) allows asses-
sing proactively and cost-efficiently the risks that are linked to
technological obsolescence (Romero Rojo et al., 2012; Gravier and
Swartz, 2009).
While the out of use might be measured by the users’
acceptance level or a certain technology, by taking into account
the number of potential users. To achieve this task, Technology
Acceptance Model (Davis, 1989) has been largely exploited.
Although it has been initially employed for predicting Internet
adoption, it is currently applied to several fields by mainly
focusing on the constructs of perceived ease of use, perceived
usefulness, attitude and behavioural intention. In fact, it is
currently involved in the retail sector for investigating consumers’
attitude towards a new system, their behavioural intention and
the subsequent actual usage (Kowatsch and Maass, 2010; Pantano
and Servidio, 2012). In particular, Attitude represents user’s
assessment toward the technology, whereas the behavioural
intention represents the degree to which the user is willing to
perform certain behaviour (in this case to use the technology)
(Pantano and Servidio, 2012).
Concerning the out of date, technologies have internal techni-
cal components, and obsolescence of these has a significant
impact on the whole technology (Feldman and Sandborn, 2007).
Hence, obsolescence can be determined by both the software and
hardware part. Its analysis allows forecasting lifecycles based on
market and technological factors, by predicting both lifecycle
curves and time to obsolescence across the lifecycle curves of
components and related technological attributes.
Although risk management has been introduced also in the
retail context, risk evaluation mainly focuses on the price forma-
tion according to actual demand (Ferrer et al., 2011), whereas
little attention is paid to the risks involved in the introduction and
adoption of innovations in the stores with emphasis on the
importance of obsolescence risk concerning the novel technical
solutions.
2.2. Risk management in retailing
The extant literature on risk management strategies on retail-
ing mainly focused on the risk aspects that are related to a certain
market (i.e. the energy market). In fact, previous studies have
defined risk management either as a set of practices and tools for
evaluating, measuring and managing the market risks in a
retailer’s portfolio of contracts and plan (Boroumand and
Zachmann, 2012), or as a set of services to provide price stability
for analysing the volatile price. Other studies focusing on the
introduction of innovations in the points of sale, mainly investi-
gated the risk of users’ acceptance of the novel technology, by
employing the TAM. In this way, past researches tried to predict
consumers’ behaviour towards electronic payment modalities
(Schierz et al., 2010), self-service systems (Weng et al., 2012;
Eastlick et al., 2012), RFID (Muller-Seitz et al., 2009), and 3D
virtual reality (immersive environments) (Pantano and Servidio,
2012). Further variables have been also added to the traditional
ones hypothesized by Davis (ease of use, perceived usefulness,
attitude, and behavioural intention) in order to develop a more
efficient predictive tool, such as perceived enjoyment (the degree
to which consumer perceives a certain technology as pleasant),
and social pressure (the influence of others, such as friends’ word-
227
of-mouth communication) (Di Pietro and Pantano, 2012). Espe-
cially two variables try to take into account the risks emerging
from the innovation usage, privacy and security, even if these
variables only focus on the consumer’s point of view. In fact, the
first one involves the interest towards keeping private the
personal data during the technology usage (Tsai and Yeh, 2010),
whereas the second one is the degree to which a consumer
believes that using that technology will be secure, with emphasis
on the online environment (Taylor and Strutton, 2010). Hence, the
TAM usage replies only to the question if consumer will use the
technology without taking into account the effective diffusion.
Hence the clients’ intention to use a new technology is not
enough for predicting the success of a technology, which could
be affected by the introduction of substitute technologies and
subject to the wear and tear of its components. Despite the
valuation of technology acceptance into the introduction of new
technologies in stores, the ‘‘out of date’’ concerning risks, which
are related to physical, technological, and functional character-
istics, have not been fully exploited in this context and require
further investigations.
3. Methodology of research
The current work is based on an explorative study design in
order to figure out a new framework for successful identification
and estimation of possible risks encountered while introducing
technological innovations in the point of sales. As a consequence,
the purpose is to propose a direction for supporting retailers in
understanding, anticipating and reducing the encountered risks.
To achieve this task, the present study focuses on the analysis of
the possible obsolescence risks faced during the introduction of a
new technology based on the immersive store, which has not yet
introduced in the stores, even if preliminary study on the
prototype showed the large consumers’ interest toward this
innovative system (Pantano and Laria, 2012; Pantano and
Servidio, 2012).
Since each risk can be analyzed through the three main phases
of Risk Management (risk identification, risk estimation and risk
evaluation), also the obsolescence one would be based on these
three phases, even if our study is limited to the first two phases:
risk identification and risk estimation, whereas the third one (risk
evaluation) can be object of further detailed studies.
(1) Risk identification
The first phase includes the identification of real and potential
threats that might affect obsolescence risk. The main tool that
allows identifying and categorizing the risks is the RBS (Risk
Breakdown Structure) (Hillson, 2002). The RBS structure
starts from a root node that identifies the technology obso-
lescence risk; the second level of RBS identifies the two main
categories of risks in which the obsolescence risk has been
split out of use and out of date risks. The third level of the
structure includes the sub-risks related to the categories
previously mentioned (Fig. 1).
In particular, the out of use category of risks contains risks
which are related to the acceptance of technology; whereas
the out of date risks category includes risks related to the
physical components of technology and thus, to the TLC
(technology life-cycle) of these ones.
(2) Risk Estimation
Risk Estimation phase aims at evaluating the frequency (or
probability of an event) and the impact that might affect the
specific risk as the obsolescence one. To achieve this task, the
probability–impact grid (or PI grid) (Ward, 1999) has been
228 E. Pantano et al. / Journal of Retailing and Consumer Services 20 (2013) 225–233

Fig. 1. RBS structure.

employed. This tool allows rating the risks that have been
identified in risk identification step both in terms of fre-
quency (probability of occurrence of a threat) and impact that
the single risk have on the obsolescence one. Thus, PI grid is
characterized by two main axes that are identified by fre-
quency (or probability) on horizontal axis and impact (the
‘‘weight’’ of a certain specific risk on technology obsolescence)
on vertical axis. Each axis is divided into three ranges: high,
moderate, and low; while the rate that can be calculated as
follows (Ward, 1999):

Rate of risk ¼ probability  impact

PI grid allows identifying categories of risks that could be high,
moderate or low risks (Fig. 2). In particular, high probability–high
impact, high probability–moderate impact, and moderate
probability–high impact characterize the high risks; high
probability–low impact, moderate probability–moderate impact,
and low probability–high impact characterize the moderate risks;
Fig. 2. PI grid with score (adapted from Ward (1999)).
whereas moderate probability–low impact, low probability–
moderate impact, and low probability–low impact characterize
the low risks. the use of glasses with polarized lens, and browse the environment
Each quadrant of PI grid is further characterized by a certain score via a special data glove (Fig. 3).
to better understand the value (impact) of each risk (Ward, 1999).
4.2. Major risk issues

4. The case study of immersive store (i) Risk Identification

4.1. Immersive stores
This study is based on the applications of methods for evaluating
obsolescence risk to retailing, by investigating the case of immersive
stores. These are innovative points of sales extensive employing
immersive technologies and recent advances in 3D graphics
(Pantano and Laria, 2012; Pantano and Servidio, 2012). In particular,
our system is based on the stereoscopic technology. It consists of a
wide screen connected to a computer and two projectors that display
the same object from two different points of view to create the 3D
vision of the item. Consumer can visualize the 3D scenario through
Our analysis starts from the Risk Identification phase, by
employing the RBS in order to identify various risks that
affect the Obsolescence risk (risk 1) of the Immersive Store
(Fig. 3). This risk is characterized by two main categories of
risks that are out of use (1.1) and out of date (1.2), as emerged
from the literature review analysis. Figs. 4 and 5.
Out of use risks (1.1) can be characterized by six main risks
emerging from the Technology Acceptance Model of immer-
sive store (Pantano and Servidio, 2012; Pantano and Laria,
2012): perceived difficult of use (1.1.1) (the degree to which
a person believes that using the immersive store will be
difficult), risk of uselessness (1.1.2) (the degree to which a
 E. Pantano et al. / Journal of Retailing and Consumer Services 20 (2013) 225–233 229

person believes that using the immersive store will be not
useful for their shopping activity), risk of boring experience
(1.1.3) (the degree to which a person believes that using the
immersive store will be not enjoying or pleasant), risk of
social pressure in not using (1.1.4) (the degree to which
people are pushed by others to not using the immersive
stores), privacy risks (1.1.5) (the degree to which a person
believes that using immersive store could have negative
consequences for own privacy), security risks (1.1.6) (the
degree to which a person believes that the immersive store
will be not secured during the usage).
Concerning the out of date (1.2), the risks included in this
category are related to the technical components that are
subjected to the internal component obsolescence (physical
components). In order to identify these risks, we have carried out
an observation of potential users interacting with the system
(from March 2010 to December 2011) for obtaining the historical
data on each component that compose the immersive store. From
the observation, the following risks emerged: obsolescence of
computer (1.2.1), obsolescence of projector (1.2.2), obsolescence
of screen (1.2.3), obsolescence of data glove (1.2.4) and obsoles-
cence of glasses (1.2.5). These risks have been decomposed in a
further level of RBS for major details. Obsolescence of computer
(1.2.1) arises when the physical components of computer become
obsolete, thus it includes the risk of slowness computer (1.2.1.1),
lack of new functionalities emerging from new software tools
(1.2.1.2), and limited computer memory capacity (1.2.1.3). Obso-
lescence of the projector (1.2.2) includes the risks retaliated to the
improvements of resolution in new projectors that appear in the
market (1.2.2.1), to the improvements of brightness (1.2.2.2),

Fig. 3. Consumer exploration of the immersive store. Fig. 5. Probability-impact grid for immersive store risks.

Fig. 4. RBS for immersive stores obsolescence risk.

230 E. Pantano et al. / Journal of Retailing and Consumer Services 20 (2013) 225–233
to the improvements colour contrast (1.2.2.3). Obsolescence of
the screen (1.2.3) is characterized by the possible substitution by
other more efficient monitors (i.e. touch screen monitor, 3D
monitor without glasses) (1.2.3.1.) or physical damages caused
by users (touches or impacts which cause the phase shift of
monitor focus) (1.2.3.2). Obsolescence of the data glove (1.2.4)
includes the risk of substitution by other input devices (i.e.
motion capture) (1.2.4.1), risk of physical damages by users (i.e.
hurts or improper use) (1.2.4.2), and risk of substitution by other
data glove with better functionalities (1.2.4.3). Obsolescence of
the glasses (1.2.5) arises when the market shows other glasses
with better characteristics (like less weight and higher resolution)
(1.2.5.1), when users cause physical damages (1.2.5.2) or/and
when the glasses become useless due to the introduction of new
technological monitor which allow to watch them without
glasses (1.2.5.3).
(ii) Risk Estimation
In order to estimate the risks identified through RBS, we have
applied the Probability–Impact grid for the evaluation of the
probability and impact of each risk. Even in this case, the
probability was evaluated by the observation of potential
users interacting with the system (from March 2010 to
December 2011), whereas the impact has been evaluated on
the base of each problem on the functioning of the whole
system and on the effect on consumers’ perception. In
particular, after observing the frequency of each problem,
we manually caused them to observe the consumers’ reaction
(we considered consumers’ exit, complaint, or no reaction)
and to evaluate the impact. Thus, for each possible problem
we observed consumers’ reaction and evaluated the impact
based on the most frequent reactions.
The PI grid allows classifying the risks into different ranges.
From this analysis, no risks with high probability and high impact
emerge. Despite this result, we have identified other high rated
risks (classified as ‘‘high–moderate’’): the obsolescence of the
screen (1.2.3) that shows the risk of physical damages caused by
the users (1.2.3.2), through the observation, we noticed that
consumers tend to touch or hurt the screen frequently with
consequences for the block or damage of whole system; and the
risk of substitution of the actual screen with other screen more
efficiently (1.2.3.1), through the observation we noted that this
event occurs with a moderate frequency (or probability), in fact in
the last few years we observed that the screen have undergone a
pretty fast evolution. The possible evolution of the screen and its
substitution might cause a significant change in the use of
technology, thus the impact on immersive store has been con-
sidered high. Another ‘‘moderate–high’’ risk is related to obsoles-
cence of glasses (1.2.5), and regarding the uselessness caused by
the introduction of new technological monitors without glasses
(frequency related to the previous considerations). In fact, if there
is an introduction of a new advanced monitor that allows using
immersive store without glasses.
The moderate rated risks (moderate probability and moderate
impact, low probability and high impact, and high probability and
low impact) include also the risks linked to TAM. In particular, risk of
social pressure in not using (1.1.4) has been estimated as ‘‘moderate–
moderate’’ risk, in fact if they do not have a good experience with the
immersive store they tend to influence behaviour of other users
negatively.
Other risks related to TAM have been estimated as ‘‘low–high’’
risks and include perceived difficult of use (1.1.1) (that have occurred
rarely, but with a high impact), risk of uselessness (1.1.2) (that have
occurred rarely with negative consequence for consumers’ intention
to use further the system, thus caused a high impact), risk of boring
experience (1.1.3) (that has been verified seldom, but with a high
impact), risk of privacy (1.1.5) (that have no occurrences) and risk of
security (1.1.6) (that have no occurrences).
A further risk that has been estimated as ‘‘low–high’’ risk is the
risk of slowness of computer (1.2.1.1) (that have no occurrence,
even if an excessive slowness could would produce a negative
experience for users). The last moderate rated risk is the risk of
substitution of data glove with other input devices (1.2.4.1)
(estimated as ‘‘high–low’’ risk). This risk has occurred often and
in the immersive store due to the frequent developments of new
input devices such as motion capture, even if this substitution has
not changed the way of using the technology, thus the impact
is low.
The low rated risks (moderate probability and low impact, low
probability and moderate impact, and low probability and low
impact) could be the limited capacity memory of the computer
(1.2.1.3), glasses with better characteristics (1.2.5.1), and physical
damages to glasses caused by users (1.2.5.2). Limited capacity
memory (1.2.1.3) has occurred sometimes (for this reason, prob-
ability has been considered moderate), the impact is low, because
users had no reactions for this event. Other glasses with better
characteristics are already available on the market (1.2.5.1), but
this event has low impact on technology obsolescence because
users continued to use the technology without complaining.
Physical damages to glasses caused by users (1.2.5.2) have
occurred few times but they had no consequences for the system
(when the glasses have been damaged we provided new glasses
to the users).
Other possible risks even if with low impact and low frequency
are: the lack of new functionalities emerging from software tools
(1.2.1.2), the improvements of projector’s resolution (1.2.2.1), the
improvements of projector’s brightness (1.2.2.2), the improve-
ments of colour contrast (1.2.2.3), physical damages to data glove
caused by users (1.2.4.2) and substitution of actual data glove by
other data glove better lightweight (1.2.4.3). All these events have
no occurrence except physical damages to data glove caused by
users (1.2.4.2) which have occurred very rarely. In fact, when this
event has happened, a new data glove has been provided rapidly
to users.
From this analysis, the possible links (or conditional probabil-
ities of occurrence) between risks do not emerge. For this reason,
a new tool of risk estimation that allows identifying conditional
probabilities of the events and the links between two or more
risks (interdependencies between risks) could provide a novel and
useful tool for decision-making process.
4.3. Development of the new interdependencies structure
Since each risk could have effects on other risks, a new tool taking
into account the conditional probabilities between risks would
emerge. To achieve this task, we propose a new graphical tool namely
Risks Interdependencies Matrix, which allows analyzing the relation-
ships between risks, by deeply understanding the most influenced
risks and the most influencing ones. In particular, this matrix
graphically shows the risks with many interdependencies without
distinguishing their moderate/high rate, thus these risks necessitate
of more attention due to the possible impact on the other ones,
enhancing the results emerging from the previous analysis.
Table 1 shows the interdependencies emerging between the
identified risks, as well as the value of these relationships. Inter-
dependencies have been identified with 1 while occurring, in order to
make the impact of single risk clearly emerge.
Concerning the out of use risks, the threat of perceived difficult of
use (1.1.1) influences the occurrence of risk of boring experience
(1.1.3), thus a conditional probability exists between these two risks.
In fact, if a user believes that the immersive store is too difficult to
use, the emerging experience is not pleasant. Similarly, the risk of
 E. Pantano et al. / Journal of Retailing and Consumer Services 20 (2013) 225–233 231

boring experience (1.1.3) has relations with the risk of uselessness

Influencing
(1.1.2) and the risk of social pressure in not using (1.1.4); when
consumers have a boring experience in using technology, they tend to

17
1 share the bad experience with other friends, influencing others

3
2
1
2

1
1
1
0

0
0
0

0
0
0

0
subsequent behaviours in (not)usage (1.1.4). As a consequence, the
1.2.5.3

boring experience generates also the risk of uselessness of the

technology (1.1.2).

1
Concerning the out of date risks, the risk of slowness computer
1.2.5.2

(1.2.1.1) influences the risk of boring experience (1.1.3), because a

slow computer affects the speed of human–computer interactions by

0
making it not pleasant. Similarly, limited capacity memory of
1.2.5.1

computer (1.2.1.3) influences the risk of uselessness (1.1.2) and the

risk of slowness computer (1.2.1.1). Since each computer has a

1
limited capacity of memory, the memory capacity reduces the system
1.2.4.3

performances (1.2.1.1). A limited capacity of memory generates also

the uselessness of immersive store, because it not allows adding new
1

1
products to the data repository, thus the usefulness of the technology
1.2.4.2

decreases. The risk of screen substitution (1.2.3.1) is linked to the risk

of perceived difficult of use (1.1.1), boring experience (1.1.3), sub-

0
stitution of input devices (1.2.4.1) and uselessness of glasses by
1.2.4.1

introduction of new advanced monitors (1.2.5.3). The introduction

of new technological screen could cause the substitution of input
1

devices (1.2.4.1); indeed the new monitor might change the use of
1.2.3.2

new input devices (i.e. motion capture). The introduction of new

screens without glasses, would avoid their usage (1.2.5.3).
0

The risk of physical damages caused by users to the screen

1.2.3.1

(1.2.3.2) is related to risk of boring experience (1.1.3) and risk of

substitution of screen with other new monitors (1.2.3.1). If physical
1

damages occur to monitors, the immersive store becomes impossible

1.2.2.3

to use, thus, users may have a bad experience with technology (1.1.3).
Furthermore, the damage may cause the substitution of screen with
0

new monitors (i.e. touch screen monitors or 3D monitor without

1.2.2.2

glasses) in order to introduce a monitor with less users damages risks.

Risk of substitution of data glove by other technologies (i.e. motion
0

capture) (1.2.4.1) is linked to the perceived difficult of use (1.1.1). In

1.2.2.1

fact, the substitution of data glove with other new technologies could
cause in users a change in their usage behaviour with consequences
0

for the perceived ease of use of the system. Physical damages caused
1.2.1.3

by users to data glove (1.2.4.2) could be one of the main causes that
force to substitution of data glove with other technologies (as motion
0

capture) (1.2.4.1) or the substitution with new data gloves with better
1.2.1.2

functionalities or more resistant (1.2.4.3). Regarding the glasses, the

risk of substitution by other glasses with better lightweight and
0

resolution (1.2.5.1) may impact the risk of boring experience (1.1.3).

1.2.1.1

The glasses physical damages caused by users (1.2.5.2) may influence

risk of substitution by other glasses with better lightweight and
1

resolution (1.2.5.1). Furthermore, the risk of introduction of new

1.1.6

technological monitors without glasses (i.e. 3D monitors without

0

glasses) (1.2.5.3) is related to the risk of perceived difficult of use

(1.1.1), because the introduction of a new advanced monitor may
1.1.5

cause a change in consumer’s usage behaviour, by arising the

Risks Interdependencies Matrix for immersive store.

perceived difficult of immersive store usage.

1.1.4

A further finding is related to the risks that emerge as the most

1

influencing and the ones that emerge as the most influenced. The
Risks Interdependencies Relations Matrix shows the risk of substitu-
1.1.3

tion of the screen (1.2.3.1) as the most influencing risk (it has a direct
1

impact on other three risks) and risk of boring experience as the most
1.1.2

influenced risk (this risks is influenced of other four risks).

1

The matrix represents a further tool for identifying the critical

risks that could be not emerge clearly from the RBS and PI grid. Since
1.1.1

the high rated risks (one or more) have a greater impact on the
1

1
3

obsolescence of the immersive store, the more influencing risks could

Influenced

increase their rate, because their occurrence may generate a series of

risky events chain. Indeed, risk classified as more influenced risks,
1.2.1.1
1.2.1.2
1.2.1.3
1.2.2.1
1.2.2.2
1.2.2.3
1.2.3.1
1.2.3.2
1.2.4.1
1.2.4.2
1.2.4.3
1.2.5.1
1.2.5.2
1.2.5.3
Table 1

1.1.1
1.1.2
1.1.3
1.1.4
1.1.5
1.1.6

allow retailers to understand which risks could be occurred if various

risks occurs.
232 E. Pantano et al. / Journal of Retailing and Consumer Services 20 (2013) 225–233
5. Discussion
Since the innovations in the stores generate important
changes, wide costs and high level of uncertainty (Fanelli and
Maddalena, 2012), an efficient management risk analysis plays a
key role for predicting and reducing the possible risks, by
modifying the subsequent firm’s behaviour (McGaughey et al.,
1994; Alhawari et al., 2011; Holzmann and Spiegler, 2010).
Despite the increasing attention in this direction, it is difficult to
predict which technology has the most potential to become part
of the new points of sale by improving the traditional retail
process. In fact, the current studies on the introduction of
advanced technologies mainly focus on the risk of acceptance
by consumers (Kowatsch and Maass, 2010; Pantano and Servidio,
2012), thus the present study aims at proposing a new framework
that focuses on the technology risk management for well per-
forming the technology-based innovation management for retail-
ing. After explaining this framework and embedding it in a
existing promising technology, we propose a method for better
mapping the risks encountering in innovation systems and
resulting in technological change for the traditional points of sale.
According to the literature (Solomon et al., 2000; Hillson,
2002; Feldman and Sandborn, 2007), we identified the physical,
technical and market risks of internal technological components
that might affect the obsolescence of the whole technology. To
achieve this task, we used the Risk Breakdown Structure (Hillson,
2002) and the Probability–Impact grid (Ward, 1999). Since these
tools do not take into account the interdependencies between
risks that would be able to increase the negative effect of each
risk, we introduce a further analysis focusing on the risks inter-
dependencies that shows to what extent some risks with low
impact in the probability–impact grid acquire more importance,
owing to the great influence on other risks. From this analysis, the
risk of screen substitution (1.2.3.1), previously evaluated as a
moderate–high risk, emerge as one of the most important due to
the impact on others. In fact, the risk of perceived difficult of use
system (1.1.1), of data glove substitution with other technologies
(1.2.4.1), and of introduction of new technologies that do not
require glasses with polarized lens (1.2.5.2) are directly affected
by this one. Hence, this component of the immersive store would
be able to determine the obsolescence of the whole system, and
its damages, malfunctioning, improvements have high impact
both from a technical point of view and consumers’ usage.
Similarly, improvements and investments in this direction will
be able to enhance the quality of the whole system and the users’
satisfaction.
For this reason, the matrix of interdependencies emerges as a
new useful tool for providing further critical information able to
reduce the uncertainty concerning the introduction of a new
technology and supporting retailers in the decision-making pro-
cess and risk management, by facilitating the evaluation of the
actual influence of any kind of risk on the others. In fact, the
interdependencies matrix is able to provide a ‘‘qualitative’’
measure of the risk impact by considering the ‘‘width’’ of the
influence of one risk on the others.
Furthermore, our findings show the different importance of each
risk, owing to the different role of each risk on the obsolescence of the
innovation at the point of sale.
Hence, the different risks have a different impact on the total
obsolescence of the whole system, by acting at a different level. In
fact, some risks have a stronger impact on the system, because
their occurrence may cause the malfunctioning of the entire
system or the occurrence of other risks (as emerging from the
matrix of interdependencies).
Since the introduced innovations have a different importance
according to the elicited changes (Marquis, 1969; Damanpour and
Wischnevsky, 2006; Sen and Ghandforoush, 2011), each innovation
can be considered ‘‘incremental’’ or ‘‘radical/disruptive’’. Similarly,
also risks can be defined as ‘‘radical’’ or ‘‘incremental’’ according to
the different effects on the obsolescence risk of the innovative
technology to be introduced. While the technical improvements of
the systems can regard small enhancements in the features, we might
face an ‘‘incremental’’ risk for the system obsolescence. If a strong
improvement in the system functionalities is implemented (for
example a deep change in payment methods), we encounter a
‘‘radical’’ (or disruptive) risk for system obsolescence. Hence, the high
rated risks in the PI matrix and the ones with the strongest impact on
the others can be considered as radical risks, due to the weight of
their effect on both the system functioning and the acceptance by
consumers. As the consequence, decision makers would take more
into account the radical ones while evaluating the obsolescence risk
for the adoption choice of a new technology to be introduced in the
point of sale. If they are combined with the information emerging
from the analysis of Technology Life Cycle, retailers achieve more
information for reducing uncertainty and better evaluating the
investment on this technology. In our case study, the screen is the
core element of the immersive environment, thus its malfunctioning,
damage or improvements have impact both for consumers’ experi-
ence and other components. As a consequence, its effect can be
disruptive from the obsolescence risk analysis, by prompting retailers
to focus especially on this element for reducing the global obsoles-
cence risk emerging from the adoption of immersive technologies in
the points of sale.
Furthermore, our findings show how the radical innovations such
as the immersive stores may encounter both incremental and radical
risks able to affect the whole technology in different ways. In
particular, each technology-based innovation to be introduced in
the point of sale would encounter incremental and radical risks which
are not mutually exclusive (rather, usually it could have both risk’s
types) that should be exploited in with different modalities; particular
attention have to be paid to the radical risks and interdependencies
(conditional probabilities) which may generate them.
6. Future works
Owing to the great number of risks involved in the introduc-
tion of innovations at the points of sale with emphasis on the
critical role of obsolescence risk, tools for the efficient manage-
ment are necessary for reducing the uncertainty. In this work, we
propose a further tool for supporting managers, by considering
the impact of each risk on the others. This tool supports the
evaluation of the real impact of a risk: the interdependencies risks
relationship matrix. In particular, we tested the tool on a new
technology (the immersive store) not introduced yet in the stores,
thus still in the early phase of the life cycle.
Furthermore, from our analysis the different weight of each
risk on the total obsolescence risk of the whole system emerges.
In fact, some risks are more critical due to both frequency of their
occurrence and the impact on the system and impact on other
single risks. For this reason, we introduced the concept of radical
and incremental risk, for better distinguish the value of these ones
and suggest retailers (or decision-makers) to focus their effort on
the radical/disruptive ones.
Although important issues emerged from our work, there are
some limitations which should be taken into account. The first
concerns the total amount of the investigated risk. In fact, the risk
analysis does not focus on all the possible risks for immersive
store, by emphasizing only the most important ones. For instance,
there are more risks related to the malfunctioning or damage of
smaller components such as the cables for electricity or batteries
concerned that are not included in this work. Another limit
 E. Pantano et al. / Journal of Retailing and Consumer Services 20 (2013) 225–233
concerns the number of investigated technologies. In fact, the
present paper is an explorative study, thus further developments
should focus on more technologies in order to achieve
quantitative data.
Since our interdependencies matrix is a qualitative tool, future
works should focus on the relationships between risks, in order to
find a numerical ‘‘weight’’ for each casual relationship, and
provide more data on the actual influence of each risk.
Our findings may be further improved by analysing the
relationship between the risks of a new technology and its
reliability, in order to provide more information for a more
efficient decision-making process.
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