Innovation in Retail systems–How is it done and by whom?

Trends like digitalization, globalization, urbanization and changing buying patterns affects society as a whole and retail in particular. The ability to change and adapt to meet such challenges is the key to survival for many retailers. Despite urgent need for change, research on retail innovation is limited, fragmented, and relates mostly to industrial applications. This means that the general understanding of innovation relies mainly on research and practices in manufacturing firms.This conceptual paper aims to elaborate on the different innovation perspectives and practices in retail systems that are essential to meeting future challenges. The paper is mainly based on literature, previous research by and experiences of the authors, in the field of innovation in general, and on retail and service innovation in particular.Retail is an intertwined setup of products and services, which need to satisfy consumers and ultimately provide value to and create a relationship with consumers. The standpoint in the paper is to focus retail innovation from a systems approach. In accord to such an approach, retail consists of several interrelated actors who jointly construct a common system. The question on retail innovation is, however, how is it done and by whom?With support in the literature the authors identify three dualities in the retail system. Based on empirical input the identified dualities are then used to elaborate on the potential differences that can be distinguished between the retail system actors i.e. the retail firms and manufacturing firms. Potential barriers to innovation caused by the abovementioned dualities are likewise expanded on. Finally, the authors extract some propositions by means of bridging the different organizational, processual and disciplinary barriers that are discerned in the retail system