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Digital Transformation in the Service Sector: Insights from Consultations with Firms in Wholesale, Retail and Logistics

Author

Listed:
  • Wei Dong
  • James Fudurich
  • Lena Suchanek

Abstract

Firms increasingly rely on digital technologies such as e-commerce, cloud computing, big data, digital tracking and digital platforms that are reshaping business operations, business models and market structures. In this context, the Bank of Canada consulted with firms in wholesale, retail and logistics, as well as with related industry associations to yield insights on the adoption of digital technologies. Results show that firms are increasingly investing in digital technologies, most often to increase operational efficiency or to enhance customer experience. The survey also aimed to shed light on the various channels through which digital transformation may affect firms’ prices in order to discern the implications of digitalization for inflation. Survey respondents point to some disinflationary pressures overall: first, firms view e-commerce as putting downward pressure on prices, due to increased transparency and comparability in online markets, which amplifies competition and reduces firms’ pricing power. Second, thanks to the adoption of technologies, cost savings and efficiencies are in some cases being passed on to the customer although, for many firms, cost savings are yet to be realized. Finally, firms view digital technologies as a driver of actual or expected changes in market structure, citing consolidation and concentration of market power among dominant players, forcing smaller players out of the market.

Suggested Citation

  • Wei Dong & James Fudurich & Lena Suchanek, 2017. "Digital Transformation in the Service Sector: Insights from Consultations with Firms in Wholesale, Retail and Logistics," Staff Analytical Notes 17-19, Bank of Canada.
    • Handle: RePEc:bca:bocsan:17-19
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    References listed on IDEAS

    as
    1. Wei Dong & James Fudurich & Lena Suchanek, 2016. "The Digital Economy—Insight from a Special Survey with IT Service Exporters," Discussion Papers 16-21, Bank of Canada.
    2. Chris D'Souza & David Williams, 2017. "The Digital Economy," Bank of Canada Review, Bank of Canada, vol. 2017(Spring), pages 5-18.
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    Citations

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    Cited by:

    1. Jongrim Ha & M. Ayhan Kose & Franziska Ohnsorge, 2022. "Global Stagflation," CAMA Working Papers 2022-41, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Chris D'Souza & Jane Voll, 2021. "Qualitative Field Research in Monetary Policy Making," Discussion Papers 2021-1, Bank of Canada.
    3. Adalheidur O. Gudlaugsdottir & Karen A. Vignisdottir & Lilja S. Kro, 2022. "What a difference a decade makes - survey evidence from Icelandic firms," Economics wp90, Department of Economics, Central bank of Iceland.
    4. David Amirault & Naveen Rai & Laurent Martin, 2020. "A Reference Guide for the Business Outlook Survey," Discussion Papers 2020-15, Bank of Canada.
    5. Ha, Jongrim & Kose, Ayhan M. & Ohnsorge, Franziska, 2022. "From Low to High Inflation: Implications for Emerging Market and Developing Economies," MPRA Paper 112596, University Library of Munich, Germany.
    6. James Fudurich & Lena Suchanek & Lise Pichette, 2021. "Adoption of digital technologies: Insights from a global survey initiative," Discussion Papers 2021-7, Bank of Canada.
    7. Maha Shehadeh & Ahmad Almohtaseb & Jehad Aldehayyat & Ibrahim A. Abu-AlSondos, 2023. "Digital Transformation and Competitive Advantage in the Service Sector: A Moderated-Mediation Model," Sustainability, MDPI, vol. 15(3), pages 1-21, January.
    8. György Matolcsy & Márton Nagy & Dániel Palotai & Barnabás Virág, 2020. "Inflation in the Digital Age: Inflation Measurement and Bias in the 21st Century," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 19(1), pages 5-36.
    9. Karyne B. Charbonneau & Alexa Evans & Subrata Sarker & Lena Suchanek, 2017. "Digitalization and Inflation: A Review of the Literature," Staff Analytical Notes 17-20, Bank of Canada.
    10. Ha,Jongrim & Ivanova,Anna & Ohnsorge,Franziska Lieselotte & Unsal Portillo Ocando,Derya Filiz, 2019. "Inflation : Concepts, Evolution, and Correlates," Policy Research Working Paper Series 8738, The World Bank.

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    More about this item

    Keywords

    Firm dynamics; Inflation and prices; Service Sector;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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