Gone are the days when outsizing your immediate competitors was enough to mark success in the retail arena. The rules of the game have changed today way faster than you can probably imagine. Top local retailers who enjoyed high profit margins back then are now just a part of a winning strategy or formula to say. Amid rising consumer demand and digital advancements, innovation is the food for success in retail now. And it’s not just for brands out there churning out distinct products with this type of a winning streak.
The future is going to be slightly different from what it is right now for sure. The line between brick-and-mortar and online businesses is disappearing even faster. Offline stores will dive into online pool while digitally native brands will establish physical shops to simply provide “retailtainment”.
Retail Statistics 2019
According to a report, digitally native brands are expected to open more than 850 brick-and-mortar stores in the next 5 years. Whereas e-commerce retail sales are expected to account 13.7% of retail sales worldwide in 2019. Customer demands and retail technology will keep evolving with time. However, if there’s one thing that won’t change, then it is customer experience.
- 82% consumer prefer to purchase from a brand with multiple delivery options.
- 81% consumers do online research before finally purchasing anything.
- 62% of customers expect personalized discounts or offers based on past purchases.
- 31% of consumers say they do their shopping while flipping through their social media accounts.
- In-store shopping is still the preferred retail channel for 82% of Millennials, even the ones who also engage in online shopping.
So to survive in this evolving marketplace retailers got to have different business models. And, trust me, many retailers have got loads of things to do still to secure their future. Upon evaluating the entire marketplace, we’ve got the following retailers models that are likely to keep your business in the pink of health in the future.
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Ecosystem players
All right! On the top of the list is “ecosystem players”. The future belongs to retailers who can turn themselves into an “ecosystem” itself. The companies that can emerge as one-stop shops and provide all-in-one solutions for consumers are going to thrive in the future for sure. But remember, the success of these ecosystems will largely depend on customer experience.
Scale fighters
Retailers who won’t be able to transform themselves into ecosystems will have to become scale fighters should they wish to rule the future. Scale fighters have both scale and local market share leadership. They are likely to grow exponentially in the future through mergers and acquisitions and organic growth of course. Their size alone won’t really define their success. Scale fighters are fast, deft at innovation, and are supported by huge investment in IT.
Value champions
Another business model on the list for retailers that will thrive in future is “value champions”. The practice of new store openings will play a key role in their success. In developed markets though these value champions will have to be a bit careful about price wars on comparable stock keeping units (SKUs). Value champions will have to expand points of distribution in markets with lower penetration, reduce supply costs, and innovate to make their products appealing.
Hitchhikers
These are comparatively very small retailers with expertise in design and development domain. They lack scale to keep up with investments in IT systems and advanced analytics. To fill this gap, they borrow scale from other companies.
According to industry, hitchhikers are going to do really well in the future if they can learn the art to stand out of the crowd.
Local stalwarts
Local stalwarts too lack scale just like “hitchhikers”. They borrow it from other companies. But their strong local leadership will play a major role in their success in the future. This has given advantage to them in the past and will continue to do so in the future as well.
Retailers who won’t be able to evolve according to these business models are at high risk of failing in the future. So these vulnerable companies must address their shortcomings in scale and innovation soon to stay in the game.
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