Retail Models

1. The Gatherers

The formula of large stores, low prices, and abundant parking to gather shoppers together has long been at the heart of successful retailing, however, the reasons people congregate will change as will the businesses best placed to tempt them.

As technology is reducing the need to leave home the types of occasions to visit a bricks and mortar retailer are converging.

The result is the focus on gathering will command a premium and retail will become just one way for gatherers to make money.

Other successful gatherers will come from further afield: multi-purpose real-estate developers, transport operators and ‘virtual gathering’ giants such as Amazon andGoogle.

Acting as manufacturer’s agents by providing the gathering space to exchange they will change both the face of retail and its business model.

2. The Connecters

Connections that retailers form with shoppers will readily expand beyond the transaction.

Technology is providing more ways to connect and retailers who leverage this quickly can remain relevant and generate new revenue streams.

Big data enables personalised connections with readily accessible shopper histories and preferences, while beacon technology and self check in provides targeted in the moment communication.

Importantly, retailers who connect through content and demonstrate intimate knowledge of their shopper’s requirements will differentiate with a broader range of bespoke services, such as UK supermarket, Tesco, which now acts as a bank, insurance provider, mobile phone operator, and on-demand video streaming service.

3. The Helpers

Shoppers are accustomed to trading time, money, and angst in exchange for items they want and the satisfaction from obtaining them.

Increasingly, they will be happy to trade privacy for personalisation to alleviate these stresses. This affords retailersanother opportunity to differentiate by providing specific help.

With their ‘Amazon Dash’ device scanning barcodes, Amazon makes it easy to replenish low running stocks whilst their customers make substantial savings by committing to regular deliveries of items on a predictable schedule.

Smart cupboards and connected fridges promising wholly automatic re-ordering processes will join this form of low-effort replenishment.

Digital technology will also help shoppers choose and navigate the path to purchase, allowing retailers to anticipate and match e-commerce sites with personalised virtual shelves.

If shoppers still need to choose, buyer ratings, peer reviews, and price comparisons are available and mobile devices can prompt lifestyle-based suggestions, while augmented reality helps shoppers envisage how items fit into their daily lives.

4. The Deliverers

Shoppers have long been delegated with the responsibility of getting goods home but a bigger slice of retail will soon involve safe and timely delivery to the home.

Delivery may well develop into wholly separate enterprises from massive distribution companies to small scale, crowd-sourced models.

Hybrid versions such as click and  collect will still play a role but in time, driverless cars, drones and 3D printing will reshape the delivery landscape.

5. The Traders

The new environment of price transparency, intensifying competition, and alternative direct business models means making decent profit margins is more difficult.

The solution may be in dynamic pricing, the means of trading directly with shoppers based on understanding their priorities and the competitive set of products and services they consider.

Location-based technology will update pricing and promotions as shoppers scan the shelf. It will focus on bulk buy bargains for some and convenient extras (like instant delivery via a drone) for others.

Trading is today’s core competency but mastering the art of dynamic pricing could provide vital differentiation. Knowing exactly what each shopper values most and engineering a satisfactory transaction will create the greatest possible margins.

6. The Payment Providers

The fundamentals of payments will not change, however speed, ease, and flexibility will.

The mobile phone will be the payment method of choice in ten years and establishing expertise in this area now means retailers can open up new revenue streams.

A new battle for ‘share of statement’ could emerge as they increasingly bid to offer payment services for credit cards, utilities and mobile phone bills, all the while increasing their capacity to gather customers.

This reconfiguration of the shopping process poses many existential questions: Does your expertise still lie in trading or can you focus on new revenue models? Can you stay big, gather people in larger numbers, and monetize their ability to do so or should you be small and nimble, leveraging your expertise in trading whilst satisfying individual shopper needs?

Should you seek to dominate delivery or outsource it? The answers will ultimately come down to your understanding of the other critical factor in retail: the changing nature of shoppers themselves.