Trends
Main Trends in the Retail Industry
Increased fragmentation, specialization and differentiation
Customer value drivers will fragment more and more. There is no more an "average customer" who
will buy average products. Customers are increasingly divided into low-cost commodities buyers and
high-value, premium brand buyers. Retailers will have to accommodate this change and offer products
that will appeal to these different customer types.
Mega-retailers are concentrating on low-cost commodities buyers and their geographical coverage will rapidly increase. They will also break traditional product/service categories, and they will blur market segments while increasing their market share. Other retailers will have to specialize and differentiate themselves in order to survive.
Consistency throughout all channels
Customers get a lot more information about products through several channels. For example, customers use the Internet to browse and compare different products before they make their purchase decision. Then they might visit the store or e-commerce site and make the purchase. Retailers must be able to present to customers coherent product information across all available information channels.
It should not matter whether the customer will make the purchase online or at the store, they should get similar kind of benefits and service. Store clerks should have easy access to product data so that they can better serve demanding customers. They need to be aware of campaigns and benefits that are presented outside of the store. For example, how many times have you seen a special campaign on the Internet and when you enter the store, nobody knows about it?
Utilizing valuable customer data
Retailers collect a lot of information about customers and use it to detect customers' buying patterns. Good examples of this are customer loyalty cards. The data collected helps retailers to customize their product selection so that it better serves customer needs. It also opens a possibility to upsell related products that are interesting to these customers. A good example is an online bookstore that offers a customer new books based on the information gathered from other customers with similar buying patterns. The customer is more satisfied and hence more likely to return to shop at the same place.
New value networks deliver greater value to customers
Driven by escalating expectations from customers and stakeholders, leading retailers are rethinking their business models and searching for ways to become more agile, responsive and efficient. They are morphing their traditional, vertically integrated value chains into more flexible "value networks" that allow them to deliver greater value to customers, with each company in the network contributing its own unique capabilities.
Read more about Typical Challenges in the Retail Industry