In recent years, developments have taken place that are dramatically changing the role of stationary retail, putting it under pressure and questioning its right to exist.
To date, most retailers have achieved revenue growth and profit optimization through scaling effects, standardization and process optimization, less through noteworthy innovation or the intelligent use of technology. Overall, brick-and-mortar retailing still isn’t familiar with new IT technologies and isn’t expanding its capabilities in this regard either. Stationary retailers have lost their closeness to the customer through this process of change and have gained and expanded their market positions primarily through the price war. The attempts of brick-and-mortar retailing to counter the increasing pressure of new competitors from the digital world via cross-channel / multi-channel solutions have brought a visible turnaround in only a few individual cases.
Competing with Amazon and Alibaba
Massive changes in the availability of information, technologies and communications have set new standards for customer expectations, since traders can interact and sell to the consumer without limits. However, many retailers find it difficult to set the right priorities given the almost infinite possibilities, innovations and trend changes. Besides all that, manufacturers and traditional dealers are lacking in risk-taking. They are in a dilemma because highly scaled and low-margin business models are subject to high transformation risks. In addition, Internet players such as Amazon and Alibaba dominate online commerce, which is growing more and more at the expense of traditional offline trading.
In plain language: most trading formats cannot adapt to the new situation due to a backward-looking management, outdated processes and systems, a too broad range of services, a poorly trained workforce and finally the missing funds. So, what about the future of trade and the trade of the future? What are the driving forces, relevant success factors, and game changers?
Customers need to determine their best strategy
One thing is clear: a radical renewal of existing business models and systems is urgently needed. Brick-and mortar shops only have a future if they invest more aggressively in digitization.
The alleged advantages of the traditional compared to the online dealer, such as advice and nice shops, are myths. Much more important, however, is for them to focus on the expectations of their customer and to realize that the trading world is increasingly developing into an integrated marketplace. Customers want to satisfy their needs anywhere, anytime, and in whatever way they prefer. They expect retailers to adapt to their lifestyle - with a focus on relevance, simplicity, convenience and experience.
To survive this competition, retailers need to reinvent their specific purpose in the lives of their potential consumers, and to reconsider and adapt their products and services accordingly. In doing so, digital transformation must be driven by passion and credibility throughout the company's leadership.
Of course, latest business models, such as seamless shopping and integrated platforms, as well as the sharing economy, play as well a role in the transformation of consumer behavior - as do business interfaces and business systems, in particular the innovations in logistics, such as same day delivery, blockchain technology and new payment solutions.
Even Jeff Bezos, the founder of the technology giant Amazon that made him a billionaire knows, it isn’t easy to stay tuned and innovative. He mentioned already a few times, that he is convinced that the death of his company, which he founded in 1994, is inevitable – but he just hopes that Amazon will do its last breath after him.
By Daniela La Marca