Reshaping Retail: Why Technology is Transforming the Industry and How to Win in the New Consumer Driven World

Chapter 5

Toward A New Retailing Paradigm

Co-authored with Nina Gillmann

Technology is severing retail from its past. It is transforming both the way companies in the retail value chain operate and the way they relate to one another and to consumers.

Three important shifts are taking place. First, the importance of the physical store is diminishing as more customers research and buy online. Second, the retail business system no longer has clear boundaries. This means newcomers can contest the territory once dominated by traditional, store-based retailers, such that anyone who can convene customer traffic can, in principle, become a retailer today. Third, big data and the technological improvements described in Chapter 3 have the potential to drive retailers' efficiency and their ability to serve their customers well to new heights. It is a step change in what we call information productivity.

The first two shifts reflect how technology, which once helped consolidate the retailer's position as the intermediary between supplier and consumer, has shifted the entire basis of competition. The retailing tasks of preselection, aggregation, sales advice, and the physical movement of stock are no longer the value-creating preserve of traditional retailers. This poses huge challenges to those whose thinking and operations are still anchored in the old-world model. The third shift reflects the huge opportunities that technology can deliver in retailing's digital era—to old and new participants ...