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

Chapter 6

The Future of Retail

Co-authored with Lis Hannemann-Strenger

As we have shown, technology has eroded the monopoly that traditional, store-based retailers enjoyed as the intermediaries between suppliers and consumers. As a consequence, it has empowered consumers and enabled new competitors to emerge. But the news is not all bad. Technology has also presented opportunities to achieve greater heights of productivity and offer customers new experiences. Nevertheless, many retailers struggle to see beyond the fact that technology has struck a blow to the heart of their old business model, the physical store.

The store will continue to play an important role, but for traditional retailers to continue delivering value to consumers in the digital era, they will have to rethink their business models and transform their operations. What forms are these new models likely to take? Focusing on strategies for mainstream retailers (specifically, those that include in their mix large networks of stores and/or generate equivalent volumes of sales online), we have identified seven “archetypes” for the digital era that can be operated at scale, either by retailers with their roots in physical stores or by pure online operators. Some archetypes require just a few tweaks to existing retail models; some call for a more extensive or even radical makeover. Most importantly, each has a sharp value proposition, demanding particular skills and capabilities, that targets a specific need or desire ...