The Covid-19 pandemic has affirmed and accelerated retail trends that have already been underway for some time. The e-commerce channel accelerated due to the pandemic and only retailers capable of updating and embracing new trends will survive this era.

In the past 10 years, the retail store business model has assisted gradual changes. Before the formula for success was the ability to find the products you want, ship them and sell them in physical locations. This business model has been discontinued. According to the research published by KPMG, retailers will have to evolve and activate omnichannel communications with the consumer or create target consumer niches. Because customer expectations and needs are changing rapidly and retail is turning into a “pull” (C2B) model setting aside the classic “push” (ie B2C) model.

According to KPMG in the next 5-10 years, seven types of business models, already present in the retail landscape, will take hold, retailers will evolve to meet changing customer expectations and market dynamics.

The 7 models identified by KPMG are:

1) Platform-based businesses: companies that promote their offers on digital platforms have become increasingly important in the last 20 years. Such business models facilitate the exchange of products and services between a consumer and a producer.

2) Direct-to-consumer: it is an increasingly important business model for manufacturers, especially with the acceleration of online shopping. In some cases, brands build custom platforms in others they rely on intermediaries to obtain additional margins and bypass traditional channels.

3) Multinational retailers: Multinational retailers are large international companies that have grown to enter new markets and increase their customer base. Even this model, like the first, needs to create digital platforms in order to survive.

4) Value retailers: Value retailers are physical store business models that have undergone rapid growth over the past 10 years. This model goals the market by providing products and services at a lower price than normal retailers. Now they will have to confirm or evolve their online value proposition to last into the future.

5) Category specialists: Category specialists offer products and services that are unique and targeted to a specific retail category or a defined customer. This type of business model aims to offer innovative products and therefore enjoys a loyal customer base.

6) Independents / mutuals: this model refers to sales companies rather than simply increasing profits they aim are the needs of their members, thus uniting retailers and customers under a common goal. This model helps independent local retailers to re-emergence and transform them into viable players using online as the main channel or as an additional channel for the market.

7) National heroes: National heroes are often established retailers who have built a strong local brand and identity to provide a range of targeted products and services. National heroes have the advantage of having a strong loyal customer base and leveraging loyalty programs to meet their needs. To survive in the future, this model must create synergistic partnerships and develop omnichannel strategy.

 

Sources:

KPMG “Future of Retail” survey January 2021.