13 Oct 2018
Which retail business models will be trending in 2019?
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By Maria Morais
As we are fast approaching the end of the year, with Black Friday gearing up for a month-wide breadth of discounting, the topic of business transformation returns as a focus of highest priority for many UK retailers.
This is the time of the year to align budgets and think strategically in order to be prepared for the next 12-month cycle. It can also be seen as an opportunity to change outdated traditions and define a new vision for the future.
With that in mind, here are some of the trends behind new retail business models that can make the difference in 2019.
1. Customer-centric retail in Business-to-Home (B2H)
Going direct-to-customer (B2C) or business-to-business (B2B) are well known business models, but a new trend is slowly emerging in the retail market: business-to-home. One such concept which has been featured in the media recently is the intelligent fridge, which allows customers to replenish their monthly or weekly groceries. While this is one of the use cases we have identified as having a potential increase in attention in 2019, B2H isnt exclusive to kitchen appliances alone. Another use case for the business-to-home model is the magic mirror, connecting to fashion catalogues, beauty and jewellery products, with the opportunity for the customer to select and filter by favourite brands, price points, etc. The best way to define a B2H business model is this: the piece of furniture exposing the product catalogue (i.e. fridge, mirror) is a rental service, which the customer can decide to opt out of at any time.
2. The omnichannel movement
Another business model that can gain traction in 2019 is digital centralisation. The customer being at the centre of all touchpoints is the standard, but once retailers achieve customer centricity, another challenge around centralisation will arise. Typically, it starts with merging store operations with ecommerce operations and the wholesale business (B2B) with the direct-to-customer business. Its the emergence of the omnichannel platform. A centralised business model for retail involves investment in digital transformation for new end-to-end processes such as:- Deliver to delight “ Developing services to better serve the customers
- Order to delivery “ Making goods available as close as possible to the customer
- Route to market “ Transforming sales and marketing omnichannel operations (in-store and online)
- Market to order “ Driving conversion with expertise, intelligence and trust between customers and sales agents
3. Unique Innovation Proposition (UIP)
A unique selling proposition (USP) is not enough anymore to create differentiation. Retailers must strive to design a unique innovation proposition (UIP) and make deeper connections in context, focussing on the experiences and feelings that products can evoke. Customers are multidimensional, and companies resisting the wave of change will find themselves on the edge of extinction, despite their confidence that current brand loyalty will keep them afloat. Innovative companies are making shifts towards cloud data, connecting commerce, marketing, sales and service capabilities into one single data base. These are some of the most critical technical core attributes that can enable retail innovation:- Consistent look and feel of the UX in all the business processes so that users can easily create great customer journeys
- End-to-end processes (from supply chain to front office and from front office to supply chain) to build connected journeys rather than fragmented touch points
- Common set of master data services to enable one source of truth for all customer data across the various departments (i.e. stores, marketing, commerce, warehouse, contact center, etc.)
- APPIs based on an open ecosystem, exposing all services to the public cloud
4. Sharing is caring
The sharing economy is increasing in traction in the retail space, with economic, peer-to-peer (P2P) models for access to goods and services through online platforms. For traditional retailers this model is highly disruptive, but there is a reason why this should be a priority for investment “ millennials are not aiming to own material goods as the previous generations were; they simply want access to products and services when they need, and move on to the next thing the minute after. Good examples of this business model are coming from everywhere (i.e. MYRECYCLE allows customers to swap rather than buy, and I LOKYOU gives customers the option of renting or borrowing everything you need: tools, cars, services, etc), but we should expect to see more ideas developing in 2019.
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