Did the events of 2020 and the related changes in buying behaviour break the traditional brick-and-mortar retail model?
The combination of Covid-19 lockdowns, supply chain issues, and financial woes hastened digital retailing in a number of regions of the economy. Although some experts believe this will lead to more individual retail companies, it might indicate that the traditional retail version won’t work or not work also in the not too distant future.
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“Let us begin with the version that just does not work,” stated Bloomreach CEO Raj De Datta, who’s also the author of the book”The Digital Seeker: A Guide for Digital Teams to Build Winning Experiences.”
“What does not work anymore is’I am a retailer. I have got a certain degree of selection. I source all of my products. I work with all of my brands. I deal with the supply chain. I open a whole lot of brick-and-mortar shops — that’s my supply. I market online and offline. I’m determined by the amount of people who walk into my store and get the product that I purchased from somebody else and mark it up a little to pay my margin and call it a day.’
“That version of retail, which has existed for a hundred years, is gone,” De Datta said through an exclusive CommerceCo by Practical Ecommerce occasion.
The Path Forward
De Datta was reacting to a question when he explained the traditional retail version was at risk. Specifically, he was asked how conventional retailers could compete when so many brands, such as Nike and Carhartt, are opening their own physical shops and encouraging their own ecommerce websites.
Finally he saw three possible avenues toward future success if these standard retail businesses adapt.
Specialty retail. Specialty retail has existed for quite a long time, also. You might think about pet shops, boutiques, as well as greeting card vendors as specialty retailing. However, to be successful long term, it’s important to pick a specialty that can’t be overrun the next time an internet marketplace like Amazon adds a new class.
Since De Datta put it, this is a”high bar” for retailers, but it might work.
“There are certain types, especially more intricate classes where [incredibly specialized retail] is achievable….it turns out glasses are a fantastic example of that. It’s pretty tough to be a excellent eyeglass retailer. There’s lots of depth from prescriptions to filling the prescriptions and making certain that matches works and all these other things. So specialization can work to an extent,” De Datta said.
Other regions of specialty success might live in Blue Ocean companies that have unique selling propositions.
Direct-to-consumer retail. Imagine you run a traditional retailer in the Pacific Northwest. You sell online and through your network of retail shops. Among the brands that you sell is Carhartt, and it opens a new Carhartt store only a mile from one of your places. How can you win from the most brands you sell?
“We have got to quit talking about brands and retailers. Every retailer has to be a brand,” De Datta said.
Effectively, traditional retailers will want to white label products and establish their own brands. By way of instance, Mid-States Distributing, which is a type of joint-venture performance with dozens of ranch and farm chains as its members, launched its own brand of pet food, Wildology.
The Wildology manufacturer sells in every one of the members’ shops — over 1,000 physical locations and dozens of sites — and is regulated by the members jointly. Wildology is, effectively, a direct-to-consumer brand which sets on the shelf (physical and virtual ) alongside classic pet food brands.
Mid-States Distributing is developing similar DTC products for everything from hardware things to power-equipment.
Nearly 40 ranch and farm chains worked together to establish their own brand of pet food. Since the chains jointly have stores throughout the USA and Canada, they could build a brand with clout.
Many other retail shops do the same.
“Owning your brands is actually important because you will need the margin, and you have got to understand that your brands are competing with you, and when they are competing with you, you have got to finish together,” De Datta said.
Marketplace retailing. The last path forward could be available only to the biggest traditional retailers: turned into a market.
“If you are Target or a Walmart or even in case you’ve got incredible scale, your organization could succeed if you say,’I will play with the selection game. I am okay without having proprietary solutions. I am okay with a high level of specialization,'” according to De Datta.
Combining the 3
If the traditional retail version, as De Datta describes it, won’t work, a merchant should adopt one of these approaches or any combination of those. By way of example, a retailer could be equally technical and the owner of DTC brands.
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