Retailers must change business models or face irrelevancy
Retailers must accept their traditional business models face irrelevancy, finds a study of 800 global executives.
Three quarters of retailers believe their business model needs to change for them to remain relevant, according to new research released by the World Retail Congress on Tuesday.
The research was conducted by World Retail Congress, OC&C Strategy Consultants and Eshopworld, and showed that a further 21 per cent of respondents doubt the sustainability of their retail business models.
The figures provide further evidence that retailers are struggling to cope with the pace of evolution in the industry. Only 3 per cent of retailers believe their current proposition will remain sustainable in the next five years.
Having a good retail business model is no longer enough, said OC&C international managing partner James George.
“Being great achieves enviable success, but being average is punished hard. Retailers are recognising this: three quarters said they need to change their business models in order to be relevant in the future.”
The research, entitled “High Velocity Retail” in line with this year’s World Retail Congress theme, drew insights from interviews with the world’s leading retailers as well as analysis of financial performance and customer ratings data of 800 retailers. The research identifies the path to success for retailers in a world where the speed of change is unprecedented.
“Trying to understand today’s fast-changing retail world was core to the build-up for this year’s World Retail Congress,” said World Retail Congress chairman Ian McGarrigle. “Our High Velocity Retail report provides a clear overview of how the old retail business model is no longer fit for purpose and identifies new models and their key success factors. The report will form an important platform for discussion and debate when the leaders of the world’s most important retailers meet in Amsterdam.”
“Retail has been speeding up for a long time,” added George. “But in the present High Velocity world, it is not just about speed, but about combining it with meaningful direction. Winners are focussing on being the best at something that matters to customers: they avoid the pitfalls of going nowhere fast or trying to do everything badly.
“Crucially, speed will not cover up flaws or inconsistency in the underlying proposition. As the world speeds up and barriers to entry fall, the challenge for retailers is to translate this clarity of focus into prioritised investment decisions that develop the things that really matter to your target customer.”
This story originally appeared on sister-site Inside Retail Asia.