Linda Zou’s Post

Transcript

The old rules of retail are gone. For retailers to win in the future, they're going to need an entirely new strategy, one that's customer driven and fueled by data. Today, we'd like to introduce a bold new strategy in the future of retail called Winning the Town. Let's start by discussing the disruption of retail. Traditionally, retailers followed a strategy of expansion, opening as many stores as possible, creating a scale effect that allow them to offer cheaper prices and attract more customers. But this model no longer works. We have seen significant changes in consumer behavior and expectations and won't be enough for retailers to rely on the old formula of store expansion. There will have to fundamentally change that. Approach and focus instead on maximizing engagement to build customer density. To do that, they'll need to start with identifying new customer occasions. Rather than building scale through the number of stores, they'll concentrate efforts to build local operating scale, achieving a lower cost to serve in each community or town one at a time. Meeting their customers needs more directly and more conveniently will allow the retailer to gain density of customers and a density of data that will help them further increase the share of. Right. And in turn, lower prices? We call this new approach to retail strategy winning the town. Thanks for the overview, Halid. Let's now take a closer look at the strategy in action. The goal isn't just to sell more products, but to expand the share of wallet by accommodating A wider range of customer missions. The retailer needs to deploy a network of interconnected assets, both physical and digital, to serve these occasions. Let's talk about that, Halid. In the past, retailers have regarded their various stores and platforms as independent entities with their own P&L statements that must each earn their. Deep, but with the wind the town strategy, these assets work together to form a cohesive whole. Stores must now serve a greater purpose and simply offering products to customers. They're now part of a fulfillment network, marketing strategy, convenience offering and more. What ultimately matters is driving customer lifetime value. That's right, once retailers have achieved the density of customers in a given town, they start to get operational efficiencies in their network of assets in that town. For example, retailers can lower their unit cost. Delivery by optimizing their delivery routes and using their store network as meaning fulfillment hubs to fulfill their online orders or by serving B to B customers through last mile delivery networks. And at the same time, because of increased customer engagement and frequency, retailers are collecting a lot of data to better understand consumer preferences, patterns and needs. One of retail's most valuable assets is the wealth of data they have. Adding touch points opens new opportunities to capture even richer customer datasets. Ultimately, it's all about adding touch points and bringing value back to the customer's Winning the town is about giving customers more of what they want, whether it's fresh produce, convenience, a more complete product, offering good prices, more of what matters for them. The secret is leveraging and building on what's already there. That's definitely it. Winning the town is all about meeting customers needs through the right assets, in the right location and at the right time. This could mean adapting some of their existing physical assets or pursuing strategic partnerships and expanding digital elements. It will be unique for each company and it's also a complex path to navigate given the capital and CapEx implications. While no new company has yet to master this approach, we have BCG are seeing its emergence across the retail landscape. BCG is working with retailers around the globe to take inspiration and apply it to their unique business, market and customer base. Join us next time as we explore. More topics in the future retail.