The web has established itself worldwide. These past few years, we have seen how many new innovations and new technologies have deeply changed consumers’ daily lives. They consume and interact with brands directly on social networks, are able to compare prices before buying, surf on the Internet to narrow down their choices, etc.

Technology in itself has also changed a lot. Our smartphones are living up to their name more and more, and connected objects are invading our homes. On the consumer side, social media outlets have largely reached their critical mass. As they became web giants with extravagant valuations, they also started to dictate their rules.

However, despite this huge digital transformation affecting companies, the retail industry hasn’t really been given a sense to its potential yet. On what foundations should these new pillars be built by the industry?

D as Digital:

“Digital” doesn’t describe the whole picture; we need to add a few more D words: de-monetization, dis-intermediation and de-materialization. Digital is the combination of these three words that force companies to rethink their traditional business models.

In reality, the ecosystem made of the Internet and new communication tools supports projects’ development. Digital allows to identify needs and to translate them into concrete projects made for real people. This is how (and why) AirBnB and Uber were created, among others, to answer society’s issues.

D as demonetization:

The recent crisis has been a disaster in the economic world. One of many consequences was to push companies to rethink their business model, resulting in numerous intermediaries disappearing. This made digital commerce more prolific, even when immediate profits were still out of the question for some organizations. This was the case, for example, for the music industry even before streaming platforms appeared.

Now the cards have been shuffled. Yet some “elites” still refuse to ascertain the facts.  Demand, audiences and clients still exist but they’re constantly changing. New companies earn massive valuations long before they make their first sale. Huge new markets have exploded thanks to the massive use of the web.

This has resulted in an entirely new business strategy:  new companies getting their demand with free offers, and then nudging their customers with “freemium” offers. The idea is to get the benefits by placing fences at the right place, at the right moment. This is today’s marketing.

D as Disintermediation:

It is no surprise that the web has removed all intermediaries. Requests from consumers are now answered by mobile apps or websites –often both, working together – provoking huge changes.

These new platforms emphasize relationships and create new markets. Assets are becoming immaterial and individuals are replacing entire companies in their roles. It is so easy to create and transmit digital content and services that the trend is booming like never before.

The most promising business model resulting from this is CtoC (Consumer to Consumer), taking over the now old-fashioned BtoB or BtoC models that were taught at school less than ten years ago.

D as Dematerialization:

Whatever happened to compasses? Dictaphones?

What is the future of cameras? Flashlights?

Now you can download culture. Rent a car online. Swap your apartment. Loyalty cards are listed and available on mobile apps, and soon enough you’ll be able to pay with your smartphone. Digital definitely changed the way we are seeing and using things. Objects are becoming IT programs.

Ultimately, property doesn’t seem to have any sense anymore, in an economical time when the only variable is change. What was a revolution a few years ago is now a reality. That is why companies’ business models have to evolve and bring with them new usage experiences.

D as Disruption:

Surprisingly, corporations are gradually being relegated to second place in the market. As a new business model, a new way to make money, digital is also creating a world that is more and more focused on collaboration.

The digital transformation wave forces companies to act fast. The GAFA – an acronym used in France to talk about the most powerful digital companies standing for Google, Apple, Facebook and Amazon – are regularly changing the market and the rules, preventing other companies of implementing mid- or long-term strategies. Marketing departments are becoming obsolete. What was identified as the truth before is not anymore. Companies are no longer the masters of their fate.

For many, the digital transformation represents a threat as it also potentially destroys jobs and values. However, this transformation also appears, for others, as a wonderful opportunity of employment and new professions. In France, the climate is complex. French entrepreneurs protect themselves as the context seems so difficult. But the web is an irreversible process. Wouldn’t the purpose be to finally and definitively accept this digital transformation?

Conclusion:

Digital has not yet modified our stores, nor the customer experience. And yet the drive-thru example and the expansion of grocery online stores show the existence of new growth and profitability levers. It has already considerably changed the retail industry in France. It shows that traditional channels can, and have to, reconstruct.

How do we bring about this change?

  1. Build a vision and evaluate what digital can bring to the business model.
  2. Define new growth levers and put the efforts where the company doesn’t know yet how to make money.
  3. Define your digital maturity by acquiring web technologies and other new tools.
  4. Measure resources and skills to evaluate development perspectives.

Digital releases creation and finds new levers of growth as well as a revival in activities. Consumers and Internet users are way more ready for this change than you can think.

photo: © Anne-Emmanuelle Thion

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