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Reshaping retail: a strategic book reviewed from a wholesale perspective



The IT revolution that helped Tesco and Wal-Mart leap ahead of the independent channel may have a sting in the tail, the authors of Reshaping Retail, a new book from Wiley, suggest.
Stefan Niemeier, Andrea Zocchi and Marco Catena have collaborated on a book that summarises the world view of McKinsey, the giant US consulting firm.
Technology has handed power to consumers at retailers’ expense, they write. Smart phones that let shoppers product search and research, purchase and pay, and connect to social media for reviews have destroyed “the monopoly retailers once enjoyed over information about products and prices”.
The book’s most provocative assertion is that many retailers simply do not have the mindset to adapt to the new situation. “Too many of those who began their careers operating stores are still trying to squeeze more from their traditional business processes rather than responding to the new world in entirely new ways,” they write.
Wholesalers could ask themselves where they sit on this question. As the importance of the physical store diminishes, does this present an opportunity for wholesalers to sell direct to consumers? Indeed, the book starts in the Middle Ages when grocers and mercers operated as both retailers and wholesalers. Are we headed back to this model?
The strength of physical stores is in four areas: preselection of range; aggregation of consumer demand; sales advice to shoppers; and the fast and effective physical movement of stock. If Amazon can do it, what stops a wholesaler?
McKinsey says there are six reasons to still enter a store and the authors believe that both grocery and household products will remain the preserve of bricks and mortar stores, particularly c-stores.
Reshaping retail suggests there will be four basic retail archetypes that will survive into the future. The lowest cost operator (Aldi and Lidl), the convenience shop that is located in the right place, the convenience operator that depends on pre-selection (formerly the demesne of the hypermarket) and the platform operator (Amazon or a department store).
“Convenience stores save consumers from making much effort to buy what they need or desire, although the ease of purchase comes at a price,” they say. C-stores save time travelling. They offer instant solutions, especially if you have forgotten a key ingredient for a meal.
Their success depends on location and store size and layout. They need to be close to a good flow of potential customers and away from potential competitors. Ideal locations might be in villages without another shop within five miles.
This previous paragraph shows the consultant focus of the authors which might grate at time as the world just is not as perfect as they envisage. However, their ideas are thought provoking. A wholesaler could easily have a business supporting local shops while also offering a “dark store” lowest cost operation where shoppers who pre-ordered goods could go to collect their groceries.
What drives this is technology. “Anyone who can convene traffic can use technology to act as a retailer, aggregating consumer demand.” The chapter on technology fizzes with ideas on how to better forecast demand, how to use promotions and how to optimise the assortment.
One un-named grocer replaced 10% of low margin products with higher margin ones and increased sales by 2% and margins by 1%, the book notes.
This book is sub-titled “how to win in the new consumer driven world” and provides you with a road map. The direction that you take is very much up to yourself and having some bright minds to help can only be a benefit.

For more, go to www.betterretailing.com.
 

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