311: Beyond The Classic Retail Business Model (part 2)

Retail is evolving faster than ever before, and the traditional “buy and sell” model might not be enough to thrive in the future. In this episode, we’re continuing our exploration of new business models that will reshape the retail landscape by 2030. From retail media networks to resale programs, we’ll break down the innovative strategies that retailers are using to unlock new revenue streams and deliver value. If you want to understand how to stay ahead of the competition and ensure your retail business is future-proof, you won’t want to miss this episode.

Listen to this episode of the Retail Transformation Show and:

• Discover the growing power of retail media networks and how they’re transforming retailers into media companies.
• Learn how Retail as a Service can unlock new revenue streams by offering retail capability and expertise to other businesses.
• Explore how resale models are helping retailers leverage sustainability to drive profits and connect with eco-conscious consumers.
• Understand the business model which holds massive value and shouldn’t be ignored.

 

The different types of new business model

5. Retail media networks

• Retailers sell advertising space on their online and offline assets.
• They leverage their existing customer relationships and traffic.
• Highly profitable relative to traditional retail with thin margins.
• Examples include Amazon Advertising, Walmart’s Retail Media Group, and Boots Media Group.
• Balancing advertising with customer experience is crucial to avoid over-commercialization.

6. Retail as a service

• Established retailers offer their infrastructure and operational expertise to smaller businesses.
• More prevalent in e-commerce with examples like Fulfilled by Amazon (FBA) and THG Ingenuity.
• Potential conflict with core retail business regarding resource prioritization.
• Tension between serving the retail business and client companies, especially during peak times.
• Customers of the service may have little control over end results.

7. Retail technology as a service (essentially SaaS)

• Retailers offer their proprietary technology to other businesses.
• Example: Walmart Commerce Technologies offers its checkout systems and logistics algorithms.
• Opening up competitive advantages to competitors can be risky.
• IT teams need to manage multiple customers, complicating support and prioritization.
• Important to understand core capabilities and maintain a balance.

8. Resale and re-commerce

• Selling used items, similar to the classic retail model but with unique stock acquisition methods.
• Examples include Patagonia’s Worn Wear program, IKEA’s buy back program, and ScrewFix’s reconditioned power tools.
• Focus on sustainability and the circular economy.
• Requires managing many small, one-off buy transactions from individual suppliers.
• Potential for a shift to cash exchanges as competition increases, posing financial sustainability challenges.

9. Complete pivot

• Radical shift into new sectors with new customers, transaction types, and value propositions.
• Examples include Amazon’s move into healthcare and AWS, and Tesco and Sainsbury’s into banking.
• High risk and full of challenges, requiring readiness to experiment, learn, and adjust.
• Feedback from all stakeholders is crucial for navigating new territory.
• Often involves long-term commitment and acceptance of initial failures.

10. The classic retail model

• The traditional retail model remains valuable despite challenges like thin margins and fierce competition.
• Focus on core success factors including: attracting customers, competitive pricing, and positive customer experience.
• Retailers should not abandon the classic model but continue to refine and optimize it.
• Balancing new business models with core retail operations is essential.
• Classic retail still represents a significant portion of future retail profits.

Additional episodes to check out next

Firstly, if you’ve not already checked out part 1 of this 2-parter, listen to episode 310: Beyond The Classic Retail Business Model (part 1) where Oliver outlines the distinctive factors of a new business model and explores the first four new business models: launching owned brands, marketplace or platform models, service-based models and subscriptions.

Oliver uses the term “valueless assets” and this is an important opportunity to make the most of a new business model. Discover more in episode 255: Moving Beyond The Traditional Business Model.

Resale and recommerce is a huge opportunity and you can discover more from the founder of Recurate, Adam Siegel in episode 252: The Rise Of Resale And Recommerce.