Development of retail business models

Traditional retail is facing major challenges as it loses more and more market share to e-commerce. Retailers who stick to the status quo and are not prepared to innovate will have a hard time in the future. Does this now mean that every retailer has to jump on the e-commerce bandwagon in order not to miss the boat? In some respects, yes. At the very least, traditional retailers with brick-and-mortar stores should think about additional digital offerings. Which business model is right for them depends entirely on the industry, the individual situation, and the retailer's goals.

Which business models are suitable for retail?

The most common digital business models for retail are e-commerce and the marketplace model. Before a retailer digitizes his business, he first needs an idea of what the additional digital offering should look like. He also needs to ask himself whether he wants to reach only his local clientele or also target customers outside his catchment area. This will determine whether he "merely" expands his brick-and-mortar store with an online store or whether he also presents his product range to a non-local audience. If he is aiming for the latter, he should look into the marketplace model. Here he can sell his products via large marketplaces such as Amazon. This quickly gives his offer a considerably wider reach. However, he can only benefit from this if he knows the competition and makes his offer correspondingly attractive.

Let's take the example of a shoe retailer who sells fashionable designer shoes from selected brands. The retailer should then know which models are doing particularly well with others, whether there are currently campaigns for certain brands or models, and how prices have developed among competitors. However, monitoring the competition means additional efforts that go beyond the creation and maintenance of a store page. If they want to improve the future prospects of their business, retailers cannot be satisfied with the status quo.

How do I structure my business model?

At the beginning of the development of new business strategies, a SWOT analysis should be made. This shows the strengths, weaknesses, opportunities and threats of a business model within a matrix. With the help of the analysis, it is possible to quickly find out which measures may be necessary to get on the road to success. If, for example, there is an external risk of existing competition, this does not mean that there are no opportunities. On the contrary, this risk can be significantly reduced through consistent market observation.

If the products sold have a unique selling proposition, the retailer can concentrate more on marketing them. With mass products, however, the situation is somewhat different. The less individual the products and services sold are, the more the market must be monitored.

Solutions for the development of innovative retail business models

• Agility and willingness to experiment: In the fast-paced retail environment, it is critical that companies are willing to try new ideas. This may involve launching new products or services, redesigning store design, or implementing innovative sales and marketing strategies. In addition, experimentation can provide valuable insights that help to continuously improve the business model and meet the changing needs of customers. 
  
  
• Omnichannel strategy: Seamless integration of online and offline channels is an important step to meet today's consumers. Retailers should provide consistent customer experiences across channels and create a consistent brand experience.
  
  
• Partnerships and collaborations: Collaborating with other companies, whether technology companies, startups or other retailers, can lead to innovative business models. Partnerships and collaborations open up opportunities for retailers to gain access to new technologies, expertise and customer bases that they may not be able to reach on their own. Through joint efforts, innovative business models can be developed to meet retail challenges and drive business success. 

The development of retail business models is associated with various challenges, but also with many opportunities for innovation. Retailers who are willing to adapt to change and adopt innovative approaches can succeed and meet the changing needs of consumers. By taking a customer-centric approach, integrating online and offline channels, partnering and adopting an agile mindset, retailers can lay the foundation for sustainable growth and long-term success.

For oraya, market intelligence is a key component of its marketing intelligence solutions. Whether we need to keep an eye on specific products, entire markets or sub-markets, we always deliver excellent analytical data you can rely on. For more details on our SaaS solutions and market monitoring methods for your company's success, please contact us.