Classic Retail is dead. Long live the New Retail.

Escrito el 14 octubre 2011 por José Luis Fernández en Lean Services

Well, maybe it is not dead yet, but it may gradually be in many cases.

I have recently been preparing some material about retailing, and one of the things I have found is that it seems to be following a similar evolution pattern to the one in manufacturing.

The pattern shown in the picture (left) talks about a trip from craftsmanship to mass production, the typical topic could be the car manufacturing and the Ford “T” though there could be many more examples. Scale economies through standardization and process improvements enable the mass consumption as savings can be transferred to customers.

Once reached the top level of volumes for standard products to be offered. Human need of differentiation, increase in competition, development of mass customization practices and leaner approaches to reduced lot sizes, in many cases aided by technological leaps, allow the way  back to some kind of mid volume and highly  customized options at competitive price.

My opinion is that mass retail services and consumption has followed a similar initial path coming from the small and highly customized retail practices based on a reduced and focused product and a specific geographical localization to big formats, department stores, category killers, which could provide high level of customer attraction through enhanced product offer and lower prices. In many cases in detriment of highly customized approaches those small retailers could provide (Old book-store in the film “You´ve got Mail”). Even though, some small retailers have remained alive through hyper specialization or highly customized and valuable service approach in the “Customer experience era”.  

The point is that I foresee (or just see) a rocketing uptrend way back to a highly customized approach. Current technological possibilities and trends in retailing, including the channels reconfiguration due to new entrants configure a new retail which is being reborn.

From the customer standpoint we are in the path of finding it hyper-convenient (anywhere, any media, any time, any form), hyper targeted, hyper customized…but form the classic and not so classic retailer a second wave of hyper competition is about to come..

Which are, for you, the main drivers?


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