Retail

Reshaping Retail

Why Technology is Transforming the Industry and How to Win in the New Consumer Driven World

John Wiley & Sons, 2013 | Stefan Niemeier, Andrea Zocchi, and Marco Catena

The retail industry is in the grip of a revolution powered by digital technology. This will be as big in its effects as the mercantile revolution that saw the birth of retailing as we know it, and the Industrial Revolution that kicked off the modern era.

In their new book, a team led by Stefan Niemeier, Andrea Zocchi and Marco Catena reports the results of a global research effort that McKinsey has undertaken to make sense of the digital revolution in retail. The authors have anchored their analysis in the origins and underlying workings of the retail business model, the technology drivers that are changing it permanently, and the likely development of the retail sector in the coming years. They conclude by issuing a call to action to the industry, as few retailers are ready to grasp the scale of the opportunities now opening up. The champions of the future will be made now.

As properly described in the book, the opportunities are huge. Yet in the authors’ experience, most retailers are seriously behind the curve. And change requires a real shift in mental model, setting clear new aspirations for the business, and making fundamental adaptations to the retail organization.

The new mental model for retail is one of customer-centricity, digital fluency, and tremendous agility. Notably, customer-centricity goes beyond a general concern or respect for the customer; it means reversing the traditional push mentality of the consumer goods industry to one really based on customer pull. For technologists, it requires the overhaul of retail systems which have traditionally been designed entirely around the physical movement of goods, and not the management of relationships with customers.

In setting a new aspiration for their businesses, individual retailers are going to have to understand how and where they are going to play: in other words, they must choose one or two (but not several) archetypes and understand how to transform their businesses accordingly. This will mean a dramatic and long-term journey, bringing in new staff and skills, embedding new processes, and embracing new organizational structures and governance models—but those who get ahead now may enjoy a sustained advantage for decades to come.

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