Reshaping Retail: Why technology is transforming the industry and how to win in the new consumer driven world
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Reshaping retail: Why technology is transforming the industry and how to win in the new consumer driven world

This book reports the results of a global research effort that McKinsey has undertaken to make sense of the digital revolution in retail. The authors anchor 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.

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.

Tech in retail

About the authors

Stefan Niemeier

Stefan is a director at McKinsey and leads our European "Technology in Retail" group. He has advised retailers around the globe and across many retail sub-sectors. Stefan holds a PhD in Economics and a Masters in Business Administration.

Andrea Zocchi

Andrea is a director at McKinsey where he leads the Consumer Practice in Southern Europe. Andrea is also an adjunct professor at IMT—Institute for Advanced Studies—in Lucca (Italy), where he holds a PhD level course on advanced problem-solving techniques. He holds a degree in Mechanical Engineering and prior to joining McKinsey, he worked for Hewlett Packard Italy.

Marco Catena

Marco is an associate principal at McKinsey. He works with retail and mobile telecommunications players in Europe on commercial and performance transformation topics. Marco holds a PhD in Industrial Management and a Degree in Management Engineering.

James Naylor

James is a senior knowledge expert in McKinsey's European Retail Practice, concentrating on latest and best practice in retail format development and on the development of consumer goods industries in emerging markets. He holds undergraduate and masters degrees in Psychology.

Roger Roberts

Roger is an expert partner at McKinsey and leads the firm's IT service lines for North American Consumer Goods and Retail businesses. He also serves a range of clients across sectors on adapting to technology-based disruptions. Roger holds engineering degrees from Stanford University and an MBA from MIT's Sloan School of Management where he has served on the board of the MIT Center for Digital Business.

Nina Gillmann

Nina is a consultant at McKinsey. She has advised some of the world's largest corporations on strategic and operational issues, with an industry focus in retail and advanced industries. She holds a diploma in economics from University of Kiel as well as a master of letters from University of St Andrews and a PhD in political sciences from the University of Kiel.

Lis Hannemann-Stenger

Lis is a consultant at McKinsey. She works in the Consumer Practice on strategy and transformation topics. Lis holds a PhD and masters in business administration.

Reviews

Peter Fitzgerald, Director of Retail, Technology and Media, Google

A fascinating book about the new realities of retail. The connected consumer is in control and businesses that put them first with a seamless experience of their brand across channels, countries and screens will continue to win.

Andrew McAfee, MIT Sloan School of Management

"Digital technologies and empowered consumers are truly reshaping retail. This book is an insightful and practical guide to the revolutionary forces at work in the industry today. It will help retailers all around the world navigate past the challenges and capture the opportunities awaiting as retail becomes a digital business."

Christoph Lütke Schelhowe, Zalando

"This book is a highly interesting read for every retail executive who wants to understand the implications of the new consumer-driven world."

Massimo Bongiovanni, President, Coop Centrale Adriatica

"Reshaping Retail is not only a thorough and timely research project, but also a fascinating vehicle for presenting scenarios and insights regarding the evolution of retail in the coming years. Moreover it helps to clearly understand how technology and innovation will change competition paradigms, consumers' behaviour and the rules of the game. These trends will be a big challenge for retailers that, thanks also to the authors' contribution, can be faced with new and convincing interpretation tools."

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