Monthly Archives: June 2007

Retail at the Inflection Point

The Coca-Cola Retailing Research Council Europe (CCRRCE) is an organization dedicated to the development of a better understanding of the food retailing and allied merchandise distribution business in Europe. The focus of its energies is to identify and then to study selected critical issues and, when appropriate, to present the findings in a suitable forum.

The most recent study (June 2007) released by the CCRRCE is “The Inflection Point” – a report on signposts or predictors of impending change in the marketplace, how to spot them and what to do about them. As the report notes, “there are points in time in the evolution of markets when an Inflection Point is reached that predicts or even dictates changes in retail practices. Failure to recognise or respond to changes in observed or predicted consumer behaviour, market conditions or opportunities has often spelled disaster for retailers around the world.” No pressure, then.

Six impending Inflection Points identified through the study include:

Age of Wellness
An explosion of consumer interest in Health and Wellness issues, resulting in significant shifts in product mix, services and sourcing for retailers. Pushed to its extreme, we may see a world where every product has to be able to broadcast some sort of wellness benefit. The first retailers who figure out a way to integrate the larger concept of wellness into their business will turn the market to their advantage.

Format Frenzy
An increasing number of formats will be developed and managed by retailers as a way to respond to the fragmentation of both consumers and shopping occasions in their core markets. One size no longer fits all. The impending ‘death of the traditional hypermarket’, as we know it today, will force retailers to venture into new formats and to discover new functions for their asset base. Retailers who wish to grow or maintain market share will have two basic segmentation schemes: 1) by format size and 2) by format purpose. The Inflection Point will come either when one retailer manages to perfect one format, effectively becoming a format ‘killer’, or manages to create a brand which seamlessly stretches from kiosk to super-centre to virtual store.

Some retailers will emerge as active agents of social and environmental change, taking a pro-active role in protecting the environment and leading the charge on accountability. All retailers will have to be able to prove their environmental and ethical credentials. Currently a point of differentiation and the license to charge a price premium, the demonstration of environmental/ethical behaviours along the whole supply chain will evolve to become a hygiene factor. The ethical standard will constantly shift, following the market leaders and consumer and media demands.

Retailers will have the ability to customise the assortment and service proposition in their stores through the use of consumer insights, ultimatelycreating ‘unique’ stores for their customers: ‘MyStore’. This will be achieved through the development of the right format to fit each community and the tailoring of the assortment in that format. Mastering and applying precise consumer insights on a localised basis will be essential in these executions.

Branded Retail
Select retailers will be capable of elevating themselves to the status of true brands through unique assortments, differentiated marketing messages and an unmatched competitive position. They will effectively become a “market of one”, creating a sustainable competitive advantage.

Technology breakthroughs which allow relevant information transfer across platforms and systems along the supply chain right up into the consumer space will provide a sustainable competitive advantage for companies who back the right technologies and invest early. Technology breakthroughs will help substantially reduce the costs of doing business and provide consumers access to products in new and different ways.

If you’d like to future-proof your organization against these potentially-fatal disruptors, check out “The Inflection Point”. We do happen to have an electronic copy of the study, yours for the price of an email.