Master
ThoughtWorks
Menu
Close
  • What we do
    • Go to overview
    • Customer Experience, Product and Design
    • Data Strategy, Engineering and Analytics
    • Digital Transformation and Operations
    • Enterprise Modernization, Platforms and Cloud
  • Who we work with
    • Go to overview
    • Automotive
    • Healthcare
    • Public Sector
    • Cleantech, Energy and Utilities
    • Media and Publishing
    • Retail and E-commerce
    • Financial Services and Insurance
    • Not-for-profit
    • Travel and Transport
  • Insights
    • Go to overview
    • Featured

      • Technology

        An in-depth exploration of enterprise technology and engineering excellence

      • Business

        Keep up to date with the latest business and industry insights for digital leaders

      • Culture

        The place for career-building content and tips, and our view on social justice and inclusivity

    • Digital Publications and Tools

      • Technology Radar

        An opinionated guide to technology frontiers

      • Perspectives

        A publication for digital leaders

      • Digital Fluency Model

        A model for prioritizing the digital capabilities needed to navigate uncertainty

      • Decoder

        The business execs' A-Z guide to technology

    • All Insights

      • Articles

        Expert insights to help your business grow

      • Blogs

        Personal perspectives from ThoughtWorkers around the globe

      • Books

        Explore our extensive library

      • Podcasts

        Captivating conversations on the latest in business and tech

  • Careers
    • Go to overview
    • Application process

      What to expect as you interview with us

    • Grads and career changers

      Start your tech career on the right foot

    • Search jobs

      Find open positions in your region

    • Stay connected

      Sign up for our monthly newsletter

  • About
    • Go to overview
    • Our Purpose
    • Awards and Recognition
    • Diversity and Inclusion
    • Our Leaders
    • Partnerships
    • News
    • Conferences and Events
  • Contact
Global | English
  • United States United States
    English
  • China China
    中文 | English
  • India India
    English
  • Canada Canada
    English
  • Singapore Singapore
    English
  • United Kingdom United Kingdom
    English
  • Australia Australia
    English
  • Germany Germany
    English | Deutsch
  • Brazil Brazil
    English | Português
  • Spain Spain
    English | Español
  • Global Global
    English
Blogs
Select a topic
View all topicsClose
Technology 
Agile Project Management Cloud Continuous Delivery  Data Science & Engineering Defending the Free Internet Evolutionary Architecture Experience Design IoT Languages, Tools & Frameworks Legacy Modernization Machine Learning & Artificial Intelligence Microservices Platforms Security Software Testing Technology Strategy 
Business 
Financial Services Global Health Innovation Retail  Transformation 
Careers 
Career Hacks Diversity & Inclusion Social Change 
Blogs

Topics

Choose a topic
  • Technology
    Technology
  • Technology Overview
  • Agile Project Management
  • Cloud
  • Continuous Delivery
  • Data Science & Engineering
  • Defending the Free Internet
  • Evolutionary Architecture
  • Experience Design
  • IoT
  • Languages, Tools & Frameworks
  • Legacy Modernization
  • Machine Learning & Artificial Intelligence
  • Microservices
  • Platforms
  • Security
  • Software Testing
  • Technology Strategy
  • Business
    Business
  • Business Overview
  • Financial Services
  • Global Health
  • Innovation
  • Retail
  • Transformation
  • Careers
    Careers
  • Careers Overview
  • Career Hacks
  • Diversity & Inclusion
  • Social Change
Retail PlatformsBusinessTechnology

Becoming a Platform-enabled Retailer

Daniel McMahon Daniel McMahon
Lloyd Shanks Lloyd Shanks
Matt Harris Matt Harris
Natalie Drucker Natalie Drucker

Published: Mar 31, 2017

While iconic brands like Macy’s and Abercrombie keep recording significant losses, Primark, Aldi and Amazon have been a rousing success. These successful brands demonstrate that shiny technologies and omnichannel strategies are not a silver bullet.

Retail is about being a great merchant and having a differentiated product and experience. To win, you must move your retail strategy closer to your product, or closer to the customer. Preferably both.

The right strategy relies on deep expertise in technology to unlock the power of your merchants while using data to power the algorithms necessary to achieve efficient scale. The future is becoming a platform-enabled retailer.

The Department Store Renaissance

Exotic products, a rooftop garden, reading and writing rooms, reception areas for foreign visitors, and customer service at its best; this was the first Selfridges store in 1909. Carefully designed to become a destination, where those in the know visited to socialize, source style, and be inspired. These brands knew their customers and did whatever was necessary to satisfy their desires.

Department stores boomed in the 70’s and have survived in nearly the same format ever since. While some continue to thrive, the internet, shopping centers and specialty brands have weakened the department store’s control over distribution. In this new world, many department stores were left floundering.

But branded goods, product authenticity, variety, immediate in-store availability, and flexible returns are still key reasons for customers to shop at department stores. Building on these core principles will help keep customers flow through the door.

Department store operators must have the best customer data and algorithms for connecting customers to brands that will provide inspiration and create desire. They must have the best intelligence to deliver this inspiration online, in store, and out in the community. Their ability to work with large datasets and communicate desirable products to customers must be unrivaled.

Beyond this, they must provide real value to retail brands by becoming the most efficient same day distribution point, enabling brands to fulfill their customers’ desires with immediacy and efficiency.

Without these two elements in place their space is no longer valuable, and given the under-investment in product discovery, customer experience and localized supply chains to date, there is work to do.

How will this work?

The modern department store will be an expert in connecting to the customer through any platform - seamlessly managing sizing, outfit construction, price and desirability.

This fundamentally differs from today’s search-focused environment - where customers know what they want, and Google, Facebook and Amazon are all too happy to capture the transaction. The department store of the future will be deeply connected with their brands, defining trends, curating products, and creating the market for desire amongst their customers.

Brands will be happy to distribute their inventory through the department stores' highly-automated micro-warehouses, or stores as we used to call them - now responsible for getting any product into a consumer's hands almost immediately.

More than just fulfillment and discovery, the department store will enable smaller brands to access inventory sophistication they’d never dream of achieving alone. Using blockchain, these brands will be connected to stores, warehouses, and suppliers as well as learning algorithms, to predict the lowest cost replenishment for all parties involved.

Department store as a platform graphic
None of this works without getting closer to the customer's purchasing decision, and reducing friction in the experience. Brands, such as Massimo Dutti, who are testing new ways of creating desire using augmented reality to mimic product curation of a physical store in an online environment - aren’t wasting their time. The data gained from these experiments is a competitive advantage in knowing when, where and how to invest in developing algorithms and new interactions.

The Future of Food

Since the 1950s, there have been many incremental improvements in grocery stores, but the fundamentals are the same. Grocers derive profits through simplification, scale, and controlling access to shelf space - where suppliers go through a battle royale in paying supermarkets to be discovered by the consumer with each trip down the aisle.

Consumers needs are changing, they are demanding a wider variety of food experiences. Whether pre-made, organic, gourmet, more convenient formats or from local suppliers, these complexities gobble margins and are tough to scale. Just ask a restaurant owner.  

For the first time in our lives we are now in a position as consumers where we can start to utilize sensors to track food freshness, provenance and the chain of custody through the supply chain. This level of transparency adds more complexity, placing pressure on the current paradigm of static pricing.

San Francisco startup Innit has already brought the connected kitchen concept to life at Pirch Store in SoHo NYC, so such an open platform may become a reality soon. Grocers need to look at their business as a platform, and build interfaces that allow them to be a part of this new ecosystem.



Above: Innit’s Connected Kitchen Live demo at Pirch Soho, NYC. June 2016

These emerging appliances reduce the effort required in making meals at home with available produce, delivering high-quality food and a frictionless shopping experience. This is the start of an ecosystem that will highlight how little connection today’s grocers have with the home and the consumers within it.

In the United States, 2015 was the first year in which more money was spent on food services outside of the home than through grocery chains. This shows a fundamental shift in how people make their food decisions. Food is no longer primarily the domain of the supermarket.

The supermarkets of the past have won through scaling simplicity, controlling distribution, and relying on controlling information from both the consumer and food suppliers.

The winners of the future will be food ecosystems. Those ecosystems who move closer to their product by connecting consumer data right back to the decisions made in the paddock to significantly reduce waste.

Amazon seems to be winning the battle with its Amazon Go store, but nothing is settled yet. The real question is why today’s grocers lack the urgency to innovate their way into the pantry, or modernizing access to food within communities.

What’s next?

In the coming months, we will continue to hear about the death of retailers in the ‘messy middle’. To avoid this identity crisis, retailers must focus on the changing reality of the modern economy and become part of the consumer revolution.
So make your choice.

Are you going to move closer to your product? Differentiate your product from the market and add value with a real-time supply chain, and introduce an effective platform to enable suppliers to continue to innovate and share in your margin.

Will you move closer to the customer? Supporting your partners and suppliers with an unrivaled customer experience. Driven by your product discovery engine - where you deftly delight your target audience, creating desire across your physical space, salespeople, mobile and social platforms.

Or do you already do both? Today you’re the lucky ones, working hard to scale your brand into the global marketplace.

But beware, Amazon, Facebook, Alibaba and others are seeking to conquer your brand - you must remain paranoid. The only way to get close to your product and your customers is to become a platform-enabled retailer.

This article was originally published in Inside Retail's Future of Retail report for Inside Retail Live, APAC's retail conference and expo. 

Discover Perspectives

Timely business and industry insights for digital leaders

Explore
Related blogs
Retail

The Modern Retailer's Holy Grail

Daniel McMahon
Justin Grey
Learn more
Retail

Q&A: Trends, Technology and the State of Retail

Giles Alexander
Justin Grey
Learn more
Retail

Platforms for Growth: Connecting Digital Strategy to Technology

Giles Alexander
Lloyd Shanks
Natalie Drucker
Learn more
Master
Privacy policy | Modern Slavery statement | Accessibility
Connect with us
×

WeChat

QR code to ThoughtWorks China WeChat subscription account
© 2021 ThoughtWorks, Inc.