Retailers can reinvigorate their relevance and societal value by leading the ecosystem economy.
In our era of consumer activism, where consumers crave and demand authenticity, newness, convenience and creativity, retailers are responding by developing personalised, omni-channel experiences. However, headlines still point towards the doom of retailers and decline in the ‘must have’ status of their brands.
A ‘retail apocalypse’ has long been heralded. However, we believe this so-called ‘apocalypse’ is in fact a ‘retail renaissance’. What is changing is what we call the ‘great retail bifurcation’: the retailers who succeed are those who are either premium retailers, or clear cost leaders. Both groups are succeeding by generating deep insights about their consumers and connecting them more effectively with the relevant participants of a broader ecosystem.
From ‘one-to-many’ to ‘many-to-many’
Broader priorities such as health, wellness, safety and social impact are increasingly driving shopper and consumer behaviour. Supported by digital technologies, the rise of consumer activism is challenging the ‘one-to-many’ relationship between a retailer and its customers. Consumers can now easily connect with each other and with all participants who complement the retailer’s offering. Therefore, the ‘one-to-many’ relationship between a retailer and its customers has now shifted to ‘many-to-many’.
Consumers can find ways to get what they need, with or without the retailer’s help. To remain relevant, retailers have started taking into consideration the full ecosystem, which is formed by all the individuals and organisations that complement the retailer’s products and services and are necessary for the consumer to fulfil their priorities. Retailers have an excellent opportunity to differentiate themselves, by joining or developing this ecosystem around consumers.
The customer-centric ecosystem
An ecosystem strategy extends the reach of a retailer’s offerings and augments the overall customer value proposition, especially if the retailer is viewed as a critical player in the ecosystem. Effective ecosystem players proactively connect consumers with useful participants or parts of the ecosystem. This can cement a retailer’s value and relevance, while simultaneously building loyalty.
Successful ecosystem players have typically been digital native organisations, e.g. Amazon, Alibaba, Uber. In the transport sector, Uber has embraced the ecosystem economy by integrating its offerings with Qantas and Spotify to create an end-to-end and highly personalised customer journey.
Traditional bricks-and-mortar retailers also have an opportunity to join, leverage or even develop the ecosystem to align with consumer priorities, as demonstrated by US Walgreens, or more locally, Australian car dealership A.P. Eagers’s Carzoos. This goes beyond connecting consumers with additional products and services. For example, clothing maker IceBreaker provides transparent information on its supply chain with a ‘baacode’ for each product. IceBreaker customers can trace the merino wool in a garment all the way back to the sheep farm where it was produced. In this example, IceBreaker demonstrates their commitment to sustainable products, connecting more meaningfully and consciously with consumers who are aligned with these priorities.
How to tap into the ecosystem economy
Tapping into the ecosystem economy requires retailers to provide consumers with (1) an additional, distinct utility and/or a deeper, emotional connection to their priorities; (2) a platform to trade and co-create with them and the ecosystem participants; and (3) a trusted data repository to drive personalisation and ultimately greater customer outcomes.
Trust is the ecosystem currency, requiring a new level of openness and collaboration with other ecosystem players. This collaboration and data exchange will help all participants of the ecosystem to better assist consumers well beyond their purchase. New insights help extend the experience all the way to a consumer’s priorities, as per the IceBreaker example.
Tapping into the ecosystem economy in this way will also amplify returns from investments made towards customer experience for retailers, their customers and the broader society. In developing these new capabilities, retailers will be able to redefine their relevance in the eye of the consumer, the supply chain, and their broader value to society.
Yann Pastor, Trent Adamson and Zoe Diamond specialise in retail and consumer business strategy and transformation at Monitor Deloitte. Monitor Deloitte combines deep industry insights with cutting edge methods to help leaders navigate the future with confidence. Learn more about Monitor Deloitte at https://goo.gl/6xWzA7