Business Models

RetailTech is reimagining customer engagement. Mobile shopping, omnichannel and personalized experiences are making an impact, but the more profound changes relate to underlying business models. While many of these represent threats, there are also opportunities. Take advantage of them by understanding how innovation is disrupting retail business models.

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How you can use the RetailTech Model

The first stage is Research & Development, when an innovation is not fully-fledged and has not yet been adopted beyond prototypes, trials or POCs.

New technologies typically go through 5+ years of R&D, though the timeframe will vary substantially depending on the degree of innovation entailed.

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Model Stages

The Leading Edge stage indicates when an innovation has moved out of R&D and into operation. Approximately 5% of the market adopts the innovation at this stage, usually start-ups and a few industry players known for being forward-looking.

Sometimes, an innovation is picked up from another sector. As indicated in the timeline below, it typically takes 1 to 3 years to move from the Leading Edge to Early Adopters stage.

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Model Timeline

At this stage organisations are more risk averse than those at the Leading Edge, but are still keen to be in the industry’s upper quartile and adopt a new technology.

The broad timeline for technologies to remain at this stage is 2 to 5 years at which point they will have reached around 25% market adoption.

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Model Origins

By this point a technology or business innovation can be considered as Mainstream since it will have been implemented by around 50% of the market.

2-5 years is the typical timeframe for this stage.

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Model Lenses

Technologies in the Late Adopters stage have been widely adopted across the industry with 80% - 100% of the market using them after a further 5+ years.

Not all technologies end up being adopted by everyone, with some 20% of technologies never reaching full adoption.

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R&D

The first stage is Research & Development, when an innovation is not fully-fledged and has not yet been adopted beyond prototypes, trials or POCs.

New technologies typically go through 5+ years of R&D, though the timeframe will vary substantially depending on the degree of innovation entailed.

. .
5+
Leading Edge

The Leading Edge stage indicates when an innovation has moved out of R&D and into operation. Approximately 5% of the market adopts the innovation at this stage, usually start-ups and a few industry players known for being forward-looking.

Sometimes, an innovation is picked up from another sector. As indicated in the timeline below, it typically takes 1 to 3 years to move from the Leading Edge to Early Adopters stage.

. .
5%
1-3
Early Adopters

At this stage organisations are more risk averse than those at the Leading Edge, but are still keen to be in the industry’s upper quartile and adopt a new technology.

The broad timeline for technologies to remain at this stage is 2 to 5 years at which point they will have reached around 25% market adoption.

. .
25%
2-5
Mainstream

By this point a technology or business innovation can be considered as Mainstream since it will have been implemented by around 50% of the market.

2-5 years is the typical timeframe for this stage.

. .
50%
2-5
Late Adopters

Technologies in the Late Adopters stage have been widely adopted across the industry with 80% - 100% of the market using them after a further 5+ years.

Not all technologies end up being adopted by everyone, with some 20% of technologies never reaching full adoption.

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80%-100%
5+

The first stage is Research & Development, when an innovation is not fully-fledged and has not yet been adopted beyond prototypes, trials or POCs.

New technologies typically go through 5+ years of R&D, though the timeframe will vary substantially depending on the degree of innovation entailed.

The Leading Edge stage indicates when an innovation has moved out of R&D and into operation. Approximately 5% of the market adopts the innovation at this stage, usually start-ups and a few industry players known for being forward-looking.

Sometimes, an innovation is picked up from another sector. As indicated in the timeline below, it typically takes 1 to 3 years to move from the Leading Edge to Early Adopters stage.

At this stage organisations are more risk averse than those at the Leading Edge, but are still keen to be in the industry’s upper quartile and adopt a new technology.

The broad timeline for technologies to remain at this stage is 2 to 5 years at which point they will have reached around 25% market adoption.

By this point a technology or business innovation can be considered as Mainstream since it will have been implemented by around 50% of the market.

2-5 years is the typical timeframe for this stage.

Technologies in the Late Adopters stage have been widely adopted across the industry with 80% - 100% of the market using them after a further 5+ years.

Not all technologies end up being adopted by everyone, with some 20% of technologies never reaching full adoption.

Innovation is the New Tradition

The imagination driving innovation

At the beginning of the 20th century, department stores and catalog retailers brought about the first wave of retail disruption. The 1950s saw the rise of supermarkets and suburban malls. Then the next wave didn’t occur until 1995, when Amazon put a catalog online.

Bigger changes, driven by technology and inspired by the consumer, are coming at us quickly now. 3D printing and fabrication allow instant production of onsite, customized products. The Internet of Things and voice-activated assistants automate ordering, with little or no role for retailers or even humans. Global marketplaces (Amazon, eBay, Tradeshift and Alibaba) herald a profound shift away from retailers toward platforms.

Direct-to-consumer models go a step further, with brands owning the customer relationship. In virtual reality, there is a store but it’s not a physical one; it’s all in the imagination of the customer. And at the extreme, in the sharing or access economy, consumers don’t buy anything; they simply rent or borrow.

In this on-demand economy, the customer might not be the one doing the shopping, and an employee might not be the one serving customer needs. So what role do retailers play?

There are two basic strategies. The first is to incorporate aspects of these new models into your thinking, i.e. disrupt your own business. Alternatively, you can double down, work even harder to improve the customer experience, strengthen relationships with customers and personalize your service. You might also look to add new revenue streams from the real-time integration of financial services, customization of products and new service elements before and after purchase.

There is no right answer, but the starting point has to be an understanding of new business models on the horizon. And that’s precisely where the Business Model lens of the RetailTech Model comes in.

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Business Models Expert

Neale Almond
DXC Retail Practice

Arrange a meeting with Neale Almond

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