Retail in 2010: a world of extremes

Abstract

Purpose

Advises retailers that traditional strategies will not be adequate to cope with trends such as unprecedented customer diversity, market polarization and dominant mega‐retailers. Explains what capabilities will retailers need to remain relevant to demanding customers. Suggests how retail executives should begin preparing to embrace fundamental change and become truly customer‐centric.

Design/methodology/approach

Using scenario techniques to examine retailing in 2010, the authors explore a “world of extremes”. In it retailers will face a consumer marketplace defined by unprecedented social diversity, competitive intensity and market complexity.

Findings

As the marketplace polarizes across a variety of dimensions, corporate thinking needs to shift from “bell curves” – where firms try to serve a generic mass market but do not meet anyone's needs particularly well – to “well curves” – where companies drive growth by applying distinct business models in each part of their business to deliver the greatest value to explicitly defined groups of customers. In 2010, retailers will succeed to the extent that they abandon the undifferentiated middle and focus their organizations on serving the extremes of the demand curve, even if they play both sides.

Research limitations/implications

This is one scenario from a set of possible futures for retailing in 2010.

Practical implications

By learning how the world of extremes scenario is being shaped by long‐running social and industry trends which, when added together, will bring about fundamental changes in the retail market, business can anticipate what steps they must take now to prepare for survival and success in 2010. These include: Craft an exceedingly focused, distinctive brand proposition; Drive customer‐valued innovation through deeper insight; Optimize core activities through systematic intelligence; Realign the organization to operationalize customer centricity.

Originality/value

Based on research at the IBM Institute for Business Value and work with clients worldwide, IBM Consulting identified five key “mega‐trends” that are redrawing the rules of competition for retailers: Customer value drivers fragment; Customers become more guarded; Information exposes all; Mega‐retailers break the boundaries; Partnering becomes pervasive.

Citation

Gagnon, J.L. and Chu, J.J. (2005), "Retail in 2010: a world of extremes", Strategy & Leadership, Vol. 33 No. 5, pp. 13-23. https://doi.org/10.1108/10878570510616843