21.06.21

The Leadership Models In Retail

Deloitte interviewed fifty chief executive officers of retail companies, and all agree that returning to the pre-pandemic indicators will take much time. 6 in 10 respondents are confident that it will last one or two years, and one-fourth believes it will take five years. One thing is obvious – to play by old rules is not going to work. In this article, we consider four leadership models in post-Covid retail.
Offline to online
One of the salient trends of 2020 that remains even in 2021 is the transition of physical stores to online. The retail sector has become one of the first that have experienced the full scope and scale of the pandemic impact.

The increase in popularity of online trading encouraged retailers to re-consider the behavior strategy. This increase has become unplanned for online sellers but a very desirable phenomenon, and for those who are offline audience-oriented – it was a cause to think of the digital business transformation.

The pursuit of offline spots owners to take root in Internet-space is due to changes in customer behavior. Modern buyers prefer channels guaranteeing the security of purchases and a high level of customer experience.

In selecting the "offline to online" leadership model, retail companies are guided, first of all, by the desire to be independent of external circumstances.
In this model, the retailer's focus shifts to:
The withholding of market share;
The efficiency of infrastructure accelerating;
Expanding the customer base.
Following omnichannel strategy in retail, that is to say, combining the abilities offline and online, the business obtains a double advantage: develops physical business due to online marketing campaigns and, in doing so, reinforces brand presence on all possible advertising platforms.
Marketplaces and e-commerce platforms
The marketplaces are a definite trend: most Russian online shopping during the pandemic switched to a new model to reinforce their impact on the market. All biggest retailers from the TOP-10 launched their platforms. Current marketplaces also don't want to lose ground. They extend a product range, engage the suppliers with advantageous conditions, increase marketing budgets.

For instance, Ozon made a unique offer for suppliers in need of rapid funding: it created an opportunity for obtaining a loan in 48 hours through Ozon. Invest. It contributed to the growth of platform popularity for both large trading companies and representatives of small and middle-size businesses.
Transforming into the marketplace, retail focuses on the following:
Monopolization of digital access;
Aggressive expansion;
Capitalization.
Brands and online shops that have not become marketplaces conduct their business on existing ones. During the pandemic period, customers used to buy all necessary things in one place, and it is unlikely that they would refuse this convenience.
''I forecast 30-35% e-commerce growth by the end of the year. We see retail companies are actively discovering new directions and markets. For example, they create their marketplaces. We observed changes in e-commerce and the traditional offline retail, logistics, pharmacy market, and other niches. Today, those companies that have high-tech solutions will win. And by high-tech solutions, I mean modern PIM systems, virtual assistants, online fitting, and others''.

Andrii Pavlenko
CEO Scallium
Disrupt niches
More and more entrepreneurs are interested in launching their online businesses. However, not all have the resources to combat market share in several directions simultaneously. The obvious solution in this situation - to "disrupt" retail. Disrupt means undermining existing frameworks, substituting well-established processes, and getting on a fundamentally new level. This breakthrough idea will allow a beginner in online retail to establish contact with the target audience, save costs on marketing, and maximize profit at the expense of raising the cost of goods demanded by the audience.
During the niche process in e-commerce, the race is about:
Unique value offer;
Aggressive growth;
Profitability.
Digital ecosystems
This platform is directed at creating additional value for clients at the expense of combining different products and knowledge. The user can work in a single account with many services (Single Sign-On technology). Examples: Apple, Google, Facebook, Microsoft, Uber, Alibaba, Tencent, Amazon.

The pandemic sped up the digitization of financial institutions and retailers, putting the need in its ecosystem in the first place. At the same time, the focus is retained on the following:
Loyalty;
Share in the customer wallet;
Customer's time and attention.
These four leadership models are the most promising today. But we at Scallium are sure there could be more. Every company has its path, and the most successful, frequently, is the most extraordinary.
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