Jos de Vries The Retail Company: Retailing needs change

How to transfer to the fifth retail generation?

By Christiaan Rikkers, CEO of Jos de Vries The Retail Company

Without doubt, the current financial crisis will change consumer behaviour and shopping patterns at unprecedented rates. Retailers, who want to survive, will have to radically rethink their position and strategy over the coming period. Inevitably, the key-phrase in this process of change will be ‘how to stay connected with my customer’.

How, as a retailer, is it possible in these difficult times to identify with customers and serve their changing requirements effectively? Retailers who wait for customers to come to them to share their new ideas, will probably have missed the boat. Retailers therefore, should be proactively seeking out customers and trying to understand their changing needs.

So get out there and find out what they want, take it back to your store tomorrow and … explain how much you care and demonstrate your willingness to help.

That economic and social trends impact on retailing is, of course, nothing new. The retail industry is influenced by social change like no other. Developments taking place today define the behaviour of the shopper tomorrow, the reason why the retail sector is often run on a day-to-day basis. Successful retailers however, know that day-to-day operations have to take place within the framework of a long-term strategy.

With the consumer being bombarded with a constant flow of bad news, formulating a long-term strategy is no easy task. To do this effectively, it is necessary to understand the development of the retail business and to look at it retrospectively. Current developments in retailing can be defined as the transformation from the third to fourth generation concepts. This change is already underway, but the process is being stepped up by current economic developments.

Retail generations
The traditional small-sized corner shop was the first generation in retailing. These ‘Pappa and Mamma stores’ had a strong social relationship with the customer.
This first retail generation was the first stage in the disassociation of producer and consumer. Before that, producer and retailer were one and the same: the baker sold his own bread and the farmer sold his own vegetables at market.

Later, in the second retail generation, the first supermarkets evolved. The direct social relationship between retailer and consumer disappeared. Now price, product range and location became the determining factors connecting customers with the store.

In the eighties and nineties, third generation retail concepts began to develop. Retail marketing was introduced; from store concept to store brand. The store focused on its own customer-base and, with the right communication and concept, a strong store identity was created to differentiate itself from the competition. Many retailers are still engaged in the process of store-brand creation and market differentiation.

A few retailers are now entering the fourth retail generation: multi-format concepts. This means that they are targeting individual consumers using different formats, at different locations and a different times of the week. Segmentation is the keyword in this process of change. It goes without saying that retailers entering the fifth retail generation - multi-format and multi-channel - are few and far between.

In this fifth generation, the retailer has almost total control, optimising management of the complete flow of goods from producer to customer … and in doing so, they are closing the circle: industry and retailer are almost synonymous once again.

Having to change to stay the same

Retailing is about running the day-to-day operations, especially in such turbulent times as today … but always based on a long-term strategy. This long-term strategy is not as difficult as it may seem. Just determine the stage of development your company is at, compare this to overall developments in the retail industry and connect up to these developments.
Join the fourth retail generation now and, when you’re ready to take the leap, go for the fifth generation - multichannel and multiformat - and take total control!