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The Need For A Retail Renaissance

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Jeroen van Meel

The lines between traditional brick-and-mortar stores and the digital world continue to blur. The changing wants and needs of users are making businesses revisit their strategies in an attempt to keep up. Jeroen van Meel, our Head of Composable Commerce, sheds light on these transformative changes and the necessity for retailers to pivot in order to remain competitive.

The Retail Status Quo

Many may argue that the retail sector is at a crossroads. Companies, in their attempts to stay relevant, are becoming increasingly cautious about potential investments. This trepidation isn't unfounded. In the Netherlands alone, the recent past witnessed the downfall of three major retailers Big Bazar, BCC, Shoeby , predominantly those with an expansive network of physical stores. But, what's driving this shift?

The answer lies in a combination of economic factors and the mounting costs associated with traditional retail. Energy costs, long leases, and substantial investments have led to inflated overheads. Additionally, the economic landscape has seen labor costs rise, making the traditional retail model less viable.

However, comparing this scenario against those retailers with a robust online presence, the picture is very different indeed. Brands that have capitalized on omnichannel strategies are thriving. The approach here is simple: while their advanced online channels drive sales and engagement, their offline channels play a supportive role, enhancing the customer experience. 

Take, for example, the Bruynzeel Kitchen company. Their in-store strategy emphasizes user experience, seamlessly integrating it with augmented reality (AR) driven experiences, creating a close relationship between the physical and digital. Phygital!

The Challenges Of Transition

But, as with any transformative period, the journey to adapt isn't without its challenges. For many retailers, especially larger ones, the investments made in e-commerce or marketing automation in years gone by have become more of a cross to bear. These solutions, mostly monolithic in nature, hinder agility. In an era demanding quick pivots – like the exploration of direct-to-consumer models, setting up marketplaces, or leveraging social influencers – these outdated platforms hinder rather than help.

That's where the concept of composable commerce comes into play. In the simplest terms, composable commerce allows businesses to break free from the constraints of monolithic solutions, offering a modular approach that's inherently future-proof.

In traditional models, retailers often find themselves tethered to monolithic platforms, hindering adaptability. But with composable commerce (something we champion at rb2) businesses can utilize modular, headless solutions: allowing them to piece together various services and platforms based on their unique needs. 

The benefit? A tailor-made solution that is not just responsive to current market dynamics, but is also robust enough to evolve with future trends.

Embracing New Models And Mindsets

Against the backdrop of these commercial shifts, a new trend is emerging – companies are leaning into innovative internal departments or external partners to trial new business models. The focus has distinctly moved from products to services.

But, the innovation isn't restricted to just service-based operators. One of our customers, a holiday park operator, has transformed into a real estate enterprise, selling holiday homes directly. This pivot was not just a response to market demand, but also a proactive approach to navigating the intricacies of new tax regulations within the Netherlands.

However, the challenge remains: how can large corporations, historically great at data management and customer insights, think of big supermarkets as a prime example, transition to this agile, start-up mentality? The key is to foster internal innovation, shielded from the corporate politics that often get in the way of creative ideas.

One of the fundamental challenges large corporations face is transitioning from a traditionally hierarchical structure to a more decentralized model. There is now a need to move away from the classic pyramid structures of traditional large businesses and towards smaller, agile teams focusing on innovation.

Rather than channeling all decision-making through a centralized system, companies are now experimenting with a model where smaller teams test and implement new ideas, using technology as a catalyst. Concepts like the Internet of Things (IoT) and Augmented Reality (AR) are no longer just buzzwords – they're tools enabling these teams to introduce fresh, relevant use cases to the market.

Toward A Digital-First Future

But while the importance of agility and innovation remains paramount, there's another facet to this retail transformation that's impossible to ignore: the growing importance of digital-only offerings. Brands, including giants like Nike, are diversifying their revenue streams, exploring emerging industries like blockchain with many major brands backing a variety of NFTs (Non-Fungible Tokens). Nike has even launched its own web3 marketplace – SWOOSH.

Such efforts are not just about diversifying portfolios but also about embracing the future. Digital identities are extremely nascent but are becoming more important for younger generations. The fusion of these digital assets with influencer marketing demonstrates the innovative spirit businesses need in times of consumer culture transformations.

But underlying these strategies and innovations is a foundational truth – a need for adaptability, an embrace of technology, and a culture of continuous learning. The future is predictably unpredictable, so with the right mindset and tools, businesses can be ready to take it on. 

The takeaway for retailers is clear: they must be agile, innovative, and willing to truly embrace digital.

Want to work with a partner who embraces technology, innovation, and change? You need rb2, the best people to support with any headless project.

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Jeroen van MeelHead of Composable Commerce
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