We believe that going forward only two retail business models will persist:
- Online Retailing
- Omni-Channel Retailing
Both are very technologically (digitally) intensive.
Until today most investors have backed Online Retailing, but there is an increasing fight back from traditional retailers based on an Omni-Channel business model. We believe that there is going to be a future for businesses that sell to consumers through an Omni -Channel platform.
Itim has developed probably the world’s best Omni-Channel platform. Our journey has started in the UK, because of UK’s geography. The UK has led the world in Omni-Channel retailing.
Our goal is to become the Omni-Channel platform of choice. That means 2 things:
- Continuing to sell the platform to other retailers
- Longer-term aggregating traditional retailing businesses into our platform
In the future, there will be probably fewer retail businesses and probably more platforms. We think that an ‘Omni-channel Amazon’ will emerge from the ashes of traditional retailing.
What is Omni-channel retailing?
Omni-Channel retailing is a concept built on the growing Uberisation of Retailing. Essentially, on the back of the restaurant industry, a whole series of local courier networks have developed in cities and regions, which is disrupting the ‘Online’ business model of national distribution from central warehouses.
Retailers are realising that, rather than thinking of their stores as points of sale, thinking of them as points of service means they can fulfil customer orders from the stock in their stores, providing 30-minute click-and-collect (curb-side collections) and same day or 1 hour delivery from their stores to customers in the local community. Providing extreme convenience and extreme services that their online competitors cannot match. Those that have done this well have seen 50% of online orders being fulfilled from stores.
In addition, they are finding that 10% of customers (VIPs) account for 40-50% of revenues, and over 60% of their profits. By linking these customers digitally to their stores and increasing engagement means, that if they shop one more time a year it doubles the retailer’s profits.
These two features, alongside the capability of providing a single view of customer, product and real-time-stock across all locations and channels, combined with optimisation capabilities, is at the heart of Omni-Channel retailing and it is proving a compelling and profitable business model if you can do it well.
Traditional retailers have been poor and slow at completely adopting this model for 3 reasons.
The Business Models of traditional retailers are still too rooted in the Past.
Retailers in competing with their online only counterparts have missed the opportunity they had to move to an Omni-Channel business model. Instead, they built online silos mimicking their online counterparts, which increased costs and moved sales from stores to online, reducing overall profitability.
The move to Omni-Channel, or increasing channels has not been handled efficiently, in addition they missed the opportunity to capture customer data in store. So historically they have not been particularly customer centric. Or even good at using customer data.
Traditional Retail Businesses are struggling to drive sales and increase scale.
Platform driven businesses like Amazon are almost sector agnostic. Their business model allows for sales growth through aggregation. Traditional retailers by comparison can only drive like-for-like sales increases by competing for market share in their speciality sector. There is too much competition now in most sectors for that to work to any scale. Traditional retailers have been poor at adopting technology and transitioning into a platform and allowing for aggregation, unlike their online counterparts.
Traditional retailers have been slow to optimise
Traditional retail business processes, fragmented across multiple systems, built around old organisation structures, with poor automation do not lend themselves to the use of AI/Algorithmic optimisation. Platforms are being more effective at using such technologies, as we do, to optimise, pricing, stock, ranging, customer distribution and marketing. All enhancing profitability and sales.
Developed over 12 years, starting in 2007, it is a comprehensive platform competing with the best of breeds in every segment/module we provide.
With 65 customers some using elements and some using all the platform, we now have the reference base and track record to be successful