Retailers with distinctive business models are disrupting and reshaping the world of value. These retailers are better able than traditional retailers to deliver certain components of value – price, speed, simplicity, or personalisation, to name but a few. Retail models will increasingly make money in different and more complex ways, permitting a different relationship between item-level pricing and business sustainability. Consider the Costco model. Prices are lower because the profit stream comes from membership fees. In the future, retailers will have a multitude of profit levers to pull that will permit many different types of item-level pricing.
As the mechanics of value become more personal, dynamic, contextual, and volatile – and traditional sources of differentiation and price leadership become commoditised or disappear – retailers and suppliers need to REimagine Value. They also need to realize that there is much more to value than price. While price is clearly an important component to value, other value attributes are just as vital in determining the value perceptions retailers can offer shoppers. In the coming years, those retailers that master the artful science of REimagining Value will create shopper value by delivering not only on price, but also on quality and service throughout the shopper’s brand journey.
This research, which represents the second of four pillars integral to our overall big idea for 2015 and beyond (REconfigure REtail: Strategies to Drive Competitive Advantage), can be downloaded here.