Big Idea

Retail Diffusion: An Inevitable Journey

Retailer fragmentation is an absolute requirement for retailer success and therefore an area of deep engagement for any successful retailer-supplier relationship.

For some time now, we have discussed retail fragmentation in its many forms—variations in stores,
shoppers, product offers, and pricing—all to try to help our clients understand and cope with an increasingly variable marketplace.
 
On the supplier side, it is sometimes overlooked just how utterly critical this trend toward fragmentation really is for the 21st century retailer. Far from being a fad or fashion, far from being a whim or even a matter of choice, it is an absolute requirement for retailer success and therefore an area of deep engagement for any successful retailer-supplier relationship. 

Perhaps the very word "fragmentation" is part of the problem. Fragmentation sounds like something being broken into many pieces. But what is really happening in retail is more like diffusion—a process of spreading out to fill all the spaces where consumers need a different sort of retailing offer. It is rather like biology; if there is a gap in the ecosystem, something will evolve to fill that gap. As retailers differentiate, separating themselves from one another in the market, they gradually diffuse, spreading out to cover all the possible permutations of value, product range, and retail experience.
 
Astonishingly, it has become clear that many suppliers are insufficiently aware of the core strategic value, even necessity, of retailer diffusion. So let’s review the reasons and processes through which retailers differentiate.

Big Idea

What Are "Big Ideas"?

Forward looking and thought provoking, Big Ideas focus on the topics we believe will most significantly affect the retail landscape. Developed by our experts, these are the must-have insights in helping you prepare for the realities of tomorrow.