One of the legacy of the pandemic is that the retail market has been rocked by the need for more disruptive business models.

In recent years, the degree of focus on generating new ideas and turning them into businesses has increased by a considerable factor, and many companies in the retail business are rushing to build digital businesses that address changes in customer behaviour.

Digital business building is no longer viewed as an experiment or an innovation to the side, but on the contrary, it has become now a necessity for retailers in the short term and, more importantly, a differentiating capability for long-term success.

It all starts with understanding our current positioning in a dynamic and fast-changing retail market, clarifying our ambitions, and then identifying the customer target we are going after. To help clarify your current and future positioning, take a look at the most common positionings in the current European retail market.

Regional stars are retailers that are performing well in local European markets. Usually, they are protected by having very strong ties to the consumer base, in addition to a good value proposition.

Piggyback riders are usually highly creative, successful food retailers or branded retailers with great consumer appeal, but they are not strong enough to sustain the fight for technology on their own. Usually, they choose to ride on the back of others’ platforms and to sell through them.

Value creators are companies that perform well in a wide market, reducing their costs, and keeping prices low. Taking into account their strategic approach, they have limited opportunity to differentiate product offerings beyond geographical coverage, so they compete to drive acquisition and retention by offering a combination of low prices and a good customer experience. The key challenge for value creators is to deliver both of those elements, without compromising the other.

Game changers are retailers who can think more broadly about reinventing their value propositions, and they have enough size to try to disrupt the rules of the game. In some cases, the value proposition might involve selling not only products but also services, in other cases, it might involve partnering with other companies to leverage the infrastructure and offer radically different sales, service, or support models.

Crazy innovators are companies that launch something interesting in the digital space but do not have a real roadmap to profitability. As they grow, usually they will fail or be acquired by game changers who learn from their experiences and innovations.

Laggards are retailers that fight to run the company and change it at the same time, struggling to maintain profitability. They compress costs to try to preserve margins and reduce investment. Often, they face pressure from the market and shareholders, and the pandemic has increased their challenges.

It all starts with understanding our current positioning in a dynamic and fast-changing retail market, clarifying our ambitions, and then identifying the customer target we are going after. To help clarify your current and future positioning, take a look at the most common positionings in the current European retail market.

Consumer behaviours and expectations are changing for more quality, more convenience, more speed, more choice, and more value, all at the same time, creating an impossible economic challenge for retailers.

Digital business building is almost a requirement to meet these new sets of needs, but that may not be possible if a company does not try to transform the approach.

Over the last few years, consumers have increased their reliance on e-Commerce, and Amazon has planned to invest $100 billion more in digital transformation than any of the other top 10 retailers in the world, between 2020 and 2025. We expect more people to continue to buy online, from books to food.

We are in the beginning of a consolidation cycle in the European retail market. Companies that can build digital businesses, creating curated experiences in retail even without the physical element, addressing changes in customer behaviour, will disrupt the rules of this game.