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(gentle music)
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The old rules of retail are gone.
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For retailers to win in the future
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they're going to need an entirely new strategy,
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one that's customer-driven and fueled by data.
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Today we'd like to introduce a bold new strategy
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in the future of retail, called "Winning the Town."
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Let's start by discussing the disruption of retail.
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Traditionally, retailers followed a strategy of expansion,
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opening as many stores as possible,
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creating a scale effect that allowed them
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to offer cheaper prices and attract more customers.
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But this model no longer works.
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We have seen significant changes
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in consumer behavior and expectations.
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It won't be enough for retailers to rely on
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the old formula of store expansion.
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They will have to fundamentally change the approach
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and focus instead on maximizing engagement
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to build customer density.
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To do that, they'll need to start with identifying
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new customer occasions.
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Rather than building scale through the number of stores,
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they'll concentrate efforts to build local operating scale,
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achieving a lower cost to serve in each community or town
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one at a time.
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Meeting their customers' needs more directly
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and more conveniently will allow the retailer to gain
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density of customers and a density of data
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that will help them further increase the share of wallet
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and in turn, lower prices.
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We call this new approach to retail strategy
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Winning the Town.
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Thanks for the overview Khaled.
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Let's now take a closer look at the strategy in action.
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The goal isn't just to sell more products,
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but to expand the share of wallet by accommodating
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a wider range of customer missions.
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The retailer needs to deploy a network
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of interconnected assets, both physical and digital
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to serve these occasions.
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Let's talk about that Khaled.
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In the past, retailers have regarded their various stores
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and platforms as independent entities
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with their own P&L statements
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that must each earn their keep.
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But with the win the town strategy,
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these assets work together to form a cohesive whole.
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Stores must now serve a greater purpose
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than simply offering products to customers.
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They're now part of a fulfillment network,
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marketing strategy, convenience offering, and more.
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What ultimately matters is driving customer lifetime value.
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That's right.
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Once retailers have achieved the density of customers
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in a given town, they start to get operational efficiencies
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in their network of assets in that town.
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For example, retailers can lower the unit cost of delivery
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by optimizing their delivery routes
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and using their store network as mini fulfillment hubs
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to fulfill their online orders.
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Or by serving B2B customers
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through last mile delivery networks.
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And at the same time,
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because of increased customer engagement and frequency,
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retailers are collecting a lot of data to better understand
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consumer preferences, patterns, and needs.
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One of retail's most valuable assets is the wealth
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of data they have.
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Adding touchpoints opens new opportunities to capture
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even richer customer datasets.
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Ultimately, it's all about adding touchpoints
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and bringing value back to the customer.
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Winning the town is about giving customers
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more of what they want, whether it's fresh produce,
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convenience, a more complete product offering, good prices,
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more of what matters for them.
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The secret is leveraging
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and building on what's already there.
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That's definitely it.
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Winning the town is all about meeting customers' needs
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through the right assets in the right location
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and at the right time.
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This could mean adapting some
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of their existing physical assets
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or pursuing strategic partnerships
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and expanding digital elements.
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It will be unique for each company,
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and it's also a complex path to navigate,
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given the capital and CapEx implications.
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While no new company has yet to master this approach,
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we at BCG are seeing its emergence
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across a retail landscape.
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BCG is working with retailers around the globe
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to take inspiration and apply it
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to their unique business market and customer base.
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Join us next time as we explore more topics
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in the future of retail.
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(gentle music)