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