There is potential for retailers to utilize data and analytics to respond more effectively to recent market trends. For the moment we experience Raise of Digital, Competitive pressures, more demanding customers and changes in the way delivery and supply chain works. Online continues to grow exponentially -it now plays a role in 33% of all purchases. New technologies create additional ways to engage and build relationships with consumers and, therefore, cultivate loyalty. Despite the increasing importance of digital, the majority of retailers still face issues with execution. Rise of discounters and post recession consumer behavior has added additional price pressure. Retailers are being forced to re-evaluate their propositions and find new ways of differentiating. With proliferation of choice in the market, customers are becoming more demanding around targeted conversations and customized services, namely There are more customer touchpoints than ever before and Building customer loyalty is becoming more challenging. From the supply chain perspective there are also challenges, e.g. Fulfilment is now a key battleground. For example new peak demand has immensely challenged retailers supply chains while introduction of click & collect further challenged traditional supply chains. Deloitte Analytics Institute help it’s clients to overcome the potential barriers of solving the CIP problems by introducing data analytics in decision making processes.
We anticipate the trends influence
Due to the recent advancements in technology area, our world has started a significant change towards machine to machine communication.
Change of business barriers
This leads to a significant increase in the amount of transactions all over the world and moreover the speed of transactions. What is even more essential, the traditional limitations for business like time and space and now going into the past, while new barriers of risk and speed taking the lead.
Managing new barriers of speed and risk requires new capabilities
In a world of traditional barriers, like time and space, also known as “Industrial age”, companies were able to build long lasting S-curves of Shareholder value creation and by anticipating change in the existing S-curve potential, companies were able to run new S-curve to continue it’s path for growth. That was the way to manage the Shareholder value growth and the risk dedicated to the anticipation.
Multiplication of S-curves
Ability to implement data driven decision process is now essential to sustain the Shareholder value growth
In the “Digital age” companies have to work with portfolios of S-curves which are less lasting than in “Industrial age” and more client focused. The only way to manage the Shareholder value dedicated to the portfolio of such businesses is to build the capability to manage the business under the pressure of risk and speed – new barriers of businesses all over the Globe. Since digitalization leads to dematerialization of products and services this capability translates in ability to process big data and be able to execute the decision based on this data in a fast and reliable manner.
Deloitte Analytics Institute presents it’s vision toward the required change
In order to break through the complexity of the “digital world” and it’s trends one needs to pay serious attention to the ways Shareholder value is created and managed. Deloitte Analytics Institute presents it’s vision for different industries and shares the products (existing and possible to be done) which can support business in its fight for the new and better digital world.
Business Model Change in Digital World
Do you know how your business is going to change next years under the pressure of digital technologies? In a pre-digital world, the “model of models” was the so-called “NM” model. Which means one was selling “M” products directly to “N” clients by using his relations, client database etc. “N1M1” or a “Sandwich” model describes this “NM” business model transformation or an evolution in the digital age. Here “N” – stands for the set of all people, which can become one’s clients (B2B, B2C, B2G etc.), “1” – stands for unique platform, which communicates to one’s clients, “M” stands for all products one is selling to his clients and last but not least “1” stands for the infrastructure one uses to run the products.
New business models may arise from a combination of a set of these layers or just one layer. At each layer, the business model assumes clear competitive advantages one will need to operate the layer. For instance to be successful at the layer “N” one needs state of the art machine learning capabilities and big data technologies to be able to understand people wishes, thoughts, their expectations etc. Thus, one will be able to offer these people exactly what the need at a certain point of time. Such offer creates a “wow” effect, e.g. “How did you know I need exactly this credit card exactly now, this is a true magic! Awesome, sure I take!” Communication platform, unique for all clients, allows you to find the best way to communicate to the client thus the best competitive advantage at this point is being able to reach the necessary person with the most optimal and reliable means of communication e.g. voice call, sms, email, post etc. Third layer belongs to products. Here, the most competitive advantage will be to run different products as fast as possible.
Thus, Agile, Lean and other ways to reduce development time, increase quality and “time to market” become tangible assets for those who focus at this layer. Last “1” is infrastructure, which allows running products. Obviously, the competitive advantage at this layer is scale, to have minimal costs for spatially distributed and cost intensive infrastructure. Case. The good example of N1M1 model operation is Uber or Gett solutions for taxi reservation. Previously, M drivers have been seeking for N passengers. Then some taxi drivers united in unions with common interaction interface – call centers. Modern business model consists of unique platform for clients and taxi drivers reliable communication, products - Apps for clients and taxi drivers.
Now, for instance, Gett starts offering cleaning products, delivery services etc., enlarging the products variety at the “M” level. Later, we will see, that autonomous cars will innovate infrastructure layer, which will allow new players or existing ones to offer new business models using Gett or Uber or even something new. N1M1 model is offering a great variety of new business models by combining different layers in different combinations for different industries and DAI knows how to implement this advantage and make the shift from traditional NM to innovative N1M1 business model. The way it works one might consider as magic, but on the other hand, it is very logical and simple.