Alexander Graf
Alexander Graf Entrepreneur, e-commerce expert, co-founder and CEO of Spryker Systems
21. December 2017 in

English Insider

Retail 2025: What retail?

At years and as always it is time to get the glass ball out. What happens with the many retailers and brands in the next years. What is the big next thing after Amazon SEO and TMALL? Where can you earn money in the future? Unfortunately there are very few thoughts about this issue. Jochen Krisch currently plays around with a model that shows four possible directions (platform, marketplace, experience, verticalization). The introduction of Amazon Echo and other “screen-free” devices make the forecast however increasingly difficult. Unfortunately, in most of the current trading strategy papers I still often find the topic Omnichannel, the saftey ring of the coachmen. When the feeling of nausea has settled, I wonder whether the authors or the readers of the studies really believe in this rescue anchor. It seems to be that many decision-makers do not only live on the wrong side of the railroad, but they want to run in the wrong direction.

Personally, I do not dare to predict which vendors and business models will dominate in 2025 and who will benefit most. However, I believe fundamentally that 2025 business models dominate, which we do not yet know today. This is also the reason why I say that companies should not “invest” in business models, but only in skills. Skills to act faster. Skills to change faster. Skills to shape the market and not to imitate. Sounds exhausting and unattractive? Measured against the golden standards of large companies from the 70s, 80s & 90s, this is hell! But what is the alternative?

The projects and discussions in 2016 have shown me, however, a business model that 2025 is hardly likely to be relevant. And this business model is called retail. The purchase of products at (brand) manufacturers, the refinement in the form of sophisticated (stationary and online) assortment concepts including the resale to end customers with price surcharges between 5% and 500% — this model has no future. It is based on a value chain that has become obsolete through digitization. Offer concepts, ie commercial formats which have defined a certain target group or a limited range, are almost always subject to the platform concepts. At the beginning, it still looked as though these new platform formats (Amazon, Zalando, Alibaba …) are the continuation of the trading concepts, but at the latest since this year it is clear that all platforms no longer regard the trading margin as a major earnings pillar. The business has fundamentally changed, as all large platforms now only let out rent. And this rent is increasing. In addition to the rental of range, the rapid growth of the platforms creates new business potential. At Amazon, AWS has already become the most important source of revenue and there will be similar things at Zalando & Co. The business model of merchandise trading has become a cheap stirrup carrier of the platform economy, and with it, the last hopes of the stationary dealers are in vain for the Click & Collapse.

This is not a black-painting or any form of a dying scenario. This is the reality of the “change is not new, so please go” people . The change which they mean draws a stable image for dealers. A little more online, a modern cash box, slightly more service and even more love in the selection of the offered goods. Something like that. In reality, the change takes place at a breathtaking speed. Today you have to be like Zalando as a dealer. Code & data is at the core of the company, the customer is no longer lured with old concepts, but as personalized as possible offered exactly what he needs and is looking for. In all sorts of digital purchase situations and shortly also via order by voice. And this scenario is also crumbling again. Zalando, Amazon & Co. must constantly try to reinvent themselves before another is doing. This is the kind of change retails needs. Technology companies seem to be more successful than companies dominated by the purchasing department. When Marc Andreessen launched his famous “Software is eating the world” mantra in 2011, most retailers smiled. I haven´t seen retailers smiling in 2016.

You do not have to feel comfortable with this scenario, but I have so far found few arguments which I could use to be able to say to a classic analog retailer: “Everything will be (again) good.” I can only say that the current capabilities of Zalando in five years are no longer their main core asset.

About Alexander Graf

Alexander Graf (*1980) is one of Germany’s leading e- commerce experts and a digital entrepreneur of more than a decade’s standing. His widely-read blog Kassenzone (“The Check-Out Area”) has kicked off many a debate among commerce professionals about the relevance and prospects of business models in the age of Amazon preferably working with a goat on analogies. Since 2014, Alexander has been CEO of Spryker Systems, a company he set up with the Berlin early-stage investor Project A Ventures to offer agile shop technology.

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