Commercial revolution and latest trends

Commercial revolution and latest trends

The commercial landscape is changing. In his last book, he uses the concept of commercial revolution by analogy with the

Industrial Revolution.

This revolution has led to profound changes: new formats are emerging, the way to get in touch with consumers is evolving and the territorial registration of trade is changing.
This can hurt current actors in the sector. Indeed, the leaders of yesterday have not resisted, the new entrants are the new players.

Why does trade change?

Trade is transformed in line with the changes in the economic and social sector. The way we produce wealth and how we consume has evolved. The previous commercial revolution, that of large-scale distribution, born in the late 1950s and early 1960s, is linked to the shift to mass production, distribution, and a “fording” economy.
The concept of the middle class emerged in this modern society of the 30 glorious years. With access to consumption, the population discovers an unprecedented, homogeneous way of life, shaped by the mainstream media. Lifestyles have changed, we had to consider another way to trade, trade more in line with the imagination of the time. We come out of years of shortage and then begins the reign of abundance, with an outbidding in the “big” (hyper).

Similarly, large-scale distribution is adapted to the way we manage the space of the era, marked by sectorisation and zoning. Today, society has emerged from this fording industrial capitalism. It is no longer centered on the middle class. The vision of space management has changed. The retail sector has been slow to take note of these changes; it is now faced with the need to adapt to a new environment.
According to the 2010 survey (1), 92% of trade stakeholders anticipate the profound changes that the trade sector will experience (56.3% and 35.6% on the graph below).

What has changed from the point of view of society?

De-mystification of society

The middle class no longer has any sociological homogeneity. Demand is fragmented; there is no more mass consumption.

Raising the standard of living

Per capita consumption has tripled since the early 1960s, but basic needs have been met. The expenditure moves to the benefit of services.
In the 1960s, goods accounted for 60% of purchases, services 40%. Today, the opposite is true: services account for 60%.
While the functional dimension remains of course a prerequisite for the purchase of a good, the intangible and symbolic dimension in consumption has gained the upper hand. But, for the moment, creating immaterial and symbolic value, the large distribution does not know how to do well.

The change in the imaginary of consumption

The values ​​of the large-scale distribution, the “big”, the “giant” … are now repulses because they are perceived as too anonymous, even inhuman. What is appreciated by consumers is the opposite, the small, the close, the authentic.

The arrival of the Internet

Today, e-commerce accounts for 5% of household spending. Its development has also allowed the formation of a collective intelligence
of the consumers. Previously, consumers were more isolated and silent, today they are very knowledgeable, speak and communicate with each other. This strongly changes the nature of the relationship between supply and demand.

What has changed from the point of view of the economy?

  • globalization
  • deregulation
  • financialisation
  • New Information and Communication Technologies (NTIC)

First consequence of economic change: the need to innovate

All of these changes have had multiple consequences, notably in terms of intensifying competition and thus lowering profits. With the financialization of the economy, companies have seen their profitability targets increase.
For this, they had to invent strategies, and in particular innovate. Thus, industrial companies have changed their form of organization and have put competence and intelligence at the heart of their business model. For the time being, this has not really affected the world of trade that has not entered the knowledge economy. There is no reason why he should not get into it. Its competitiveness will no longer depend solely on its power, but also on its intelligence to understand market developments and to invent.

2nd consequence of economic changes: the discovery of the client

Companies have refocused on the customer, but by changing their business model: the credo is not “more customers”, but to retain existing customers and gain more value. In the world of commerce, the discovery of the customer came later: the first marketing director in the large food retailer arrived only in 1997 (Carrefour).
In the big food distribution, the postulate was: the consumer wants low prices, so we organize the store to offer him low prices. The trade sector will also gradually return to this logic of the knowledge economy and customer orientation. Indeed, when we ask the actors about the vision of what retailing could be like in 2020:

  • It is the cheapest trade that “will win”, the reign of the broken price: 13.2% of responses,
  • De-mystification, precision trade: 42.6% of responses,
  • Service trade providing useful effects: 44.2% of responses.

we are faced with distributors who anticipate a radical change, qualitative of what will be tomorrow’s trade.
Thus, the current direction of the commercial revolution is customer orientation. This orientation leads to a commercial revolution taking place in two stages: a first phase marks the transition from a mass trade to a precision trade, and a second phase is characterized by the affirmation of a service model.
The time “1” is already started while the time “2” is hardly.

Time 1 of the commercial revolution:

Responding to an increasingly heterogeneous demand

Precision Trade

Since price competition threatens to “siphon” margins, the economic model must evolve and create value. Distributors will satisfy the changing demand by responding to its heterogeneity.
It is about taking a particular target of customers and building a dedicated business concept. By precision, commerce will differentiate itself from its competitors and create a more profitable business by creating added value.

The strategy of segmentation and differentiation

At their level, distributors create intangible and symbolic value, which is all the easier because they have at their disposal levers that industrialists do not have: the presence of the consumer in their walls for a time given. This makes it possible to create an additional soul to the product that is sold: more expensive with more margins.

Relationship marketing

The way to address the consumer will change. The large-scale retailer will establish a relationship with him that goes beyond the transaction, and that
will allow him to become loyal to the brand.

The food sector has so far been segmented by format: superset, supermarket, and hypermarket. Today, it is totally inadequate, in each of the formats mentioned, we can identify different positions:

  • Concepts that play on price, but more radically than others, are hard-discount formulas. These formulas are of the precision trade: the customer is sensitive to the price.
  • Concepts that play on the freshness, Aachen has launched a sign “The supporters of taste”
  • Concepts “practical”, it is necessary to simplify the lives of people: these are the concepts of proximity “Monopod”, “Chez Jean”, vending machines … in per-urban area: drive …
  • The concept “direct producer”: strong trend • The concept “exoticism”: the Casino group “Via Italia”, the Ethnic: a guard of independent trade, some are: Casino launched a hallal product brand.

This process is still at an early stage, but it can already be seen to what extent it may threaten the forms of trade that emerged from the previous trade revolution. The big groups that create precision trade “dig the graves of hypermarkets”.

The major cause of the decline of the hypermarket is that there are precarious concepts outside the hypermarket that proliferate and provide more precise and relevant answers to the multiple expectations of consumers. The hypermarket is itself so imposing that it has difficulty to enter into this precision trade.

This is only one step in the ongoing commercial revolution. The second step will be more fundamental: it is the switchover to service models. Cracks appear in the consumption pattern. Hyper consumption is questioned: this way of consuming is not tenable, especially if it is exported to rapidly growing emerging countries.

Purchasing power constraints

The coming years are going to be difficult on the issue of buying power that is going to contract. But, unfortunately, even if the public finances can be stabilized, there is reason to fear that purchasing power will continue to decline, as commodity prices will increase in a trend.

From a sociological point of view

We feel the consumers more and more disappointed by the current consumption pattern, “even in Nutella, there is palm oil …“Every day we discover a dark side of consumption and this creates anger and a context of generalized distrust. Thus the critical discourse on the consumer society of the sixties comes back with a new youth through ecological arguments. leads to a rise in the aspiration to consume otherwise, it manifests itself in various forms: second-hand market, barter, AMAP …, these are emerging phenomena that are spreading. There are, on the part of consumers, a wait for something else, and if the market sector does not respond, if it is not able to understand it and embody this need, something else will be created with actors who do not come from the sector. trade.

The time “2” of the commercial revolution:

More services

Interested in this situation, the actors of trade responded to this heterogeneity by concepts of precision. But the more they go deeper the knowledge of the customer, the more they will realize a basic reality: customers never buy the products for themselves. They are the useful, immaterial, symbolic effects they expect from consumption that make them buy the product.
So what will be important for distributors is to sell useful effects, to provide solutions to customers.

The first degree of the service model: the sale of useful effects

In the short term, through the products, the distributor’s mission is to maximize the amount of useful effects that it offers to its client for the expense it will agree. Thus, they extend the commercial relationship upstream and downstream of the transaction. Before buying: you have to inform the consumer, the adviser, possibly customize the product. Example of Decathlon where the labeling explains that the product is suitable for this
type of use. After the purchase: support of the customer towards the obtaining of beneficial effects: adjustment of the products, training in the use (DIY …), assistance in case of problem…

The second stage of the service model: solving the customer’s problem

The distributor “forgets” the products. His job is to solve the problem of his client, and aim to bring the solution to the customer.
To solve a problem, a single product is not enough; the consumer needs a set of solutions (example in the DIY): it is called a “bouquet offer”. The distributor accompanies the customer step by step in solving the problem: dialogue with the customer, diagnosis, proposals for solutions: example the kitchen (Lapeer): construction of a custom project.

The consequences of the commercial revolution

Thus, the image of what will be the geography of trade is almost the reverse of what has been known for 40 years. Precision trade requires accurate location. We are going to put the shops where the customers for whom they were designed.

A new kind of local business

Too often we associate proximity with the city center, but from a demographic point of view, there is no return of population to the city center. We are still in logic of urban sprawl, even if the movement has slowed down. A new neighborhood trade of per-urban type will “invent”, the “drive” is a first manifestation. This return to the proximity trade will not resemble the proximity trade preceding the first commercial revolution. We have to invent something else, where people are, where new places of life will be created.

Towards the creation of multimodal service platforms

The future, is no longer at the point of sale, but to multimodal serving platforms. Each sign will manage multimodal serving platforms whose core will be on the net. The aim is to provide consumers with a wide range of access to services, products and recommendations that can solve the consumption problem. There will be physical contact points, which will not necessarily be boutiques in the sense that we are currently hearing, but rather agencies, with advisers, demonstration spaces. We switch from multi-channel to cross-channel .

A different business in different locations

New forms of commerce will thus appear: flow shops, located close to the consumers they aim at, new spaces for relations with customers (which will not be the shops of today) … Thus, the trade inherited from the previous commercial revolution will be less and less adapted to these new forms: it is not the same trade, it will not happen in the same places, or in the same formats.

Thus, not only is there a quantitative problem, but also a qualitative problem. One must be very vigilant when it is necessary to imagine the Document of Commercial Planning. Projections are dangerous: we are experiencing breaks. What is emerging tomorrow is very different from what we have seen in the past, the commercial apparatus risks two breaks: quantitatively, with a problem of overcapacity: it is too large compared to that will become the trade
and from the qualitative point of view with the appearance of commercial wastelands. The commercial apparatus grows faster than household consumption. If we add to this the bleeding that e-commerce is supposed to do in the future, we are going to great disappointments. It is therefore necessary to be vigilant; trade is changing in its fundamentals of settlements and relationship to space.