Joern Kuepper, Senior Partner, McKinsey

 In Business

Partnerships at scale

Underlining the most significant disruption to be seen in modern retailing

WINNING COMPANIES ARE THOSE ABLE TO BUILD BROADER ECOSYSTEMS WITH OTHER PLAYERS

Jörn Küpper, Senior Partner, McKinsey, says retail is facing the most significant disruption to be seen in modern retailing. With the theme of his conference session being Partnerships at scale, we asked him how important business partnerships are in the retail industry.

The old vertical model of suppliers/brands/retailers/shoppers is becoming obsolete. Brands are becoming retailers (direct to consumer), retailers are becoming brands (private label, verticalisation), and players and business models are entering the market. Now – and even more so in the future – consumers/shoppers are returning to the core and centre, seeking a wide choice of offerings and shopping occasions.
Future success will rely heavily on the ability to build superior offerings for these consumers/shoppers and to connect directly with them. Winning companies in this space are those able to build broader ecosystems with other players and/or that invite other players to join their system in order to create these superior offerings around product/solution, price, convenience, service, and availability.

Do you have any case studies that you could mention to highlight collaboration?

The way Zalando is building an ecosystem with brands such as Nike and Adidas – and inviting small mom-and-pop stores to join the Zalando system – can serve as a blueprint for the consumer industry to show how you can successfully self-disrupt your own business model. Whereas Zalando started as a classic online retailing business, it has moved on to become a much more integrated collaboration model with both brands and retailers. Furthermore, Zalando is a trusted partner of brands such as H&M, which operates mostly in a vertical business model, selling its streetwear label weekday online. Zalando is partnering with other retailers and offers them an extended “shopping window” to the European consumer. As part of this effort, the company has started collaborating the US sneaker and streetwear retailer Stadium Goods, providing the retailer easy access to the European market.

How could collaboration work in the electrical retailing sector?

The logic of collaboration should probably not be fundamentally different from other sectors such as DIY, fashion, or food. It starts with identifying consumer need states, for instance, security at home, connected home, and so on. Then, companies develop offerings/solutions to fulfil these needs and build partnerships “at scale” so they can deliver these offerings/solutions to, for example, retailers, brands/suppliers, service companies, insurance providers, etc. While some of these offerings are already out there today, they are not yet at scale.

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