Understanding the 3x3x3 Framework in Retail
As retailers and consumer brands kick off 2023, they face an uncertain economic environment with mixed and often contradictory signals. So how can retailers and consumer brands innovate for the future in the face of economic uncertainty?
A quick sampling of current issues: the IMF revising its global economic forecast to be slightly more positive at the end of January, the abrupt reopening of China’s economy, varying levels of inflation ups and downs across global economies, rumours of interest hikes across countries, technology sector layoffs and continued global instability.
Companies are — sensibly — cautious as they begin to execute against carefully laid 2023 strategic plans.
For retailers and consumer brands that are emerging from a series of tumultuous years with dramatic changes in consumer behaviour, widespread digital advancement and disrupted supply chains, the perceived consequences of standing still may be too high to bear.
Despite diligent attention, plenty of collective hand-wringing and endless platitudes during the past few years, retailers still lack the ability to connect with Generations Z and Alpha in an authentic and relevant way.
In Next Generation Retail, we introduce retail and brand professionals to the 3X3X3 Framework as a means to implement low-risk solutions for innovation that impact the bottom line immediately.
Summing up the 3X3X3 rule: retailers will have 3 new things to sell, 3 new ways to sell them, to be delivered in 3 new ways.
Three New Things to Sell
When we think about how retail has changed as a result of the advent of today’s technology landscape, three new revenue streams for retailers have emerged.
- Retail Data: With the move to an increasingly digital world and with the ‘cookie apocalypse’ (the planned phase-out of third-party cookies), the data landscape will shift dramatically from the big internet companies (Google, Facebook, Instagram) having all of the most valuable consumer data to retailers now having this consumer data. Retailers will be in a position to sell this data to brands, which can not only provide a new revenue stream for retailers as they sell this data but will also contribute to a more personalized and rewarding shopping experience for the consumer.
- Retail Media: As brands and retailers are shifting their online advertising budget away from Facebook and Instagram, they are seeking new media that can help them to reach their target audience in today’s increasingly fragmented media landscape. Retailers can provide advertising opportunities to brands that they sell that will enable brands to very accurately reach their target customers with personalized offers and messages.
- Digital collectables & NFTs: As the Metaverse continues to develop, we will see more retailers establish new revenue streams from selling virtual items such as clothes or accessories for avatars, tickets to virtual events or NFT launches that can also help to drive interaction, engagement and visits to retails stores – both in the real world and in the Metaverse. The sale of these virtual items can drive new revenue lines, as well as be additive to existing revenue streams by creating excitement, driving new product development and raising brand engagement with core consumers.
Three New Ways to Sell Them
The changing nature of the retail technology landscape will also bring us three new channels for retailers to sell both virtual and physical goods.
- Livestreaming: Livestream shopping allows retailers to combine entertainment with direct selling, allowing for sales from an in-person retail store, within the Metaverse or even on a one-to-one basis with a host or salesperson. This new way of selling allows for enhanced engagement with the consumer, increased product education and direct interaction between the consumer and the host. Livestreaming enables brands and retailers to reach and sell to consumers wherever they are, showcasing products in a live, authentic and engaging format.
- Web3: With brands quickly adopting the Metaverse, the future will see more retailers selling both virtual and physical products via the Metaverse. This can encompass a wide variety of formats, including e-commerce in the Metaverse, virtual stores, livestreaming in the Metaverse, integrated offline/online stores, selling of digital assets (NFTs) or transactions made within virtual worlds or games. We expect the number of options to rapidly increase in the next several years as well.
- Quick Commerce: Consumers are going to continue to want speed and convenience in their shopping environment; and in the future, the definition of speed and convenience will accelerate to be even faster and more seamless than it is today. With the advent of quick commerce, retailers can now sell to their customers via quick commerce channels to enable their consumers to have a shopping experience that meets their needs, delivering products in minutes or hours, rather than in days or weeks.
Delivered via Three New Methods
Given new things to sell and new ways to sell them, retailers and brands need to keep pace with consumer needs and demands. The final “3X” is crucial, the three key ways that retailers will need to serve customers of the (near) future:
- Personalized: Consumers will come to expect that the level of personalization they receive when shopping online will be brought to them in the retail environment.
- Experiential: Consumers need more from their shopping trip than just running an errand or accomplishing a task. Retailers have a higher bar to clear to please consumers and entice them to visit the retail store.
- Sustainable: Younger consumers are going to force the future of retail to be more sustainable. They will no longer tolerate the same standards of sustainability – they will demand more accountability from retailers, and they will not reward those that do not comply.