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Everybody knows the story of how Kodak failed to switch from photographic film to digital images and how Blockbuster made the mistake of failing to move out of physical videos and into digital downloads and streaming.

There are many other examples of such calamities and there will no doubt be many more because one of the toughest things in business is for managements to disrupt their successful businesses by introducing a new way of working. It was the worry of many retailers that opening online stores would suck sales from their physical outlets and so they delayed making the shift online. It was a serious mistake because it let other – pure online players – move in and steal their trade.

We all know it is better to cannibalise your own business than to let a rival do it. But the reality is that it is so much easier said than done. It takes brave management to disrupt a proven formula. Despite this it is interesting to see a number of interesting examples of this taking place in the market today.

Built’s new warehouse in Tyseley

One of these is Built, which is owned by Travis Perkins, and is a DIY retail business that brings digital very much to the fore. Many of its orders come from tradesmen who purchase via their mobile phones and then pick-up in-store. The key feature of Built is its reduced range that focuses on the most frequently bought products and guarantees that these goods will be in stock. The uncertainly of availability that has dogged the DIY industry is removed. The potentially disruptive Built sits alongside the core Travis Perkins stores and no doubt provides a pointer to the future for the group and how it will likely need to inflict change on its existing model.

Other disruptive initiatives are being seen around rentals. AO.com has just announced a trial of renting out white goods. It has recognised the trend away from ownership and is not waiting for a rival to step in and offer such a service. For £2 a week customers can rent a washing machine and after five years they can have it replaced with a new one while the old one is refurbished or recycled.

It is a similar story at IKEA that is experimenting with rentals and introducing a circular economy aspect to its business whereby it will repurpose and refurbish old products into new items. There is much uncertainty about how the economics of these moves will stack-up but like many other retailers today there is growing realisation that they must disrupt themselves in order to position their organisations to better cater for the changing consumption habits of shoppers.

 

Glynn Davis, editor of Retail Insider

K3 Retail partners with businesses to provide connected technologies based on Microsoft Dynamics 365 so retailers can reach their goals now and in the future. In a size that best fits future plans wherever you need it – Cloud, Hybrid or On-premise. Our solutions drive more than 800 international retail brands from Charles Tyrwhitt and The White Company to Ryman and Sue Ryder, Hobbycraft, Wasabi and Ted Baker, K3 Retail is a Microsoft Gold Certified Partner and the UK’s leading Microsoft Dynamics retail partner.