THE MODERN RETAILER BUSINESS MODEL AS THE KEY TO SUCCESSFUL RETAIL MARKETING

Abstract

Introduction. Retail marketing is becoming increasingly important given the competition in the retail market and the need to meet consumer needs as effectively as possible. The business model, as a structural mechanism and the philosophy underpinning the retail business, requires constant improvement in light of market innovations and changing market conditions in general. For the retail business, it is important to foster genuine customer loyalty; consequently, the business model must be based on the concept of the retailer’s comprehensive closeness to the customer, innovation and corporate responsibility. There is a need to investigate and systematise into a single mechanism the concept of creating such a business model in retail that would ensure the most effective interaction with customers and foster genuine loyalty.

Purpose. The aim of the study is to systematise the elements of a strong business model in retail and to present such a business model as a unified mechanism.

Materials and methods. The research materials consist of academic and popular articles on retail marketing and retailers’ business models, as well as websites dedicated to retail business news.

The research employed methods of generalisation, observation, systematisation, grouping and visualisation.

Results. The mechanism of a strong retailer’s business model must be based on the retailer’s comprehensive proximity to the customer, innovation, corporate social responsibility and ethical marketing.  Proximity to the customer must be established across all dimensions: geographical, temporal, product range, conceptual, service, pricing and atmospheric. Corporate social responsibility entails accountability to customers, partners, the ecosystem, the state, employees and society as a whole. Innovations must be implemented in the automation of all retail processes and the use of augmented reality technologies. Automation and elements of artificial intelligence, as part of the ‘ERP-customer loyalty’ system, are designed to ensure the personalisation of the customer experience, which will enable maximum effectiveness in communications with customers and foster their loyalty. Furthermore, innovation and automation must be geared towards ensuring omnichannel capabilities: the availability of multiple convenient purchasing channels and the synchronisation of data across all channels for each customer. This, in turn, will also take the level of personalisation in customer interactions to a new level. Thus, a strong retailer’s business model must include the following components: innovation, a concept of comprehensive customer proximity, corporate social responsibility and ethical marketing (which is becoming increasingly important to customers), omnichannel capabilities, the automation of all processes, the implementation of artificial intelligence elements, and the personalisation of the customer experience.

The importance of retailers applying a robust business model is confirmed by an analysis of the rating levels of well-known Ukrainian retailers’ business models and their average revenue levels, which demonstrate a direct correlation between the quality of the business model and the revenue of a specific retail chain.