From specialist retail to generalist retail
Diversify or lag behind, that is the question
Every other Wednesday, h/commerce provides in-depth analysis of the most impactful trends reshaping retail.
More and more companies and retailers are diversifying and no longer specialise in a single sector. Today, the retail market focused on the distribution of a single product category is increasingly in decline.
If we look at the world’s most famous retailers and brands, we find that most of them are tending to diversify. Some have been pursuing diversification practices for years, while others have only just begun.
M&S was one of the first retailers carrying out a conglomerate diversification
If we go back in time, we arrive, for instance, to the period when the main Marks & Spencer’ business was based on clothing selling. Then, the brand began to commercialize food, which could already be seen as the beginning of a diversification. But it was not until 2015 that the brand opened a store with a cafe for the first time in Hong Kong, representing the brand’s venture into serving hot drinks and meals in the city.
This type of actions, which were clearly aiming at diversifying and expanding its offer, have never decreased with M&S, but the opposite. The most recent diversification action the brand has carried out has been the opening of a flagship in Victoria Square development. The M&S space occupies 50,000sq and it is extended over two floors, stocking a range of clothing, homeware and gifts, food, a bespoke bakery, and café.
IKEA: Diversifying from selling furniture to selling homes
Another major, and more recent player in the history of commerce is the furniture retailer IKEA, which, being already a reference in terms of innovation and diversification, continues to surprise its consumers with new proposals and projects to make their lives more comfortable.
The launch of its latest project has taken place in Tokyo, a city where the demand for accommodation far exceeds the supply, so finding a place to live is not usually an easy task. The saturation of habitants and houses in Tokyo has led Japanese to live in very small houses due to the lack of space. The company’s proposal has been to offer for sale “mini houses” that can be bought outright. These houses are already furnished and decorated with IKEA furniture. The brand has chosen the “Shinjuku” district of the Japanese city. This idea was carried out in March 2022. The retailer has shown, once again, with this project its ability to innovate and to pursue new fields of action that it has never entered before.
HARRODS: The luxury retailer Harrods expands its bussines by opening an outlet in the British capital
Another innovation in the world of retailing has been brought about by the luxury retailer Harrods, known for having a mythical, iconic, and famous store located in London. There is only one Harrods physical store in the world -except for small points of sale at Heathrow and Gatwick airports in London and Hamad airport in Qatar- which is largely the brand’s attraction; but, last 2021 the firm has opened an outlet in which low price is the main benefit and the main retail proposition. The discounts offered by the brand vary between 40 and 60%.
With this initiative, Harrods aims at, on one hand, segmenting itself; creating another point of sale and offering a different content to consumers, and on the other hand, reaching a target audience that had not yet been addressed: the non-premium consumer.
The outlet sells excess stock from existing and previous seasons in a space that will allow 365 customers to be inside at one time and this will be controlled using customer-counting technology.
LVMH: 200 years after its creation, LVMH buys the iconic luxury jeweller Tiffany
Source: Company reports & Statista
Luxury retail giant LVMH celebrated its 200th anniversary in 2021. But the retailer, far from feeling its age as a burden, has done nothing but grow significantly in relation to previous seasons.
The group is also very much oriented towards diversification and innovation in the market and is aware that the sector is also advancing in leaps and bounds towards this subject.
The retailer’s made some major acquisitions. First, the purchase in 2020 of the luxury jeweller “Tiffany”, to enrich its own brand LVMH’ jewellery business with the acquisition of a company with so much history behind it. Then, months later, the fashion giant bought a majority stake in Off-White, the brainchild of the late Virgil Abloh, allowing the brand to enter the sportswear market.
H&M MADE, & MAISONS DU MONDE: Brands that diversify by becoming online retailers
For their part, H&M, Made or Maisons du Monde, three brands that have adjusted to that new diversification model have decided to jump into the omnichannel world and become Marketplaces, so that from now on H&M’s website will contain products from other brands, and so it happens, in the same way, with Maisons du Monde and Made.
Why is it interesting?
In this article we have talked about retailers that are a reference in today’s world. So, when they carry out an action, whatever it may be, it makes a big sound. The inclination of these brands and groups to diversify show how more and more brands, regardless of size, wish to increase their range of offerings, the channels they occupy or even the public they target.
Fewer and fewer retailers are specialising in a single channel, and more and more are experts in everything. Is the specific, unique, and delimited commerce coming to an end?
It is likely that this whole move towards hyper-diversification is rooted in the business model and global strategy of Amazon, which, as is well known, is one of the world’s most powerful groups in the retail sector. Looking at the growth and impact that Amazon has been making almost since its inception, it is not unreasonable to think that retailers who have not yet reached a level of commerce so close to perfection are influenced by this retail giant.
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