This article aims to define a new category of retailer and coin a new term to describe it.
Over the past decade in retail, we have seen the lines continue to blur between the quick-service, fast-casual, full-service, specialty, grocery, convenience, and online retail business models. The term omni-channel has been used to describe a retailer marketing their products in more than one sales channel. For example, a quick-service retailer (QSR) might sell their products in stores, online, mobile, order marketplaces, and in grocery stores. The difference between omni-channel and what I’m describing is the convergence of business models, not just a single business model embracing multiple sales channels.
Here are some of the drivers causing retailers to embrace multiple models:
- The pandemic lockdowns caused full-service and fast-casual to embrace the quick-service model (drive-thru, take-out, curbside, and delivery)
- The growth in Order Marketplaces and Third-party Delivery (3PD) has caused all retail models to embrace a delivery option
- The emergence of the ghost-kitchen model for delivery has enabled brick-and-mortar retailers to experiment with a new business model (marketing new virtual-only brands on the Order Marketplaces, fulfilling the orders in a ghost kitchen, and delivering the order via 3PD)
- Top global brands have had success with omni-channel (stores, online, grocery, delivery) to expand beyond one type of retail model
- The growth of cloud and mobile technologies have enabled innovation in omni-channel order management
- Technology vendor consolidation has enabled the technology platforms to support multiple retail models
- M&A consolidation of brands into large multi-brand retailers enables cross-leveraging expertise in multiple retail business models
Now that we have established the trend of retailers embracing multiple retail business models under one brand, what do we call this model? We need a new term to describe the combination of multiple retail business models. I propose Omni-Service Retailer (OSR).
The focus of OSR becomes how to deliver on a brand promise, regardless of the sales-channel or the appropriate business model for execution.
An OSR doesn’t define itself as a quick-service retailer, fast-casual chain, or full-service restaurant. It might be any combination of the above. An OSR brand might have locations that fit into each category (quick-service, fast-casual, and full-service) based on which format is optimal for a given location. They may also have a brand presence in grocery, c-store, specialty retail, and online retail.
The Starbucks Example
Which retailer business model properly describes Starbucks? They have always defined themselves as Specialty Retail. But what about their presence in quick-service, fast-casual, full-service, grocery, c-stores, hotels, airports, campuses, and online? To call them an omni-channel retailer is correct but the word channel is sales channel-focused and doesn’t really address the fact that there are multiple business models in play as well.
To be clear, I’m not defining a new business model, I’m simply putting a name to the combination of all established retail business models. Since the lines continue to blur between the models and retailers are embracing any and all combinations of the established business models, we may well be better served with a single name that describes this combination of retail business models. This will also help technology vendors to better describe their focus and capabilities for providing enterprise-level platforms that can meet the needs of all business models under the Omni-Service Retailer umbrella.
