Neo-Retail:

Abstract

Dramatic changes in the environment, such as digital transformation and the COVID-19 pandemic, have had a profound impact on consumer behavior and the retail industry. New retail business models are needed to adapt to the era of the New Normal. In this paper, we first review the main literature on how digital transformation is reshaping the retail industry and on how the COVID-19 crisis has markedly changed its activities. We then use consumer surveys conducted by the Hakuhodo Institute of Life and Living; the Ministry of Economy, Trade and Industry; Accenture; and others to examine how digital transformation and COVID-19 have changed consumer behavior. In addition, we conducted interviews with top management of retailers such as BEAMS and Cainz to examine how these factors have encouraged new retail initiatives. Based on these discussions, we name the new business model of the retail industry in the New Normal era as "Neo-Retail". Finally, we present a comprehensive picture of Neo-Retail from the perspectives of customer relationships (customer identification, targeting, touchpoints, customer relationship bonds), value-creation and value-provision (provided value, directionality, role and position of physical stores), activity systems (product supply systems, business systems, intra-and interorganizational relationships), and profit formulas.