The Ethical Business Model That Threatens Retail Giants

Last week we discussed how retail giants benefit from being more “Green”, but let’s talk about how a new business model, that supports sustainability and ethical thinking, is threatening to pull the rug from right under the retail giants who don’t get on board.

Admittedly, the notion of “sustainability and corporate giant” is bit of a contradiction from the get go.  If we’re talking about ethical consumerism, we’re also talking about stopping over-consumption, so presumably, we should be moving away from selling products altogether.  Can you sense the cold sweat trickling down the retailer’s temple?

ILoveFilmAs it turns out, even without sustainability as a catalyst, businesses should be thinking about fundamentally shifting their sales from products to services.  New businesses adopting a new, service-based business model, such as LOVEFiLM and StreetCar, have found that leasing a product or offering a service makes consumers much more likely to come back for more.  This “leasing” trend of service-based brands, essentially offering a customer the same things over and over, have the potential to send profit margins through the roof.

Not only are we, ethically-aware consumers happier at the thought of fewer products being produced, and therefore, fewer “old” products ending up in landfill, but retailers can enjoy saving the time and money not spent on making new things.  Win win.

This is a huge shift in traditional business models, and one that threatens to outmanoeuvre the (overproducing) businesses who don’t adapt.

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