July 31, 2018
Retail is changing. It is a process of slow transformation that will include a balance of virtual retail platforms and relevant brick and mortars store chains. There is no stopping this trend and it is time for everyone to accept this reality and get on the change train. Some e-commerce businesses have made tremendous progress versus traditional brick and mortar. The trend is real and smart retail firms have worked hard at preventing the exodus of their customers to online platforms, at reducing the “show rooming” phenomenon, and at building trust with value and the pricing experience.
Over the past couple of years, there are plenty of retail success stories and interesting reports on how to better compete against e-commerce giants. Here are five ideas:
Retail stores must take away the fears and uncertainty of shoppers related to perceived value and pricing. Most shoppers have a feeling they cannot trust prices in stores and that they can get a better deal somewhere else. So building their trust that they are getting the best value for their hard earned dollars is critical to make sure they shop while in the store. They are already there! Pricing intelligence solutions are helpful in helping retailers set their prices and in offering a price-match warranty. Shoppers might also be interested in real-time price-matching kiosks in stores where they can compare prices and bundle multiple products on the spot. How about interactive and dynamic price shopping while in the store? That is the foundation of a great retail shopping experience: building trust.
You probably are aware of the old saying in retail: location, location, location. Bottom line, if shoppers do not come to your store, then you might want to bring the store to them. Grocery chains are now offering shopping online with home delivery of their needed products. Other chains have moved their stores into shopping malls, airport vending machines and other store locations. The traditional brick-and-mortar approach is not enough as shopping patterns and behaviors evolve. Retail chains have to adapt and adopt hybrid location strategies.
Some categories of shoppers left the brick-and-mortar stores because they are bored with the experience. Younger shoppers might be looking for more excitement, an emotional connection and a sense of belonging while walking in stores. Shoppers also want to experience a new level of customer service while in stores. Brick-and-mortar stores chains still get the lowest satisfaction ratings in the retail world – they have a long way to go. To retain shoppers, they need to focus on service and innovation.
The “cool factor” is essential. Differentiation in products and service offerings have to remain a priority. Offering products and bundles that no one else has is a tricky proposition and one that requires intense market research and competitive analysis. Best Buy’s partnership with Samsung in a store-branded section and with Amazon is the latest example of a potential breakthrough in electronics retail. Alliance and partnerships to secure exclusivity for certain products might be another avenue to attract certain categories of shoppers.
Real Time Analytics
Amazon reportedly generates 20% of their revenues from the recommendations features of their online platform. Can some of these advanced prescriptive analytics be used in stores? Can retailers know exactly what the customer might buy before they walk in the store? Can the sales force in the store have access to the customer purchase context by simply using a tablet that receives analytics retrieved in a few seconds using the customer cell phone ID or name? Amazon invested billions in artificial intelligence, big data analytics and overall system integration. Can that approach be transposed to the brick-and-mortar environment?
Retail chains like Staples, Best Buy, PetSmart, REI and others are fighting back. They have redesigned their business models and they are investing heavily into digital and customer experience. What can distributors learn from this? It’s time to find a way to refresh and re-energize their value propositions to generate WOW differentiators as more e-commerce platforms penetrate the B2B world. The principles of making distributors more differentiated will likely bring a similar impact to the industrial distribution sectors.
The key is to start the work before it is too late and prepare a differentiation transformation roadmap to become better equipped to compete with Amazon, Alibaba, and Google Supply. Stay tuned for more insights on this topic in part two of my blog series.
To learn more about the evolution occuring in retail and how that impacts manufacturers and distributors, listen to our webcast Amazon at the Gates: Preparing for eCommerce Armageddon.