10 Apr Staying Relevant in Retail
Its no secret that E-commerce has become a force to be reckoned with in recent years. In fact, last year online sales of physical products surpassed $500 billion and are projected to eclipse $735 billion by 2023 according to a report done by Statisa. The unquestioned e-commerce leader, Amazon, hit a $1 Trillion market cap last year, joining only Apple in the 13 digit club. The driving factors behind this growth is Amazon’s commitment to innovation and technology. While Amazon isn’t the only game in town, this collective e-commerce pressure on brick and mortar retail has become known as The Amazon Effect. How can retailers stay relevant as The Amazon Effect continues to permeate every aspect of modern day retail? Let’s take a look:
Amazon’s 1-click purchasing and two-day free shipping for Prime members has created a customer that expects an expedited and hassle free shopping experience. Nearly half of US Households are now Amazon Prime subscribers proving that this convenience is important to customers. In response to Amazon’s acquisition of Whole Foods, Grocers like Walmart and Kroger have added online ordering with curbside pick-up. Other retailers have partnered with third party delivery services like Postmates and Instacart to provide expedited, and in some cases same-day, delivery for products that are purchased online or through an app. Studies show 41% of consumers are willing to pay more for same day shipping, and they care more about delivery method and speed than who is delivering their goods. Retailers must be able to provide this convenience to customers regardless of whether its done in house or outsourced.
2. Competitive Pricing
With over 100,000,000 all-time app downloads, Amazon’s mobile marketplace is in the pocket of most retail shoppers while they peruse brick & mortar stores. Amazon’s ability to undercut pricing is well documented. To combat this, Retailers including Walmart, Best Buy, Home Depot, Target and countless others offer price matching in store for certain products. While more unique product lines may be safe, those selling commodity products must be willing to match or beat e-commerce competitors. Local loyalty is only worth so much to a customer and this flexibility will keep customers coming into the store.
3. Customer Service/Experience
Customers have been the biggest winners during the recent disruption of old-school retail. Increased access to information including product reviews, customer testimonials, and competitor pricing has increased customer power to an all-time high. As customer power increases, customer stickiness decreases and if a customer is not satisfied, there are few barriers slowing them down from the next option. For any Retailer to compete and stay relevant, they must first and foremost cater to the customer. In addition to best of class customer services, Retailers should also create an in-store experience that cannot be replicated online. Real time, face to face conversation with a knowledgeable salesperson creates a meaningful, value added experience that customers can’t get online.
As Amazon continues to innovate, so must Retailers. This commitment to innovation and thereby the customer will keep retailers relevant. Brick and Mortar Retail isn’t dead, its just changing and Customers will be the beneficiaries of that change.