3 Survival Strategies to Staying Relevant in the Age of Amazon
In the era of e-commerce and its on-demand convenience, there’s a question we hear quite often: Is today’s omnichannel environment killing the physical store? The truth is that many traditional retailers are failing, with physical stores closing in significant numbers. However, it’s also true that certain retailers are alive and flourishing. The winners in avoiding the potential retail apocalypse are following one simple rule: Evolve or die!
Technology has shifted into the hands of the everyday consumer and, not surprisingly, customer expectations have evolved. Technology feeds new consumer expectations, and these expectations feed the development of new technology. If retailers don’t stay ahead of the curve, quite simply they fall into the abyss of disengaged customers that are ready to be picked up by competitors that “get them.”
In this hypercompetitive environment, we’re seeing the rise of three key strategies that big brands are using to survive and thrive in the age of Amazon. While not mutually exclusive, each of these three strategies does have distinct nuances that you should consider when evaluating your own survival strategy for the future.
Strategy No. 1: Price
In many ways, a retail strategy based on lowest price matching is nothing new. Big-box brands such as Walmart, Home Depot and Best Buy have used this approach for years. But what is new is premium brands such as Macy’s adopting Sears’ playbook, reducing its physical footprint and adopting a price-focused approach.
Through its off-price concept, Backstage, Macy’s will be providing self-service for previously high-service offerings such as shoes. It will also provide off/past season items at up to 80 percent discounted prices. Macy's strategy is to go after the more than 70 percent of millennials that shop at off-price stores monthly. This could yield a huge dividend in demand, but not without risk. This strategy basically shifts Macy’s brand from a premium in-person experience to get in, get out and get it cheap, while no longer providing the latest styles or capitalizing on hot trends.
Strategy No. 2: Convenience
The next strategy is one that almost everyone is familiar with: an Amazon-like model based on maximizing on-demand, online convenience for the customer. This can include live chat customer service, mobile support, predictive re-ordering, one-hour fulfillment and delivery, and a host of other services geared to meeting one customer demand: “I want it and I want it now.”
Amazon proves beyond any doubt just how effective this strategy can be, but it does lack one thing — the brand differentiation and loyalty that comes from dealing directly with a real human being. With food-on-demand services like GrubHub and Uber Eats available, there’s still a reason people get in a car and drive to their favorite restaurant — they want the experience that comes with dining out.
Strategy No. 3: Experience
The experience approach breaks down the barriers that consider online and physical store shoppers as separate entities. It recognizes that while people used to come to a store to buy products, they no longer need to come to a store to fulfill this function. If a customer is traveling to a physical location, it’s because they want the experience of interacting with the brand at that location in a real and tangible way.
Nordstrom is embracing this dynamic with its inventory-free Reserve Online and Try In-Store concept that's targeting a unique blend of convenience with a physical experience for customers. The goal is to enable consumers to shop exactly on their terms. They can find items they like online through an app, but they can also book a “smart” fitting room at the store of their choice to try the item in person. At no point is there an obligation to buy, but when ready to make a purchase, omnichannel conveniences including click and collect and curbside pickup are available.
Defining the Right Mix for Your Own Strategy
Each of these strategies offers new channels and ways to connect with customers. And with each comes an opportunity, but also a different mix of customer expectations that must be met. With new channels also come new internal teams and new partners that will be responsible for delivering your brand experience, which mean new quality control and customer service efforts need to be in place. The question is: How do you know which model is best?
The first step is to know who you are. Ask yourself, what does your brand represent and how can that representation manifest itself through all of the channels available to you? Keep in mind that this isn't a one-size-fits-all approach. You must deliver on customer expectations through each channel in a way that’s appropriate for that channel. Many different paths will be available to you, but you should focus on the mix that aligns with your brand and keeps you coming back to who you are as a company.
Then, you need to execute well. You need to measure and monitor the experience your customers are having in each channel, as well as every possible combination of channels. Use tools such as mystery shoppers to identify the gaps in areas such as service delivery, pricing and product selection, and focus on closing the holes discovered as soon as possible. Mystery shoppers are effective because they can take the same purchase journey and allow you to see the experience your customers are having through their eyes.
If you keep walking the path of your customers, the right strategy and the way to execute it well should become apparent. That visibility is essential for survival in this age of ever-evolving, ever-reinventing retail.
Steven Maskell is the chief client officer at SeeLevel HX, a mystery shopping and market research firm.
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