The best way to ensure your future is … to create it!
With all of the news related to Amazon and other major ecommerce players, it might be tempting to conclude the demise of the bricks and mortar store. The reality for most categories is the majority of consumers shop online, but they still purchase in store. However, store based retailers cannot afford to rest on their laurels! The competitive threat for retail stores will come from traditional retailers like Macy's, GameStop and even Walmart, which are creating a more seamless omnichannel experience for customers. Instead of playing "defense" to combat the erosion of sales to online, the future retail winners need to learn to play "offense" to differentiate their value beyond price and selection.
Why this is important: Consumers today are spoiled. They have unprecedented choice, especially online. In order to survive, retail stores need to stop playing defense and go on the offensive to create value beyond selling products at a price.
"Me too" won't cut it … Retail stores need to go on the offensive
The poster child for ecommerce in the US is Amazon. It just passed Walmart in market value. While Amazon has only recently returned a profit, their YoY growth continues to be double digits! The response to Amazon's success by many traditional retailers has often been "defensive". Too many have adopted either a "me too" by starting to sell online, or a defensive posture in terms of promotions and pricing to retain sales.
The strategy of the world's largest retailer has been interesting. There are 3 clear signs that Walmart is starting to play offense beyond just selling online and promoting price:
- Optimizing click and collect BOPIS (Buy Online Pickup In Store)
- Experimenting with same day/quick delivery in major markets
- Offering an annual club with free shipping at 50% less than Amazon Prime
While Walmart has deep pockets to pour billions in competing online, the recent announcements clearly indicate Walmart's new offense of leveraging what Amazon doesn't have – physical locations called stores, which represent delivery and pickup points. When Walmart rolls out BOPIS with curbside pickup for groceries, that offensive strategy changes the game for all players, including grocery stores and even Amazon.
How will smaller, traditional retailers survive?
Most retailers are scrambling to establish a web presence. And, rightfully so. Selling online can create incremental options for reaching new customers, and maintain relationships with best customers. Most importantly, today's consumers begin their shopping journey online.
There is one critical caveat: Few retailers can outperform Amazon or Walmart online in terms of product range or price. And, Amazon also sets the gold standard for services online, which are very challenging without all of their systems and infrastructure.
Selling online is even more price sensitive than selling in store! The best offensive strategy for traditional retailers is to follow Sam Walton's advice about doing something different – something Walmart and Amazon are not doing as effectively today.
Retailers must go on offense to survive and thrive
Playing defense is largely a game of reacting to your opponent. Reacting to the moves of retail giants like Amazon and Walmart is not a productive strategy for most traditional retailers with limited capital and resources. To go on offense requires the opposite mindset of proactively creating strategies, points of differentiation and value that consumers notice.
This discussion is NOT about online retail versus offline. The best retailers will be omnichannel in order to reach consumers where they shop. Retailers going on offense is all about one thing: "Focus on something the customer wants, and then deliver it."Parenthetically, it is interesting to note that previous sage comment is from Sam Walton.
5 Ways Retailers can go on offense
I've said it before, and will keep shouting it from the rafters: Differentiate or Die! The single best way for retail stores to take the offensive is standout on something that is truly different in the eyes of consumers. This means more than new fixtures or lighting, although appealing stores never hurt. Boldly means dramatically, noticeably different. "Knock your socks off" kind of service by staff who care. Select, curated assortments of merchandise you can't find anywhere else. Total store atmosphere focused on "helping you buy what you need", versus selling something in stock at a discounted price.
Let's face it, the internet is impersonal. It is a huge search catalog that works great if you know exactly what you want. But, human shoppers crave interaction. The "People" in the store are always one of highest rated differentiators valued by consumers. But beyond people on the floor, there are a lot of things retailer can do to personalize service … like keeping a record of purchases and warranties. Nordstrom's staff write personal notes and follow up on customers' birthdays/events. If there's a way to customize products in some way (e.g. adding a name, special bundles, etc.) it creates differentiation and a personal appeal.
The old Burger King slogan is truer today than ever: "Have it your way". Consumers value choice. Today's omnichannel, consumers have almost unlimited choice of products online, so it's hard to compete on product selection. What stores can do is offer a variety of choices in terms of how to purchase. The choice of "click and collect in store" is within the reach of many retailers. Home delivery has been a staple of many stores for a long time … and if installation is an option, it can create a very attractive turnkey store solution. Too many choices online can also be overwhelming. Consumers do appreciate retailers who "curate choices" for them.
Consumers are time starved more than ever! Retailers need to rethink every process to make them easy and streamlined. Approximately 80% of consumers shop online before coming to the store. How can retailers make it easy to create a shopping list consumers can bring to the store? If they purchase online, can they pickup curbside? How can retailers make it easy for consumers to use their smartphones to quickly navigate and find things in store? The offensive goal needs to be creating a seamless shopping experience where consumers say: "wow I like shopping there because it is so easy and convenient".
5. Follow consumers home = The single greatest miss by stores today
Retail stores have been so focused on selling things that they have an inherent mind set of today's sales transactions as the goal. The future of retail needs to transcend today's sale. It is all about creating a relationship with consumers before and after the "sale". Best Buy's Geek Squad opens the door to a home design, install, and services after the sale. Build-a-Bear has an ingenious process of naming each bear with a birthdate so that the child's experience continues at home after the sale. The single greatest offensive strategy every retailer can deploy is a CRM (Customer Relationship Management) system that makes doing future business easy, personal and efficient.
Follow consumers home = The single greatest miss by stores today
Retail stores have been so focused on selling things that they have an inherent mind set of today’s sales transactions as the goal. The future of retail needs to transcend today’s sale. It is all about creating a relationship with consumers before and after the “sale”. Best Buy’s Geek Squad opens the door to a home design, install, and services after the sale. Build-a-Bear has an ingenious process of naming each bear with a birthdate so that the child’s experience continues at home after the sale. The single greatest offensive strategy every retailer can deploy is a CRM (Customer Relationship Management) system that makes doing future business easy, personal and efficient.
Those retailers playing defense will always be a step behind. Instead of playing defensive catchup, retail stores need to start playing aggressive offense. Offense requires a playbook focused on the customer relationship, not the sale.
At the end of the day, it is we the consumers who vote on retailer survival based upon your value to us beyond products at a price.
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Sources:
- Images: Stuart Miles; Freedigitalphotos.net
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