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Why and how retailers must create relevancy to survive

Winning retailers focus on convenience, consistency, customized value

By Chris H. Petersen

Toys R' Us is an example of a "category killer" that did not make the cut. Sears will enviably fall by the death of a thousand short cuts that diminished its relevancy for today's customers. However, the big "retail apocalypse" has not happened as predicted. America's top retail chains will in fact add 5,000+ stores this year. Quite simply, those retailers who lived in the past died. Those who thrive are evolving on a very simple premise: increase relevance for today's customer.

Why this is important: Bricks and mortar retail is not dead. It still accounts for 85% of sales. In order to thrive, today's retailers must evolve from a product centric past to a future focused on increasing relevance by providing greater value add customers.

Why “the second sale” is more critical than new acquisitions

Acquiring a sale today does not ensure retention creating lifetime value

By Chris H. Petersen

Image Credit: Pixabay.com

Retail has a legacy of focusing on immediate results. Historically, the cash register drove the retailers' core metrics. The results that counted were the POS tickets and total sales at the end of the day. The better retailers measured store traffic and calculated the conversion rates. Even with the launch of ecommerce, core metrics still focused on traffic, acquiring customers, conversion and AOV (average order volume). However, studies repeatedly show that the second time buyers are more valuable and more profitable. Why do so many retailers focus so heavily on the first purchase and fail to measure the KPIs of "the second sale"?

Why this is important: What gets measured can be managed and improved. Many retailers are failing to measure the second sale, and track the related customer variables to build lasting relationships that create lifetime value.

How “Less is More” when competing with Amazon

Curation strategies that limit choices improve CX and closing sales

By Chris H. Petersen

Image Credit: geralt; pixabay.com

When is too much choice a bad thing? Brain scientists and psychologists have discovered that too many choices overwhelms our brain. Too many choices becomes intimidating, frustrating and can result in fewer sales. Amazon has literally been creating a "store of everything". Few retailers can afford to compete with the "more" of everything in Amazon's ecosystem. However, research indicates that retailers can offer customers "more" relevancy and value by narrowing choice through curation. By helping customers narrow choices to what is most relevant, retailers can create a more positive experience and increase sales.

Why this is important: The historical premise of retail was "more is better". However, science shows that too many choices overwhelms our brain; we get frustrated and cannot decide. Retailers curating choices can achieve more sales.

Are Amazon online cost advantages eroding?

10 Signs indicate the pendulum will swing to a more level playing field in retail

By Chris H. Petersen

Image Credit: Pixabay.com

A decade ago, there were substantially different cost models of selling through online versus physical stores. Today, competitive advantages of selling through pure ecommerce versus stores are not as great as some might perceive. While Amazon continues to march toward dominating pure ecommerce, there are signs that indicate that online cost advantages over bricks and mortar retail are eroding. As the “last mile” gets faster, it is also getting much more expensive. Recent trends indicate that hybrid retail models can effectively compete on costs to sell through to end customers. Future retail success and profitability will depend less upon unique channel cost advantages, and more on innovative “phygital” retail integration.

Why this is important: While pure ecommerce has consistently achieved double-digit growth, trends indicate that historical ecommerce cost advantages are eroding. Today’s hybrid “phygital” retail models can compete if they also meet customer expectations.

How small retailers can thrive in a world of retail giants

How do you compete with Amazon? The simple answer is you don't.

By Chris H. Petersen

Imagine the following retail scenario. You discover beautiful piece of furniture only to find that it is a "one of a kind". You discover where you can order one only to find out that it could take 4 to 6 months to receive your order. So, how does this retailer manage to survive in the age of free two day shipping? Salt Creek Farmhouse is an example of a vertical furniture retail shop that has found ways to develop customer relationships to thrive in an omnichannel world. Retail survival requires transformation to new paradigms. Lesson 1 starts with focusing on doing what the giants are not doing.

Why this is important: When you don't have the resources or infrastructure, the best way to compete with Amazon is do something different. Some of the smallest retailers are deploying strategies that other retailers can leverage for differentiation.

Winning the race to the home requires more than the last mile

The future of retail is not linear – the winners are building ecosystems

Image Credit: Ring

By Chris H. Petersen

The "last mile" to your door is paved with gold in terms of future ecommerce potential. Home delivery is a current customer expectation, and will prove to be a critical requirement for subscription models delivering regular replenishment orders to households. However, major "potholes" are creating significant barriers. Working customers are not home when most deliveries occur. There is often no place to deliver packages at large apartment complexes and office buildings. "Porch pirates" now follow delivery trucks to steal packages from porches after delivery. Getting to your door quicker is not enough. Secure delivery INSIDE your home or locker is the next frontier.

Why this is important: To grow subscriptions and ecommerce volume in general, retailers must do more than deliver the last mile. Home delivery is NOT a highly valued convenience if the customer has to worry about time slots, access or theft.

When one door closes, the other one is "Always Open"

Strategic collaboration is finding the right partners to reach customers

Image Credit: pixabay.com

By Chris H. Petersen

If you ask friends about eBay, most remember it as the "old auction site" where you put your stuff up for bid. Yes, many sellers still post used items on eBay auctions. To remain competitive, eBay quickly evolved to a marketplace where brands and retailers post new items for sale. However, what many have missed is how eBay is also transforming to be collaborative partner for bricks and mortar retailers. EBay has unveiled a new "Always Open" program that enables retailers to continue to market and sell products after their stores close. Always Open will be a fascinating case study of how previous "competitors" are now strategically collaborating in new ways to meet the rising expectations of customers.

Why this is important: In responding to customers escalating demands, most retailers do not have the resources to do everything in house. Finding the right partners can bridge gaps to create win-wins that will be critical for future survival.

A New Era of Content Management and Strategic Collaboration

By Chris H. Petersen

One of the most misunderstood and missed dynamics of retail today is the renewed importance of “content.” Historically, brands focused on mass marketing of products that drove product content creation and distribution. Brands provided “air cover content” for launching products and educating customers. Brand content was also the “stuff” of retail ads, promotions and in-store merchandising. So, what changed?

 

What has changed is consumer behavior and expectations. Transformation from physical to digital retail created many new points of access for customers. More than 75% of today’s customers begin their journey online. Another layer of complexity is that consumers are increasingly using their smartphones to research and shop. Consumer-facing content is now dispersed across many channels, systems and the cloud. Consequently, a major challenge for both brands and retailers in today’s ecosystem is how to curate the “rich product content” that engages customers early, often, and even after the sale. 

Image Credit: OneSpace.com

Collaboration: A Distributor POV on Roles and Innovation

Chris Petersen & Adam Simon interview Nitin Chhabra, CEO Ace Turtle

Image Credit: Context

As part of our continuing series examining a wide range of collaborative ecosystems, we are examining the transformation of the supply chain and the role of the distributor. The rising expectations of consumers are creating stress points on logistics and profitability for both retailers and brands. Fulfilment the last mile is not only a requirement of the new retail ecosystem, distributors must now emerge as innovation partners that create strategic opportunities for both retailers and brands.

As strategic collaboration evolves worldwide, new models and opportunities are emerging to adapt to the unique ecosystem needs by region. While retail has many common themes, countries like India and the APAC region pose unique challenges and opportunities. We were excited to have an opportunity to interview Nitin Chhabra, CEO of Ace Turtle. Mr. Chhabra shared his point of view on the changing role of distributors, and the innovative omnichannel approach of Ace Turtle in the APAC region.

When ecommerce dominates, do you compete or collaborate?

By Chris Petersen and Adam Simon

Image Credit: Context

There is a tipping point coming where ecommerce will overtake traditional retail sales. That critical mass is not as far off as many might think. Doug Stephens recently published some interesting forecasts on the growth of ecommerce, particularly the top 3 giants. Based upon the recurring annual growth rates of 12 to 35% for the large ecommerce players:

• Ecommerce will be 25% of total US retail in 6 years, and may exceed 30% of the UK
• Amazon, Alibaba and eBay will control 40% of global ecommerce within just 3 years
• Within just 15 years, ecommerce will overtake traditional retail sales accounting for more than 50% share of consumer sales

This is highly relevant in the Middle East with the takeover of Souq.com by Amazon, and the recent price-slashing at the beginning of this month. Other than being swept away by the tidal wave of ecommerce giants, what are the choices for brands, distributors and traditional retailers?

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Stop thinking about owning end to end sales and focus on collaborative solutions that customers deem as valuable.

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