Want to Compete in Retail in a Post-Amazon World? Here’s How.
It’s true that Amazon is disrupting the retail industry. In fewer than 10 years, it has become the dominant player in nearly every consumer retail product category and during that time its yearly growth rate has been above 20% every single year. So it would be easy to blame the current U.S. retail industry meltdown on the seemingly unstoppable e-comm retailer – but it wouldn’t be true. It would also lead brands to make bad decisions and investments in trying to survive the post-Amazon world.
A recent article in The Atlantic highlights a few explanations for the recent demise of America’s premiere retail brands – and they are much deeper than just Amazon. At ActionIQ, we’ve seen this trend building over the years and have partnered with leading brands in retail, and other industries, to help transform their business to compete in the new omnichannel economy.
1.The U.S. retail industry is too big to be controlled by Amazon
Amazon is really big, but it only accounts for only 1.6% of the $5 trillion dollar U.S. retail market. Not only is Amazon a bit player in the overall retail market, but e-commerce as a whole is only 7.1% of total sales. In-store purchases still account for the vast majority of U.S. sales, while e-commerce is still very small — but growing.
2.There has been a dramatic shift in consumer shopping behavior
Traditional retailers have not been able to evolve at the speed of their customers. More and more people are shopping online, and post-recession everyone wants to feel as if they’re getting a deal. In addition, millennial consumers are more interested in experiences than they are material things.
ActionIQ Strategic Recommendations
1.Online + offline hybrid is the ideal retail model
This is proven by Amazon and the other e-commerce retailers opening physical locations and large traditional retailers, see Walmart, buying successful e-commerce brands. This is a good sign for traditional retailers who have a head start on the in-store experience.
2.Create unique brand experiences
All retailers must now compete on customer experiences. The days when customers would come back time and again to a retailer’s stores to find the next new product are long gone. Brands need to expand their expertise beyond merchandising and stores to customer experiences. Plus, pictures are now worth a lot more than a thousand words when it comes to retail—think of all those potential shares! So don’t miss out on “Instagram-able moments.” Capitalize on experiences and value that are exclusive to your brand. Doing so will help you attract more customers, including millennials.
3.Invest heavily in digital
Treat e-commerce as your flagship store and as your primary way to conduct customer research.
Imagine the scenario in one of your physical stores where you can track what your customers purchase, browse, pick up but don’t buy, search for, questions they ask your sales teams, where they come in from, and how long they stay. This would be a gold mine of information that you could use to improve customer experiences across all your stores. That’s your e-commerce store!
4.Connect all your data and channels
Data-driven insights will help you better understand your customers and create the unique shopping experiences and value that they demand. To do so, leverage your data and scale the personalized experiences across all your customer touch points. Your customers don’t think of your brand differently by channel – and neither should you. The onus is on you to be relevant and provide value in every interaction with your customer—regardless of context or channel. If you don’t, someone else will, and your customers will leave you behind.
The smart money is on the retailers investing big on technology. But technology alone will not solve all of your problems. At ActionIQ, we provide retailers with both a next generation technology and a partnership to help deliver on the critical steps needed to compete in a post-Amazon world.