Retail Strategy: It’s an Amazon World and We’re All Just Living In It – Or Are We?
See below for a piece on the future of retail strategy by Jenifer Ekstein, a consultant in Vivaldi’s New York office.
With Amazon making acquisitions left and right to ramp up their retail presence, people are quick to panic. Palms sweating and heart racing, this full-on retail-induced frenzy is far from the fun kind.
Have we reached the finale of retail? Is this where it ends? One King Kong-sized, e-commerce giant coming in to demolish the retail world as we know it?
Stop. Take a step back, breathe, find your center and clear your mind.
Amazon may have swooped in with a vengeance and a creative way to expand their business, but what does that really mean for the retail world? For decades, the retail experience has looked very similar, no matter what store you walked into or where it was located. A customer enters a shop, is greeted or not by a store associate, there is an assortment of products sold, and the customer chooses to buy or not. Well, are you the same as you were decades ago? Probably not. So why has retail strategy looked the exact same for so long?
Perhaps Amazon is not the enemy who comes in to destroy everything in its path, but the knight in shining armor that’s actually here to save the retail world. Don’t believe it? Retail has needed a kick in the pants for a while. Instead of innovating and trying to push the boundaries, especially with the rise of e-commerce, many have decided to stay stagnant and rest on their laurels. Their old, traditional laurels. This Amazon “scare” may just be the fire under brands behinds to take their retail strategy more seriously and reevaluate what they need to do to best serve their needs and their customers’ needs. This is the time to take a step back and really think about what the retail experience means for your brand and for your customer.
Why not lose faith in retail? E-commerce may be growing at a faster rate but revenue in physical stores is still positive with a 1%-2% growth. Moreover, e-commerce still represents less than 10% of total retail sales and is expected to remain below 20% in the next 5 years.
Now, this fact may be the reason why retailers feel as if they do not have to evolve. They may think, “Hey, physical shopping is still generating 90% of all sales, so we can’t be doing that bad!” Wrong. The trend clearly shows that e-commerce is on the rise and will continue to rise over the next decades. The time to act is now.
So where do we go from here?
It’s almost 2018, so let’s catch up.
The traditional ethos of retail strategy was to build, build, build. Go big or go home. Get your storefront anywhere and everywhere, from malls to street corners, so people knew your brand and had access to your product. Well, e-commerce has made everything accessible to just about everyone, so building for the sake of building is not a necessity anymore.
Think strategically about what makes the most sense for your brand. Is it stores in lucrative locations? Is it pop-ups that give you the ability to change locations? Is it strategic partnerships that combine your own retail experience with another’s? Is it a curated store experience? Find what’s best for your brand and run with it.
Where am I again?
Just as Airbnb allows a person to feel as if they are a local rather than a visitor, consumers no longer want to walk into a store and feel as if they could be anywhere, or nowhere, or in some nondescript mall. When I go into a J. Crew in San Diego I don’t want it to feel as if I’m in New York City. Warby Parker does a great job of integrating their stores into each specific neighborhood they inhabit. Every location has a different design, enhancing the customer’s feel for the neighborhood they’re visiting. So the Warby Parker store in Venice Beach is completely different from the one on the Upper East Side of Manhattan, but both perfectly fit into those neighborhood pockets – and into the larger WP brand.
You can call me on my cell phone.
For better or worse, we’re attached to our phones. We always have them, they’re usually in our hands, and we feel lost without them. So instead of making our extra appendage obsolete in a store, give us a way to use it to our benefit! Sephora does a wonderful job of integrating their app into the in-store experience. Customers can scan products and receive ratings, reviews, and other helpful information as they browse the shelves themselves.
Experience, experience, experience.
It’s like a broken record – but one that happens to be right on track. A physical store is an opportunity for your customer to have a tangible experience with your product. It may not be the customer’s first interaction with you as a brand or where they first discover you, but it’s an important customer interaction nonetheless. This is not to say that the in-store experience needs to be over the top and completely out of the box. It doesn’t need all the bells and whistles – but it does need to align with who you are as a brand and the benefit you want to give your customer.
So why not go full e-commerce and ignore retail all together? Well, it has been shown that omnichannel shoppers, those who shop on- and offline with a specific retailer, buy 250% more than their online-only counterparts. Amazon may have come in and thrown a wrench into the retail game, but instead of panicking, let’s welcome it. Retail strategy has to change, and while it won’t all happen at once, finding the right retail strategy for you and your customer is imperative today. Remember, even after King Kong came in to save the day, he still tumbled to his fate.