Competing with, not against, Amazon is the only solution for Aussie retailers
While Amazon’s impact on Australia’s retail industry will be undeniable, Medallia’s Zach Hotchkiss believes there’s a lot more bricks and mortar stores still have to offer.
The wait is (nearly) over. The much-speculated and highly-anticipated arrival of Amazon is just around the corner, with the online retail giant expected to launch in time for the Black Friday or Cyber Monday sales.
Many Australian retailers have been eyeing the much-vaunted debut of the shopping behemoth for some time and putting plans in place to take it on at its own game and for good reason. It’s hard not to see the impact of Amazon’s success across the globe; shopping malls are struggling, bookstores have closed, and big box stores are becoming showrooms for e-tailers.
The arrival of the world’s largest online retailer will fundamentally disrupt the shopping environment in ways not experienced in Australia before. Those retailers who once thought they were beyond Amazon’s reach – supermarkets, for example – are (or will soon be at least) experiencing its disruption. Amazon’s scale and mission is reshaping the retail industry – from supply chains to customer expectations – and no one, even luxury players, is immune to the effects.
So, how do traditional retailers take on Amazon at its own game? It’s time to survey the battlefield: acknowledge the competitor’s strengths, find their weaknesses, and use the existing capabilities within the business to fight back.
Given its sheer size, many Australian retailers are unlikely to be able to compete with Amazon on price and inventory, however loyalty programs, product exclusives and immediacy – giving shoppers a reason to complete their purchase in-store – are strategic levers that can be used. At at the end of the day, it comes down to one key driver: exceptional customer experience.
Amazon founder Jeff Bezos once said: “The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works”. For someone who obsesses about customer experience, this quote from Bezos reveals a surprisingly inhuman approach to serving customers. And for brick-and-mortar retailers, this should be viewed as Amazon’s achilles heel.
The feeling customers get when they walk into a retailer, of seeing, touching, and trying on the products, of having a friendly and knowledgeable sales staff to help them – it’s going to be tough for Amazon to replicate that. It’s just not in their DNA and it plays to the shopping behaviours of Australian consumers.
Physical retailers have the advantage of instant gratification, but there’s been increasing concerns in the industry around ‘showrooming’ – the practice of customers trying products out in person and then ordering them online to get lower prices. Interestingly, a recent study found as many as six out of 10 ‘showroomers’ actually entered a store with the intention of buying right then and there. The key to success then is to give shoppers a reason to complete their purchase in-store.
Get the most out of your physical presence
Given that 20% of retail customers enter stores without a specific buying agenda, the design of a retailer’s physical presence is a huge opportunity. Leveraging store space to create transformative, unique, and personalised experiences for customers which should continually evolve over time. Give customers a reason beyond your products to come into a store and create an intuitive and enjoyable space to engage with. It’s something you just cannot replicate online.
Creative solutions to this challenge have ranged from Tommy Bahama’s in-store restaurants and Lululemon’s yoga studio spaces, to IKEA’s food options, and the broader concept of store-within-a-store.
IKEA’s restaurants are an added bonus for furniture-fatigued shoppers
Shopping experiences with exceptional service
Frontline staff are another huge opportunity for retailers to create unique, memorable, and differentiated customer experiences.
Companies such as major department chain Macy’s in the US implemented a new top-down selling framework where staff are empowered to deliver exceptional service for customers, over and above traditional service levels.
Then there’s personalisation. Retailers like Sephora, Tory Burch, and The Container Store, offer personalised or private services that customers can’t get elsewhere.
Expertise is another important factor. Companies like Best Buy have created expert services like the Geek Squad to provide a level of service and in-person advice that’s nearly impossible to achieve over-the-phone or online.
Integrate the in-store experience with your online and mobile presences
It’s of no surprise that online and offline experiences continue to converge. It’s a shifting dynamic retailers can’t afford not to ignore.
With 74% of shoppers planning to go online before they visit a store, a strong online presence should be considered table stakes for physical retailers – but many are falling down when it comes to providing usable, intuitive solutions that drive conversion.
The goal isn’t to create a website to compete with Amazon, but to create a website to augment existing channels – as well as provide opportunities for customers to have a personalised experience where they can easily move between the online and offline experience.
Infrastructure to manage the entire experience
From Point of Sale and CRM systems, to customer experience management platforms – how do retailers connect the wires of their businesses to collect customer data, empower departments to improve, and consistently create great customer experiences?
It’s not enough to collect the data – they need to break it free from silos and take action on it. Beyond the data collected passively, like spending behaviour, it’s also important to have a real-time understanding of customer sentiment and segmentation. Listening to customer feedback – and getting that feedback to the right people inside an organisation – will have a major impact on differentiating customer experience.
Amazon’s track record shows that no retailer is safe from its impact. Even if they are years away from selling products in a particular category, they will continue to change the face of retail and become increasingly aggressive. Retailers will feel the effects: from the way suppliers operate and companies market products, to the costs associated with delivery and the expectations customers have for price, quality, and frictionless service. It’s been an ongoing battle for many retailers, but it’s a battle that can be won.
The strategies that will be most powerful are those that leverage the assets that sets them apart from Amazon – stores, staff, and specialty offerings. In other words, it comes down to a unique and tailored customer experience. Retailers need to be asking themselves if they are giving customers tangible reasons to come back, spend more, tell their friends, and… not shop on Amazon.
Zach Hotchkiss is Australia and New Zealand country manager for Medallia
Amazon bankrupts its suppliers of successful products then sells those products as their own. Buyers benefit but retailers who use Amazon and have initial success get their accounts suspended so they go broke then Amazon takes over their product line.
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