skip to Main Content
DISRUPTION IN THE AGE OF AMAZON: 5 STEPS TO TAKE

DISRUPTION IN THE AGE OF AMAZON: 5 STEPS TO TAKE

Rumors about the “death” of brick-and-mortar commerce are greatly exaggerated. Yes, Sears has shuttered 180 stores so far this year and Macy’s another 68. But Amazon has received clearance to gobble up grocery giant Whole Foods and pure play Warby Parker ─ a purveyor of hip eye wear ─ is slated to open 25 retail stores this year, adding to 41 others in North America. Step through the looking glass and welcome to today’s Alice in Wonderland retail world. This dissonance illustrates the breadth, depth, and complexity of disruption in retail today, and it’s not just digital disruption.

  • Traditionally physical channels are going digital. Walmart has been on something of an acquisition spree, recently acquiring trendy online fashion brands ModCloth and Bonobos – the retailer’s third and fourth ecommerce acquisitions in less than a year.
  • Stores are vanishing. Investment bank Credit Suisse estimates that 8,600 stores will close in 2017, and that one in every four shopping malls will be closed by 2022. Even the in-store model is shifting. An Opinion Research Corp., survey revealed that by 2020, most shoppers will want to be left alone without engaging with an in-store sales clerk.
  • Digital pure plays are going physical. Native digital brand Harry’s ─ D2C, high-quality shaving products and subscriptions ─ now can be purchased in Target, which also sells online mattress upstart Casper through Target.com.
  • Disruption is sector-specific. In apparel, for instance, the resale market is expected to almost double to $33 billion in 2021 from $18 billion in 2016, with online resale players growing more than four times faster than the broader apparel resale market. On the home front, more than half of the consumers surveyed by Opinion Research Corp. said they prefer a virtual view of how home furnishings and accessories fit in a home before they make a purchase, and a majority said they want mobile access to a floor map to locate products in stores.
  • Commerce is ubiquitous, hastened by voice-activated devices and the Internet of Things enabling always-on, always aware, everywhere commerce. Use of Alexa and similar devices has grown 130% this year alone. So far, only one in 10 consumers are using their devices to order products – queries about the weather being most common. But as the rate of adoption grows, shifts in consumer behavior are sure to follow.

Re-imagining Commerce

Retailers and consumer brands can expect the pace of change to accelerate, driven by emerging technologies, evolving customer expectations, and the proliferation of data. As businesses implement and refine their omni-channel strategies, will stores transition to showrooms or become fulfillment centers? How can retailers leverage their physical presence and geographic coverage while driving higher value per store? What about Amazon, Jet, and other marketplaces? Answering these questions is key to succeeding in today’s retail landscape.

Here are five steps you can take today to meet these challenges head on. We’ll examine these and other tactics in upcoming blogs, featuring fellow PFS thought leaders.

  • Re-examine how you go to market. Look at your channels and consumer touch points critically with an eye to consumer engagement and your own company’s ability to execute. Identify any gaps to success and determine where you have a compelling offering; investments may be required to shift consumer behavior. Consider the case of Nike. The brand announced it would sell goods on Amazon – a move it resisted for years – based in part on Amazon’s stated commitment to protect brands from counterfeiting but also Nike’s own analysis of how consumers prefer to shop.
  • Identify where you can create value and stand out. Product selection and discounting aren’t enough anymore – buyers can find that everywhere. Define your unique value proposition and put a plan in place to exploit it. Our strategy team regularly works with brands to provide a compelling reason for shoppers buy direct, which not only increases margins but also generates highly valuable consumer data.
  • Examine your core business. Assess whether you should team with others to improve and differentiate essential processes.

Consider fulfillment, for instance. Can you meet customer expectations that are ratcheting up rapidly or does it make sense to collaborate with a provider that can get goods to customers faster and more efficiently? Is there a more personalized service you can provide or a uniquely branded experience you can deliver?

  • Know thy customer. Data is everywhere and growing exponentially. The challenge isn’t collecting data, it’s applying insights to create more personalized, targeted (and profitable) customer experiences. This requires a holistic approach to data collection, distribution/access, and analysis. It’s not enough to hire a “data person.” With an eye on leveraging your data, focus on how key personnel are incented and who “owns” the customer relationship. In a disproportionate number of enterprises, physical and digital channels grew up independently and this silo mentality is reflected in customer interactions.
  • Experiment. Use the customer data you’ve accumulated to identify and experiment with new customer sets, product categories, or market opportunities. Try new marketing tactics and measure, measure, measure outcomes. And if your commerce technology isn’t automated, flexible, business friendly, and scalable, the time for internal disruption is now.

How does your enterprise stack up against competitors and customer expectations? What do you need to do to grow and differentiate your brand? Find out. Our Omnichannel Audit delivers a quick, comprehensive report card, rating you against leading companies in your market. Contact us at info@pfsweb.com to learn more.

 

Douglas Hollinger

Dr. Doug Hollinger joined PFS in 2015 as the Vice President of Strategic Commerce Consulting and is responsible for building and leading innovative strategy practice. With over 10 years of executive experience and more than 16 years working in digital-focused consulting, Doug specializes in collaborating with cross-functional teams to help B2B and B2C clients achieve measurable success by identifying and capitalizing on emerging digital opportunities.