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How Can Retailers Compete in the Age of Amazon?

Posted by admin on 1/22/14 10:00 PM
Topics: college retail

The following excerpt is from an article written by Lydia DePillis, reporter, and published on The Washington Post. Check out more of DePillis' coverage at the National Retail Federation's annual convention and her take on the future of retail by reading the full article.

At the National Retail Federation's annual convention, a festival of consumerism housed over the past four days in New York City's soaring Jacob Javits convention center with 30,000 attendees and dozens of lectures on the wizardry of modern commerce, the hottest ticket was for a lunchtime talk about a company that wasn't even there presenting. The enigmatic title: "Even Amazon Can't Do This…Yet."

"If you don't think Amazon is a problem for your business, I don't care where you are in the world, you are wrong, you are living under a rock. It's time to come out," declared consultant Lee Peterson of WD Partners, to an auditorium so packed that people were standing at the back and sitting in the aisles. "The very concept of online shopping has become synonymous with Amazon."

If you really want to claw back some market power in the age of Amazon, you need to do a few things: Let your customers discover, purchase and have your products delivered anywhere they please. Make your physical stores into interactive fun zones. And, meanwhile, learn as much about the people buying from you as possible.

That overall approach can be encapsulated in one easy buzzword: "Omnichannelization" (a.k.a. "Amazon response").

Let's break that down. "Channels" are the ways in which retailers communicate with their customers, from their storefronts to their Web sites to their mobile applications. "Omni" means that you have to use all of them and that consumers need to be able to switch among them, ordering something online to pick up in a store, finding something in a store and getting it delivered to their home, whenever they want -- the only way to compete against a company that makes buying everything as easy as one click.

Much of the change has happened behind the scenes, as retailers start turning their physical stores into warehouses that can respond much more quickly to online ordering. A whole lot of it hasn't hit the street yet -- and could totally upend the consumer experience when it finally does.

Take a brand-new technology by Los Angeles-based startup, which has developed a way for television commercials to push alerts to a viewer's phone about the clothing everyone on a show is wearing, or even send coupons for the products in an advertisement. All of it can be personalized, as the networks learn more about the preferences of who's in front of the TV. When it goes live this fall, the program could solve a huge problem for broadcasters: getting people to actually watch the advertisements that generate their revenue.

It only works, though, if viewers can be taught what's going on. "You just hope that consumers understand it," said Actv8 CEO Brian Shuster, when asked what he worries about most with the program. "And if we make it simple enough, they will."

Those are the new technologies that seem to have real potential. Sometimes, the aspirations for omnichannel retailing seem more akin to fantasy than mere magic -- with limited real-world utility.

"The world has become so virtual," he said. "Even Amazon has to do this kind of thing, or else they're going to be wiped out."

The flip side of all of this: Letting consumers access goods electronically allows companies to learn everything there is to know about your relationship with them, and leverage it to sell you more. "Loyalty" programs are ubiquitous now, but they're not just a consumer convenience -- they're also a way for companies to anticipate your needs. Think about going to get a sandwich at Quiznos, and because the store recognizes an app on your phone as you walk through the door, the person behind the counter already knows you like American cheese and no tomatoes.

Introducing that level of panoptical intelligence into the customer relationship must be done delicately. A small company that develops customer management software for mid-sized retail operations, Springboard Retail, showed off what a sales associate could know about customer "Albin Douglas" when he walks in a store. Since Douglas has bought mostly blue shirts in the past, the associate could recommend a new selection of blue shirts that just went on sale. It's all in the interest of making the in-store experience just as intelligent as the online one.

"A lot of people predicted that brick-and-mortar would go away. We're trying to help them rebuild those relationships," explains Springboard's Allen Williams. But isn't it possible that customers might be more creeped out by people knowing things about them that they used to entrust only to a computer? "They kind of will be, I think," Williams acknowledged.

Springboard may have the right idea, as consumers get more used to the reality that companies are tracking them everywhere, to put that knowledge in the hands of actual people, who can use it to re-create a sense of community that's been lost in the digital age.

Indeed, that was the answer to the question that drew so many convention-goers to Lee Peterson's session on how to beat Amazon. He presented the results of a large survey that showed that consumers find dealing with sales people more frustrating than satisfying, even though face-to-face interaction is the one thing Amazon can't offer.

"To me, that's a travesty," Peterson said. "If you're worried about defeating Amazon, I think this is number one. Invest in people. Hire people who like people. Retail is like having a party in your house every day."

The rest of the convention, though, seemed to be going in the opposite direction. Most of the innovations on display focused on how to take people out of the process, including: huge vending machines that sell everything from hot meals to Kindles; lockers where you can pick up whatever you've ordered to be delivered to them (eliminating the need for keeping pharmacists on duty round-the-clock, for example); and battery-powered price tags that can be manipulated from a central computer, rather than having someone spend hours changing them one by one.

MBS has the tools you need to compete with Amazon including a loyalty program, a robust e-commerce platform that allows for in-store pick, price comparison and more! Contact us to learn how we can help you overtake the competition.

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