September 7, 2017
Survey: How retailers are adapting to Amazon
Though we’ve acknowledged the future of retail isn’t as doomed as many media outlets want us to believe, there’s no denying the growth of online shopping has changed the way brick-and-mortar stores need to conduct business to stay afloat.
It’s dubbed The Amazon Effect by TotalRetail, for the way the “online retailer continues to exert its influence on the retail industry.” The organization surveyed its customers to find out, among other things, how Amazon was affecting their businesses and how they’d changed their technology spend as a result.
The survey found 61 percent of respondents believed Amazon had “significantly increased its position in the marketplace” over the past two years. The months since the survey was conducted have brought even more domination, with Amazon’s purchase of Whole Foods and almost-immediate pricing restructure.
Interestingly, even among retailers with strong e-commerce sites, many “respondents feel they have an unlikely advantage: their brick-and-mortar stores.” Considering that RW Baird reports Amazon moves almost six times as much e-commerce merchandise as the eight biggest brick-and-mortar retailers (Walmart, Target, Best Buy, Nordstrom, Home Depot, Macy’s, Kohl’s and Costco) combined do online, brick-and-mortar is a logical space for retailers to find their competitive footing.
In the store, customers can see, touch and smell your products. They can try on clothes, feel how sturdy furniture is, and see if something is a bit larger than they pictured or hoped. It’s also where they can get face-to-face assistance and interaction with your salespeople. Brick-and-mortar has a lot going for it.
However, while 45 percent of survey respondents think their brick-and-mortar stores offer a competitive advantage over Amazon, 17 percent admit their in-store sales have decreased by 5 percent or more in the last two years. This implies that some retailers aren’t investing enough into their stores, because others report the opposite — 27 percent of respondents reported their brick-and-mortar sales have increased in the past two years, despite Amazon’s exponential growth.
“If leveraged correctly,” TotalRetail says, “retail stores can provide the physical experiences consumers are looking for as well as the personalized service they’ve come to expect, while still being integrated with digital operations, from in-store apps to increased fulfillment options (ship from store; buy online, pick up in-store).”
Fifty percent of survey respondents said they had somewhat or significantly increased their spending on personalization and customer experience technology in response to Amazon. No respondents reported decreasing their technology investment, either significantly or somewhat.
So retailers are spending money on personalization technology — but 73 percent of them reported either stagnation or decrease in sales at their brick-and-mortar stores. Perhaps they’re not investing in the right technology.
Every retailer wants to “wow” customers and transform their in-store experience, and flashy technologies can be tempting. But often, they present more bugs and quirks than razzle-dazzle. They’re expensive to implement and can be difficult to maintain.
Consider, instead, investing in technology that touches somewhere your customers never even see: the back office. Of course, when your back-office operations are streamlined, customers won’t necessarily notice. They won’t see that your reporting takes less time and is more accurate. They won’t see how shrink has gone down because you can spot problems in your stores sooner. They won’t see that you’ve lowered your cost of accepting cash and increased productivity across the enterprise.
What they will see is exactly the opportunity brick-and-mortar locations have to rise above internet retailers. They’ll see quick checkout lines. They’ll see clean, organized product. They’ll see happy, enthusiastic salespeople ready to make their shopping experience easier. And those are the things that will keep them coming back to your stores instead of scrolling on their phones – no matter how quickly a drone could deliver orders to their houses.