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Disruption In The Age Of Amazon: 5 Essential Steps To Take

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Author: Douglas Hollinger

July 24, 2018

Rumors about the “death” of brick-and-mortar commerce are greatly exaggerated. Yes, major retailers are shuttering stores, but online-only brands are opening physical stores. ThredUp, an online consignment shop, has long-term plans to open 100 physical stores. Other examples include Casper, UNTUCKit, Glossier and Boll & Branch, and Warby Parker. 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.

  • Stores are vanishing. Investment bank Credit Suisse estimates 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. The same is true of eyeglass retailer Warby Parker
  • Disruption is sector-specific. In apparel, for instance, the resale market is expected to almost double to $33 billion in 2021. 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.

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 on consumer engagement and your own company’s ability to execute. Identify gaps and the ways to fill them. For years, Nike refused to sell through Amazon, but to meet its $50B revenue target the brand needed to expand its Amazon partnership.
  • 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.
  • 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.

Douglas Hollinger

Dr. Doug Hollinger joined PFS, the LiveArea parent company, in 2015 as the senior vice president of Consulting, and is responsible for building and leading innovative strategy practice. With more than 10 years of executive experience and 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.

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