If You Cannot Change a Consumer Trend... What's Next for Retail?
GMDC Perspective, by Mark Mechelse, Director of Research, Industry Insights & Communications
Consumers today are crunched for time. They shop less in stores and are less loyal to brands and retailers due to an ever-increasing disruption in the marketplace – for both products and retail outlets. So how does your company rise above the online chaos and and capture a time-crunched audience increasingly bombarded with choices?
I’ll tell you what not to do first.
Do NOT compete with Amazon – especially when it comes to price, shipping costs, or speed. Instead, there are other ways for retailers to offer value for consumers that Amazon cannot.
The big issue here is that Amazon is selling products at margins that are not sustainable, and for the longest period of time, they've been able to convince Wall Street: "Trust us, we'll make money some day." At the same point in time, there's a day of reckoning. - Thomas Stemberg, Co-Founder, Staples
Consumers want more, want it easy, and want it cheap. That's where online answers the call. But does it really mean people will shop exclusively through e-commerce more and more?
Are we in the last days of battle witnessing a retail shopping armegeddon that will eventually make brick-and-mortar a thing of the past?
That depends. Are you willing to think differently?
It’s all about the combination of keeping up with, and staying ahead, of consumers. The more you're willing to take risks and get ahead of your current tactics, the more equipped your business will be able to activate "next practices".
It may not be as difficult as you may be thinking right now.
Consumers are more engaged than ever in this hyper-connected world, and a little innovation and effort to reach them where they already are can bring big results. It's simple, just look at how shoppers shop and how much information is at your disposal.
The way to track consumer behavior when I was a kid, was also my favorite past-time. I used to sit in the mall during peak weekends of Christmas shopping and "people watch". Have you ever just sat on a bench somewhere and observed how people behave, listened to what they said, watched what they pick up and put back down, and ultimately saw how they made a decision to proceed to the checkout?
All of that kind of activity is happening more and more digitally. And the scary and delightful idea behind that is that it can be tracked. In fact, more activity has been tracked in the past five years than in the past 50 years. It's a continuous and ever-growing stream of data that leads to insights for businesses to interpret and change accordingly.
What can you do with all those insights?
Take a minute and think about your last online shopping experience. What made it most memorable? What triggered you to buy more than you intended? Did the website give you suggested items to buy?
Now, think about how shoppers shop a store. Can they find what they need right where they want it? Are related items crossing the aisles in order to capture a top-of-mind purchase?
Shoppers today want an experience that's as easy as getting online. If a retailer is not willing to deliver that, the shopper may just walk away. And when they leave the store, you bet they're powering up their mobile device, and buying the same item at your front door but now on a website.
Even so, not all businesses are seeking insights and advice that reveal these things, and even less are putting insights into action. That very thing called "action" is a tool that companies can leverage to differentiate themselves. Differentiation comes in many forms -- the one that stands out most obviously is "touch and feel". It's time to reinvent brick-and-mortar and be different again.
Here are a few options for differentiation. The more you can apply these to your business, the more opportunity you will uncover, learn, then unlearn, and evolve as a result. Once you jump onto the bandwagon of change, there's no going back. You'll realize that you were missing out in the first place.
If you don't embark on this perpetual lifecycle, its nearly impossible to stand out from the crowd. Don't be a "me too" business.
Define what makes your business unique and then roll with it
Instead of slashing your prices to undercut Amazon or another competitor, start assessing what makes your business unique. Do you cater to a specific market segment? Do you sell one-of-a-kind products? Are you known for going the extra mile for a customer to locate a hard-to-find product?
Sell something different
Look to include products that have higher gross margin value than what Amazon sells, particularly in general merchandise categories such as electronics, home and garden, toys, or media. Try not to offer a value of below $10 to $15. Also understand that you have stocking costs, while Amazon doesn't.
Create a strong experience
Design your online and offline spaces to display your products in ways that are engaging for your specific market. In other words, you can compete by creating a fantastic browsing experience.
Build (and be) your own community
Amazon knows that its customers are there for one very specific reason – great prices. To develop your online community, unique content is essential. Have a blog that people actually want to read, videos, and active social media channels. Align your community with your brand, gear it to your audience, and make it interesting to get the best ROI.
The secret to your success is to not compete or try and change consumer trends. Rather, differentiate your business so that you’re on an entirely different playing field. By doing so, you’ll get customers. And then you can take joy in the fact that they’re choosing to buy from you because you’re offering something other than just the lowest prices.
Any way you slice it, companies trying to succeed today and beyond will need to locate shoppers in an increasingly fragmented world and then encourage them to loosen their tight grips on their wallets. Talking to consumers through their favorite channels and aligning innovation with consumer lifestyles can help businesses get noticed in today’s chaotic markets to drive purchases and loyalty.
For retailers and manufacturers looking to differentiate, take a closer look at GMDC. This is the place where brick and mortar comes to discover products, and is the path to retail for suppliers. In 2016, put the GMDC Marketing Conferences in your budget and you'll be astonished with how deep our focus is with connecting the most innovative suppliers with retailers that are seeking to be different and capture today's consumer spend.
Don’t fight the trends; learn them and differentiate yourself.