Retailers looking to compete with and beat Amazon can do so by being what the online giant isn’t
By Sean C. Tarry
In an age of precision and hyper-personalization, competing with an online giant like Amazon can seem like an impossibility to some retailers. The company’s reach is unprecedented, able to deliver to locations the world over. Its market share is nearly unthinkable, owning just about half of all purchases made online in the US. Its infinite inventory cannot be matched. And the level of sophistication built into the algorithms that the company deploys to better understand online shopper habits is in a category of its own.
All of this being true, however, there is a way for retailers to not only compete with Amazon and others operating within the platform economy, but to beat them. And, according to Tony Chapman, brand strategist, consultant, consumer behaviour expert and Owner of Tony Chapman Reactions, it all starts with the retailer’s understanding of what it is and the role it serves with its customers.
Q: We are living in interesting times, what some people might call the Amazon Age of retailing. It seems the online behemoth holds the upper hand on just about all of their competitors. What, if anything, can retailers do to combat the force of Amazon?
Tony Chapman: Amazon is a huge disruptor and is quickly becoming the world’s biggest vending machine. It’s firmly placed within arm’s reach of customer desire, located in the palms of hands all over the world where people can search, research and aggregate prices without ever leaving the company’s website. And, because of the disruptive online influence that it poses, all the metrics and key drivers that are used to define retailers’ success – things like location, merchandise, promotion, customer service – have changed and been cast aside. As a result, retailers must pivot from simply being the place to buy to becoming the place to be; to be something of value to the consumer – something that’s worthy of their time and dollar.
Q: Does that mean, as many are suggesting, that retailers need to offer their customers an experience when they visit them in-store?
TC: They have to offer an experience. But not just an experience for the sake of it. It isn’t about bringing a band into your store. It’s about understanding what your store is and the reasons people visit you. For example, am I going to The Running Room to buy shoes, which is a product I can get anywhere, including online? Or am I going there because I want to get back into shape and run a 5k with my kids? Or, am I going there because I’ve just had my cholesterol checked and have been read the riot act by my doctor? That’s an important question that all retailers, especially those hoping to compete with a company like Amazon, need to ask themselves. What’s the reason for the store visit? Am I going to the dollar store because I know I can buy things for cheap? Or am I going there because it’s an affordable treasure hunt? I can buy clothing anywhere, including online. But I’m going to Winners because I can find that Picasso in the attic – that find – a place where I can be such a clever shopper. I’m be going to Mountain Equipment Coop because I want to become one with nature. I’m unlocking my inner foodie when I go to a great grocery retailer. In each of these cases, I’m visiting a store that can help me achieve my objective. When retailers can position themselves in the minds of the consumer in this way, they move themselves much more into the path of their journey, helping them get to where they want to go, as opposed to simply being a place to buy stuff.
Q: Is it fair to say that the opportunity for retailers is to be what Amazon can’t be?
TC: Absolutely. What Amazon doesn’t have is a heart. Human beings want their hearts to beat – they want to be social, they want interactions, knowledge, excitement. They want a treasure hunt, enlightenment – a whole gamut of stuff. That’s what Amazon can’t do. It can’t provide these things in the same way as other retailers. What Amazon has always done well, and continues to do well, is become faster. It’s what the aim of the company is. They’re taking human labour out of the system and replacing them with algorithms. It’s very personalized and precise in terms of their offer. But what they lack is what I get from a great retail experience. When you walk into an Indigo, you’re being met at the door by book lovers. You get to look at the books and touch them and find out what the staff members have thought about it. This helps peoples feel more confident about their decisions.
What Amazon doesn’t have is a heart. Human beings want their hearts to beat – they want to be social, they want interactions, knowledge, excitement.You can buy alcohol online, too. But when you go to your local liquor store, you know that you’re getting the wine that’s going to work best with your food pairings, because staff have provided meaningful information for you. You can’t be all things to all people. But, focusing on your customer, what they want and need from you, and then delivering on that will put you as a retailer in a really good place – a place where Amazon can’t chase you. They’re going to try by using augmented and virtual reality. They’ll continue to be really precise with their algorithms. But ultimately, a great in-store retail experience, involving human interaction and the relay of pertinent information and advice, is always going to be something that consumers value.
Q: Despite the fact that Amazon doesn’t provide catered service and advice, how can other retailers compete with their algorithms that predict and personalize offers to their customers?
TC: There’s a big difference between personalization and personality. Amazon’s algorithms can help fly-fish the right offers to the right consumer at the right time. But personality is reflected in your brand when you intimately know and understand your customer. If retailers can find out why the customer is coming into their stores, they can start to sell into the consumers moment versus simply using algorithms to hopefully capture their attention. People usually come through your door on a journey. There’s a reason they’re visiting you – it’s pointed. The more you can train your sales staff and use cues in-store to say “I’m part of your happy ending” versus “we’re just here to sell you stuff”, the better. For years, Home Depot has done this better than most with its do-it-yourself workshops and other campaigns. You can purchase a hammer anywhere. But if you purchase a hammer feeling that you’ve made the right decision for the project that you’re working on – that’s where personalization comes in. There are a lot of retailers out there with ‘me too’ offerings and ‘me too’ products. It’s very difficult to personalize ‘me too’ experiences. But when you’re truly helping someone, when it’s more transformative than transactional, there’s nothing but upside.
Tony Chapman, conference host, keynote speaker and brand strategist delivered a session from his new keynote: From a place to buy to the place to be at Retail Council of Canada’s two-day STORE 2019 Conference on Tuesday, May 28, 2019.