Retailers should take a more aggressive approach to online sales and use physical locations as browsing and shipment centers while focusing on e-commerces — and expecting fewer in-store sales.
The fall is in full swing with kids hopefully thriving in school (with just a few hiccups) and businesses starting to reopen, slowly but surely, in most states. Many of us are now settling in for what will likely be a rather trying winter. How long will the weather stay warm enough and dry enough to be outside? Will schools remain open through the winter? Welcome to the great unknown.
Whatever happens, the beneficiaries of all the tumult ahead of us are online retailers. I believe colder, wetter weather (at least up in the Northeast, Midwest and Pacific Northwest) and kids at home means there will be an autumnal uptick in online shopping;. As usual, Amazon.com Inc. will be far ahead of the curve. Let me explain.
It’s no surprise to most retailers that the pandemic has accelerated the evolution of the online marketplace, and those who fail to adapt stand to lose everything. Widespread reports show that retail has been devastated by the Covid-19 pandemic. The list of fallen retailers includes giants like J.C. Penny, Lord & Taylor, Neiman Marcus and Pier 1, and storied clothiers such as Brooks Brothers and J. Crew and fashion upstarts like Aldo, G Star Raw and True Religion. The seismic shift toward e-commerce was especially challenging for retailers who weren’t nimble enough to make the transition. They never had a chance once the Covid-19 sandstorm blew through their once-busy stores. Everyone and I mean everyone, lost a lot of ground to Amazon this year.
In its usual blend of business savvy and prescience, Amazon has been in discussions with Simon Property Group, America’s largest mall owner, about converting some empty stores into warehouses. I think it’s a great idea. In American suburbia, most department stores dwell as the “anchor” destination in shopping malls, which historically have been the commercial hubs of many of our suburbs (and the social hubs, especially for American teens and tweens). Like everyone else, these malls are waiting for the pandemic to die down and for state governments to lift restrictions on indoor spaces.
Mall tenancy will make Amazon more of a “local.” When you order something online but want to return it, it makes sense consumers would want to go to an actual brick-and-mortar location, maybe even to pick out something new? Why not? Amazon is already doing that with its agreement with Kohl’s (announced last year). If Amazon has its way, you can come right to them at your local mall. While you’re there, you can do some quick shopping, maybe grab lunch, etc. Making returns — and pickups — possible at mall warehouse locations puts a friendly, local face on a global behemoth. With this latest move, Amazon continues to define how to evolve to genuinely secure last-mile delivery (which further solidifies Jeff Bezos’s position in the pantheon of online marketing).
Scott Hirsch CEO
Okay, so here’s the challenging part. If Amazon comes to a mall near you, how do you compete? And what can you adopt from the company’s model?
The takeaway for retailers is to take a more aggressive approach to online sales and use physical locations as “browsing” and shipment centers, focusing on e-commerce and social media channels — and expect fewer in-store purchases. You might have to make your retail location an “experience destination” — this is where Amazon can’t compete.
Let’ take Toys “R” Us as an example. This big-box retailer couldn’t compete on price or convenience. Still, it had great play spaces and experience areas where kids could try and enjoy games — sort of the modern equivalent of the video arcades we flocked to when I was a kid. At Toys “R” Us, kids would push their parents to take them to the store for all the fun and to try out brand new games, which would usually lead to some in-store purchase. In general, kids and shoppers haven’t changed that much, but if you don’t give them a one-of-a-kind experience, you won’t beat Amazon on price and convenience. Customer loyalty? Something to strive for, but it only goes so far in today’s environment.
Stores would also do well to make their physical locations customer service centers, where the return/exchange process is streamlined and in line with all CDC indoor spacing requirements. Put out plenty of hand sanitizer, have masks available at the entrance, for free, if a customer here and there forgets his or hers, and offer gloves to people who want an extra level of comfort. What I’m saying here is retailers should modify their business model, so the emphasis is on an outstanding in-store experience and enhanced customer service while concurrently ramping up digital marketing initiatives.
Now, back to e-commerce. We all know Amazon is a leader in creating complete, satisfying customer journeys for everything from books to TVs to lawn furniture. How can smaller retailers beat them at their game? The first questions to ask are, “What can we offer that Amazon doesn’t?” and “How can we create an impeccable last mile for every customer journey?”
I would start with live human customer service. At the end of the day, if there’s an issue with something we’ve purchased, or we have questions about something we want to buy, most of us want to pick up the phone and speak to a live person — for most consumers, this is still the fastest, most efficient way to get things done. Can you offer this to your customers and make it a key message in your digital marketing efforts? Where else can you go from here? How about screen sharing with individual customers to help them make product selections, answer questions, and introduce them to other items?
It’s tough, I know, but you’re stepping into the arena with a true world champion. You’ve got to be light on your feet and as clever as a can opener. Do you deliver? If not, it’s time to start. Are you offering coupons, discounts, loyalty points? If you are, amp it up; if you’re not, get to it. The goal here isn’t to slay Goliath. It’s to coexist alongside him and, ultimately, thrive.
It’s time to get your virtual and brick-and-mortar ducks in a row.
Media Direct is a data, analytics and digital marketing firm.