The sheer scale of the National Retail Federation’s Big Show requires big ideas – no more so than Lee Peterson of WD Partners’ presentation on the evolution of retail, and what bricks-and-mortar stores can do to compete with internet behemoths like Amazon and Alibaba.
Over the last holiday period, Amazon embarked on a land grab which saw it generate 39% of total retail sales, with the next 21 set of merchants combined carving up 38% of the pie. That is quite incredible and demonstrates how far the company has come since its days in Jeff Bezos’ garage in Washington state.
So what can stores do to fight back? Peterson cited Sam Walton, founder of Walmart, who said “it’s easy to compete with us, just do what we don’t”.
In the context of ecommerce versus the physical environment, this is all about experience; being able to touch the products, enjoy demonstrations and outstanding individual customer service.
There was then a discussion of the three waves of retail. The first was the ‘mom and pop’ stores, which provided everything local shoppers wanted on a more small scale. The second was the ubiquitous chain, which benefited from economies of scale and mass marketing – success stories include Gap and Best Buy.
We have now moved into the third wave of retail, which focuses on being better. Examples of this are Shake Shack (which had a store round the corner from my Times Square hotel) and Apple, described as the grandfather of this particular commerce epoch.
How are such stores measured? Using soft, qualitative metrics, which Peterson outlined in his 5 principles for successful retail in the future:
- Quality over everything – better products and customer experience. Don’t try to be all things to all men; a few outstanding products that can’t be replicated will suffice
- Any way the consumer wants it – the omnichannel experience is key, as demonstrated by Argos’ click-and-collect service
- Break the rules – strive for uniqueness, like the REI outdoor clothing brand, which closed on Black Friday and urged shoppers to go for a hike instead
- Keep it simple – enough said
- Be the brand
And with that Peterson delivered his retail blueprint for #NRF16 and beyond. It will be interesting to see who heeds his words in this ever changing world.
Tom Jones is an Account Director at Fieldworks