COVID-19 has thrown a monkey wrench in the predictive capability of pre-pandemic data. Customer shopping behaviors have been changed by an external force, so existing algorithms and machine learning are a bit less accurate. That impact is even more dramatic when you consider AI applications which rely even more on a wealth of data and some level of predictability.
The impact of the pandemic creates the need (and opportunity) to leverage purchase history data in new ways. The challenge is to dive into the dynamics of recent behavioral change to gain insights into how to compete and how to better serve your customers. The best way to be relevant right now is to help the customer adapt to the new normal. Looking at each customer's behavioral change as a result of the pandemic can reveal insights into how they are responding and how the retailer can best meet their current needs.
I think it is an awesome move and I think that selling them at cost is a strategic choice to achieve the most good. They could certainly afford to give them away, but they know that pricing affects demand and giving them away might not be the best solution and could actually backfire. They might be flooded with orders and sell out of available supply too quickly. Charging the minimum sustainable amount avoids hoarding, which would likely occur if they were given away.
I agree Jeff. This discussion is about the possibility that running promotions might make things worse by getting more customers into the store. But the flipside is that any retailer that stops their normal promotions might be seen as taking advantage of the situation to make more profit.
This is a situation where clear communication is key. Retailers want to be seen as responsible and respectful of the situation, but also empathetic to their customers' desires to save money. It's a tough situation to navigate with no conventional wisdom for how to manage it best.
The challenge for many independent operators is that so much of what is being hyped these days doesn't even suggest a near term payout. It is crucial that the retailer's technology efforts are focused on tangible, customer-facing improvements or promotional efforts that can deliver positive sales gains.
Ron Bonacci mentioned the low hanging fruit for independent operators when he talked about how quickly personalized promotional programs can be implemented. Done properly, that's an area where retailers can see an immediate profit impact and create a competitive advantage.
I agree 100 percent, Richard. The same culture that caused H-E-B to win the top ranking with customers is the culture that made the company want to share the success and recognize their employees.
H-E-B understands the importance of connecting on an emotional level, both with their customers and with employees.
The root of the problem is evident when you read the response of Barnes & Noble: "The booksellers who championed this initiative did so convinced it would help drive engagement with these classic titles."
That's about selling books, not celebrating black history.
I would suggest that Amazon incorporating hot food into their Amazon Go format is not about making the format profitable. It's all about showing the huge convenience store chains that the Just Walk Out technology can handle everything that they sell. If they can spur the convenience industry to embrace Just Walk Out, Amazon will profit as the most efficient provider.
This is the same approach that they used to dominate e-commerce, cloud computing, etc...
I love the design of the Target Circle program because it provides value to the customer while being consistent with the Target brand. Instead of focusing on providing points or other incentives for customers to shop at Target regularly, the program focuses on reminding customers what they love about Target and why they love to shop there.
The goal is to strengthen the emotional connection that is at the heart of true loyalty.
From the list of ways to compete I would choose loyalty, but I also think that the term doesn't mean the same thing to everybody.
Transactional loyalty, or shopping a site regularly, would be an area where I would say Amazon dominates.
Emotional loyalty, or the desire of a customer to shop somewhere even when other options are available, is an area where I think other retailers can do well. Even shoppers that go to Amazon for everything probably don't feel much of an emotional connection to Amazon. Retailers can leverage their brand positioning and sense of community to encourage customers to stay with them despite the power of Amazon.
In fact, I think brick-and-mortar retailers should look at this list and consider what they might have that Amazon can't match. That consideration will likely lead you right back to emotional loyalty, which is an area where Amazon is at its weakest.
I cringe every time I see stats suggesting that getting a customer to join a loyalty program will make them a better customer -- it's the other way around! Frequent shoppers are more likely to join a retailer's loyalty program, so of course members are better customers than non-members.
It is all about value. The secret to expanding loyalty enrollment beyond your core customer base is to provide value that appeals to everyone, including your lighter (currently less loyal) shoppers.
Ken is correct that this is a marketing technique and I think it is brilliant.
Prior to this morning, I didn't know about Allbirds and now I not only know what they offer, but they have told me exactly why I shouldn't feel good about getting their product cheaper at Amazon.
The event is designed to remind shoppers of the value of local businesses in their community. It should also serve as a reminder to local retailers that their best weapon against the huge national and digital chains is the emotional connection that they have (or can create) with their customers. Algorithms and free shipping don't create an emotional connection.
I love this move by Shoptalk specifically because it is a little over the top. As they indicate in their explanation, they could have simply set a goal of 50/50 representation and "checked off the box" for gender equity, but instead they did something that really sends a message.
For those who see this announcement and think that it's crazy to have the show (or anything) dominated by just one gender, that just might be the feeling they are trying to get you to experience and understand -- it is crazy.
They say they are building a grocery store but, from a strategic standpoint, they probably see the locations as distribution or pick up locations that also allow customers to shop for themselves.
I imagine the layout will be designed for picking efficiency and ease of drive through pick up for groceries and other stuff bought on Amazon.com. Structurally, that might mean doing things like building the aisles and refrigerator/freezer coolers with space behind/between them, so pickers could source the product from behind the shelf, so they don't get in the way of shoppers.
I would also suggest they focus on the power of the Amazon ecosystem and integrate the new stores into that with benefits for customers that use Amazon for both e-commerce and grocery. Promotionally, that might mean not only savings for Prime members when they shop at the grocery store, but also savings off of their annual Prime membership fees for regular grocery shoppers. The goal would be to make Amazon the easy choice for just about everything.
The part that caught my eye was the early (Wednesday) access to Black Friday deals ONLY for Target Circle and RedCard members. That shows me that Target recognizes the power of their Target Circle loyalty program in helping them connect with their customers in a way that Walmart, which doesn't have a loyalty card, can't.
There's a lot of trade press about the power of Amazon's Prime membership and their ability to leverage detailed data on their customers, but Target's move into the loyalty game has not gotten as much visibility. This clever method of driving up enrollment in Target Circle will serve Target well going forward.