How can stores compete with Amazon?
"It’s easy to compete with us, just do what we don’t do." – Sam Walton
At a Breakout Session Tuesday at the NRF Big Show convention, Lee Peterson, EVP of created services, WD Partners, presented the findings of his firm’s comprehensive white paper, Amazon Can’t Do That: Consumer Desire & the Store of the Future.
The study, based on surveys of 1,700 consumers across demographics, explored how the store can compete against the conveniences and ubiquity of the Amazon shopping model.
Encouragingly, the study found that "stores are winning," Mr. Peterson told the packed house. The core reasons people shop still favor physical stores.
Immediacy in taking home product was valued above all, with 79 percent of survey respondents pointing to "instant ownership" as the most appealing attribute of any retailer. A close second, "touch and feel" — another solely physical store attribute — was found particularly appealing by 75 percent. Third, "exclusive products and bargains," largely tied to store bargain shopping, rated 65 percent.
Online’s strengths showed up in fourth with "reviews," at 59 percent. Other largely-online attributes came in close behind with "unlimited options," 48 percent, and "one-click shopping," 47 percent.
Mr. Peterson said while Amazon ranks highest in trust, the largely "functional" nature of online shopping still fails to "excite" as much as physical stores, which gains an edge in driving "emotional" connections around shopping.
"Amazon isn’t a company you want to hug; it’s a company that does exactly what it says it will do — every time," he said.
More worrisome for the future of physical stores was the finding that Millennials ranked "unlimited options" and "customer reviews" as their top two shopping ideals, with "instant ownership" falling to third. This group came of age with online shopping and "shop anywhere anytime." Millennials grew up with a more impersonal big box in-store experience than past generations.
According to Mr. Peterson, to evolve, stores should:
- Be social,
- Be open,
- Be captivating.
The "store of the future" should try to incorporate online’s strengths, including peer recommendations and using technology to extend access to "endless aisle" inventories, according to Mr. Peterson. An efficient and pleasant buy-online, in-store pick-up service should go a long way to joining the two worlds, the white paper finds.
In appearance, stores should "encourage curiosity," "be inspirational," and make use of "voyeuristic" elements particularly evident from the outside. The more stores look cluttered with horizontal presentations and conservative displays that resemble an Amazon warehouse, the more they’ll compete with Amazon, Mr. Peterson asserts.
Social advantage should be particularly played up, with food and drink kiosks, educational and entertainment options, and perhaps concierges to encourage conversation. But the biggest opportunity for retailers is investing in employees, with the survey showing only 31 percent felt associates were a key driver of a store’s appeal. Nordstrom, Apple, Whole Foods, Starbucks and Sephora were cited among those already capitalizing on their associate’s ability to engage customers.
"Human beings are, and will always be, socially driven," said Mr. Peterson. "It’s time for retailers — at least those that want to survive the coming rationalization the industry faces — to invest in the one asset online can never trump: people."
How will physical stores have to evolve or be reinvented to compete with Amazon and online shopping overall? Can in-store associates be counted on as a primary differentiator to online selling?