Perspectives

From The Co-Founders

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Strategic insights and commentary from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

Compete with Amazon? You don't!

As Amazon Prime Day approaches – it is June 21 and 22 this year, the earliest ever for this 48-hour promotional event – retailers from all segments are wondering (or being asked): "So, how do you compete with Amazon?"

Our response? You don't, at least not directly. 

Yet independent retailers do have many strategic advantages over Amazon. But you must recognize them, and enhance them at every opportunity. Here are some ideas that you may want to consider. 

Take advantage of Market Segmentation

No more attempts to be all things to all people. Instead, focus on the portion of your market – and the customers – that are most profitable for your operation.

Remember that life stages (presence and ages of children in the household) drive buying decisions. Shoppers from which lifestage are most profitable for your stores?

Trade Up

Amazon can certainly undercut any and all competitors on price. And being asked by would-be customers to "match Amazon's price" is not going to end well. 

But, you do have the opportunity to trade up. Sell on quality; and serve those customers who value quality. Give yourself permission to say goodbye to the price hounds who only want the lowest price. 

Expand into New Categories

Now that you have a focus on your key customer segment, what else might those folks want to buy from you? Consider adding appropriate complementary products. 

Pursue Private Label Opportunities

Coordinate with other retailers in your segment – whether through a buying group, a trade association, or another group – to develop private label merchandise. This offers all those participating retailers a unique sales and margin opportunity. And once this product line is in place in your stores, you may find that it prompts a bit more respect from your other vendors. 

Have Your Website Tell Your Story

Your goal is to get people into your store, right? Then, use your website/web presence to make that easy for them.

  • Showcase your people.
  • Showcase your merchandise, the stories behind it and why you have selected it.
  • Give your customers a way to do their online research before they come in, to know what's special about your stores, and why they should experience it for themselves. 

We think it is essential that your website and other online presences "do justice" to your store, the richness of the experience of shopping with you.

Have your website reflect that warmth, the customer focus, the "let's find a solution" attitude of your stores. That is a major design challenge, but one that likely would be welcomed by thoughtful web designers.
 

More Perspective

  • And remember this: as Amazon continues to roll out brick-n-mortar stores, their approach is to have those stores actually replicate the online experience. A "frictionless experience" (e.g., free of human interaction.)

  • Just as on the web, all the burden in Amazon's offline stores is on the customer. 

In other words, Amazon is trying to compete with independent retailers. They may never win at that. 

In retailing, one must win both the minds and the hearts of the shoppers. In that race, independent retailers can have a decided head start on Amazon. 



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