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.
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?
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.
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.
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.
Your goal is to get people into your store, right? Then, use your website/web presence to make that easy for them.
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.
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.)
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.
Let's assume your stores have been closed for weeks now.
We recognize how conscientious you are. So, after paying what you can to your employees (and yourself), the next most-worrisome dilemma is your rent.
As you likely have discovered, a common choice for many landlords is to offer to defer your payments. But that means taking on more debt, as those payments are only being postponed to a later point in time.
You need a better solution than that.
A frequent recommendation for how to navigate the current economic uncertainty is to be more diligent about controlling expenses, and focus on profit. (You'll see; we challenge that below.)
Hmm. Concentrating on profits is easier said than done in today's environment, with cost increases proliferating under the umbrella of inflation.
Remember thinking that Amazon was the most disruptive force to happen to retailing? (Well, at least since Walmart was the most disruptive....)
However, the coronavirus pandemic eclipses them all. No matter where you live or do business, it is not whether, just when, COVID-19 will impact your life. Disruption with a capital D!
For retailers, the Fog of Uncertainty that began in April 2020 around the pandemics keeps coming back. Just when it appeared that we were ready to "get back to life" if not "back to normal," the Delta variant has surged.
This has created more uncertainty. How willing are your customers to actually go out and shop? Even more important (to you): how willing are YOUR customers to shop with YOU?
So, here's an idea: Why not ask them? Really. Send them a short questionnaire.*
For retailers, the uncertainties caused by the impacts of the Covid-19 pandemic are unrelenting.
So, what should we do with this additional "found time," waiting for the customers? That's a question we CAN answer!
As you are sorting out how best to reopen, we encourage you to be bold about embracing technology. Not just a POS system upgrade with better e-commerce capability. There's much more that warrants your attention.
There's a whole alphabet of resources out there, already being embraced by many: ML (machine learning); AI (artificial intelligence); AR (augmented reality), QR (Quick Response matrix barcodes). All enabling chatbots, robots, digital displays and much else to become "smarter" and more applicable.
Still less than $1 a day! 👀