How Brick & Mortar can fight back against Amazon

Posted by Lucy Martin Nov 20, 2018 12:30:00 PM


4 min read

It’s no surprise to hear that retailers are suffering. Take a walk down the high street and the retail vacancies are startling. The British Retail Consortium (BRC) found that sales were down by 3.1% in April 2018, the biggest drop since the survey was launched in 1995. On top of this we have an increase in store rental rates, staffing costs, and of course, online shopping. 

Every day we are bombarded with Amazon advertising, and online shopping is becoming more convenient for the hectic life of an 'on-demand’ millennial. With voice purchasing through Echo, next day delivery and a diverse range of stock all from the comfort of your own home, it’s becoming the default option to just say, ‘I’ll get it online’.  We need to ask ourselves how Amazon has achieved its trillion-dollar market capitalisation, which comes down to one key ingredient; data.

Amazon has invested in building up customer loyalty through its Prime membership, an inner circle which gives its members free shopping, streaming of movies, TV shows, unlimited reading and more. To show the strength of the Prime membership, in July the ‘Prime Army’ contributed to an estimated $4 billion spent globally in just 36 hours.  When it comes to understanding customers, the Amazon lead is unmatched. Amazon’s distinct advantage comes from the richness of its data. While customers are searching for a particular movie, book or gift, the customer has subconsciously given Amazon an insight into their demographics, buying intents and browsing habits.

  Amazon has the ability to understand its customers and products, having the data to show what products sell well with other products and who is likely to purchase them. With this historical data, Amazon can understand its supply chain, meaning it can benefit from economies of scale by optimising inventory and delivery by understanding real time demand. By saving costs in one end of the value chain, prices can be cut at the other. Pricing began as the key to gaining traction, with the ability to undercut the competition and prompting a race to the bottom by offering the lowest price available for a product, a price Amazon knows its competitors can't match profitably. This all adds up to Amazon’s goal of being the most customer-centric version of retail imaginable.

 With price being the main selling point for customers, is the possibility of a shop-less shopping centre slowing becoming a reality? Brick & mortar stores need to think strategically to keep their footing and stay with the online competition.

 A crucial factor to Amazon’s success, as stated, is the data it collects to understand its customer. Brick & mortar retailers do not have the same advantage when it comes to customer insights. Their only solution has been ‘loyalty cards’, which have enjoyed limited success.  However, most Brick & Mortar stores have an online presence, it’s now a matter of interlacing these efforts together to understand customer needs and implement this both online and in-store. The ability to offer a click and collect service to customers means the retailer can gain an understanding of customer trends in a particular area and can utilise look-a-like marketing and public demographic data to understand what future products will sell well in certain areas.

 One of the necessary factors in keeping up with the 4th industrial revolution is the need to embrace technology. We see it happening with the introduction of IoT-augmented reality and virtual reality.  IoT is seen as another promising option to bridge the data gap with Amazon. In store IoT devices like ‘login on entry’ and store heat mapping cameras etc, can produce rich localised data and help retail owners understand what shopper’s want and focus their sales strategy on making the shopping experience a more seamless and pleasant one.  Companies like Samsara are bringing IoT to shipping to improve brick & mortar supply chain data. Through the efforts of IoT, Samsara customers have benefitted from a decrease in operating expenses, fuel efficiency, and an increase in overall safety. 

Retailers have a huge pool of data services available that can paint a better picture of what is going on in-store and how to improve on it. All of this data needs to be turned into business insights for these brick & mortar stores. Business Intelligence products need to be able to deal with many data types and turn them into actionable metrics and KPIs. Brick & mortar stores now need to adapt and run a more data centric strategy towards building a customer portfolio, their marketing campaign and optimising their store presence. A KPI report allows you to congregate this data into the key metrics necessary to evaluate the success of a company’s objectives.  If you are interested to learn more about how ServiceClarity can help your business with automated KPIs, just ask! 

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Topics: KPI Reporting, Retail, Retail Service Providers, Amazon

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