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Flourishing in the Age of Amazon: How can Retailers Reinvent themselves to Stay Relevant

Flourishing in the Age of Amazon: How can Retailers Reinvent themselves to Stay Relevant
August 28, 2018

Mainstream retail business is dead or so the doomsayer would like everyone to believe. As mobile apps and e-commerce keep gaining traction worldwide in an era of on-demand consumption, traditional brick-and-mortar chains have no future, the critics argue. To drive home their point, they cite the growing dominance of Amazon, the U.S. e-commerce pioneer that continues to expand aggressively through a relentless focus on innovation and customer experience.

So, is Amazon going to change the revenue game for everyone on its way to global supremacy? Is there no way conventional retailers can fight back and remain relevant in a fast-changing marketplace? Of course not. Retailers, I believe, can indeed rebound from the structural challenges they are grappling with today, and retell their story to discerning, digitally empowered customers in a persuasive manner. For inspiration, retailers need to only look at the success stories of marquee consumer brands such as Apple and Nike that have retained their unique value propositions by continuously reimagining customer experiences.

Retailers, I believe, can indeed rebound from the structural challenges they are grappling with today, and retell their story to discerning, digitally empowered customers in a persuasive manner.

Here are three broad ways in which retailers small and big can innovate around product design, in-store experiences, and other aspects to sustain profitability and provide differentiated and superior brand and customer experience:

Find your niche: showcase creative, unique products

Operating in an environment where customers can get pretty much anything they want, anytime and anywhere, retailers must think hard and deep about what really makes them unique. Show-rooming can be combated, and retailers having an excellent online presence that complements their offline stores will have an edge when they combine these capabilities with the right in-store product categories.

So, is there any specific attribute of their product or service portfolio that separates them from the competition? If the answer is yes, then they need to emphasize on this angle and roll out unique offerings that potential and existing customers would not find anywhere else.

A critical factor in such a product overhaul and repositioning exercise would be design innovation. In this regard, retailers should use regular feedback and suggestions gathered from their customers, as well as various relevant industry surveys concerning consumer behavior and expectations. The spectacular success of Target’s new Cat & Jack children’s apparel brand is instructive here. The clothing line, whose sales topped $2.1bn within a year of its launch, was conceptualized and developed in-house by the U.S. retailer’s product management team, with aesthetic sensibility being a USP. And Target, enthused by the early dividends of this revamp initiative unveiled in February 2016, is betting $7bn on an end-to-end design of its goods.

Deliver a compelling experience through the digital store

As retailers embrace the “bricks-and-clicks” template of seamlessly harmonizing the online and physical channels, they must focus on enhancing the customer experience with a missionary zeal. Because delivering boring in-store experiences would simply turn off customers in today’s age of instant gratification when buyers transact on platforms that offer them enjoyable experiences. And the digital store is the means by which retailers think creatively as to how they can incentivize customers to visit their outlets. The digital store can also double up as the primary data source for capturing customer behavior, and help drive continued improvements in visual merchandising and store operations.

The way Nike has reimagined its new store in New York to maximize experience per square foot by facilitating multiple customer interactions with its products offers pointers on this front. The facility sports a treadmill, a setup that simulates runs in diverse locations, a football enclosure, and an indoor basketball court. In addition, the outlet offers a shoe bar for customers to tailor a pair of Nike Air Force and instructors who help visitors try out different pairs of shoes. Basically, the facility is both a “gaming zone” as well as a shopping center.

Similarly, Ulta Beauty, the prominent U.S. specialty cosmetics retailer, has redefined the notion of customer experience in its industry by providing a combination of products and beauty support. The retailer sells various high-end products in a superstore format, besides offering in-store hair, skin, and eyebrow treatments.

Today’s clienteling is to monetize experiences and not products

The third way retailers can carve out a niche for themselves in a fragmented marketplace is by rethinking their business models from the bottom up. Sales efforts of yore have translated into modern clienteling, backed by savvy marketing and resulting in improved conversions, for instance, by unbundling the actual shopping transaction from the overall retail experience. Bonobos, an emerging menswear brand, has rolled out so-called “guideshops” that provide counsel relating to fittings and fashion. The company doesn’t charge visitors for the advice, expecting them to place orders for its apparel online later on. And in case a customer transacts in store, Bonobos ships it free of cost.

Another innovative way retailers can innovate around their business models is by pitching their physical and digital footprint to exclusive brands, rather than monetizing through product sales.

B8ta, a fledgling U.S. consumer-electronics retailer, doesn’t take a cut of the revenue it generates from in-store sales, unlike most of its peers. Instead, it levies brands a specific charge in exchange for featuring them in its outlets. The company, essentially, is showcasing an exclusive range of gadgets, with its staff educating visitors on their various features.


To say Amazon would render every retailer irrelevant would be an exaggeration. After all, offline retail business sales account for over 90% of total industry revenues worldwide. But yes, mainstream retailers must urgently up their game and reinvent their playbooks to remain an attractive proposition for today’s customer. And a comprehensive playbook centered on the customer and supported by technology and human creativity can help them survive and, indeed, thrive in these exciting times.