Ever since the advent of on-line shopping the question of traditional retail model survival has been continuously in the forefront of media and consumer discussions. Yet, only 8.5% of US Retail Sales were conducted via ecommerce during Q1 2017, which represents a long term annualized growth rate of 16.04%.
While it sounds like a healthy growth rate, it is hardly reflective of the well publicized turmoil of traditional retailers, with stores closing and job losses. Even if you take more aggressive estimates by Forrester, direct online purchases account for “roughly” 10.3 % of total retail, the peril of traditional retail stores hardly seems imminent. Moreover, the successful expansion of the ecommerce giants, like Apple and Amazon, into physical stores clearly proves that it is not Where, but How you conduct business to be profitable.
Retailers like Sears, Kmart, Macy’s have never understood that consumers have a lot more choices now than they used to, and they choose the stores that offer them a better experience and not just nearby location. The primary focus is not on Product selection, Price, Place/location and Promotion any longer. Every meaningful market player has figured these things out or gone out of business by now. The competitive edge is found in the fifth pillar of marketing – People, or more specifically Customer Experience, which became the primary differentiator.
Retail leaders are disrupting traditional retail methods, not the traditional market format (brick and mortar) that has been in existence for thousands of years. The change is not about digital and physical. It is about what has been learned by conducting ecommerce business – where customers have a myriad of choices, past experiences of “people like us” ( which is the next best thing to your own experience), and ability to return or replace the merchandise that did not meet their expectations without leaving their home or office.
The next frontier is the grocery aisles, where margins are fat and complacency is high. Get prepared and find the way to create an experience your customers will find engaging.