RETAIL GROWTH IN THE AGE Of AMAZON
Much has been made in the last few weeks and months about the great Retail Apocalypse of 2017 and the dominance of the aptly named Amazon. On today of all days - Prime Day - it’s as if you can hear merchants everywhere stamping their feet and crying, “Amazon’s ruining everything!” But the struggle is real! While both the demise of traditional brick and mortar retailing appears to be tipping quickly, and while Amazon appears to be the direct beneficiary of so much of this fallout, VENN suspects that the two are being conflated as simple cause and effect, when the reality of the situation is far more nuanced. To say that Amazon has had a colossal impact on traditional retailing is an understatement to be sure, but Amazon’s success has had as much to do with the mediocre strategies of the competition as it has to do with their greatness.
Mediocre retailer strategies stem from self-imposed limitations, a lack of diverse thinking, and a failure to heed unambiguous trends and warning signs that clearly indicated seismic shifts in consumer behavior. Shifts that foretold a need to evolve strategic direction including overhauling consumer experiences long before Amazon was a source of pain. These failures have empowered Amazon to dominate on the most rudimentary and pragmatically rational levels: price and convenience. In the absence of emotionally compelling experiences, most consumers understandably opt for fast, cheap and convenient, and where these factors matter most Amazon is, not surprisingly, dominating. While no one envies the position that Albertson’s and other leading grocers find themselves in as a result of Amazon’s acquisition of Whole Foods, for many other retailers, in most other categories, the final chapter is still yet to written and there is still a lot that can be can do to stave off Amazon’s advances.
While it would be crazy to bet against Amazon, it would also be premature to crown the company "Monopolists of All Retail". Just as Microsoft was once decried as a monopoly that would ruin computing experiences for consumers the world over, there will be a fair amount of twists and turns in retail before Amazon is declared the permanent and all –encompassing "Big Brother of Retail". In the meantime, retailers and consumer goods brands have an opportunity to determine their own growth path.
No doubt there will be major losses of epic proportions, both in jobs and in the shuttering of legendary brands (JC Penney for example has over 110,000 employees compared to only 79,000 coal miners in the entire U.S.), but for the majority of large and small retailers and branded manufacturers, the next chapter is still to be written. Over the course of the coming weeks VENN will provide five factors for retailers to consider in their re-invention that play to their strengths rather than to those of the Seattle-based behemoth, and which correspond with VENN’s proprietary growth model:
1. WHO: GENERATION Z DEMANDS TO BE HEARD
2. WHERE: LOCATION,LOCATION, LOCATION
3. WHAT: WE WILL ALWAYS WANT COOL STUFF
4. WHY: BRAND POSITIONING STILL MATTERS
5. HOW: “EXPERIENCES” OVERUSED AND NOT UNDERSTOOD
Next week's installment will address how retail and consumer brands need to shift their understanding and approach to attracting younger consumers: