Retailers Are No Longer Competing Against Amazon
September 21, 2018
The most sophisticated companies no longer view Amazon as their competition. The tone in the retail industry has changed from one of combativeness and resentment towards Amazon, to one of collaboration and partnership. Companies who once viewed Amazon as the enemy, are partnering today.
Just as Amazon continues to drive change and push the boundaries of how the retail industry thinks about selling products, the technical prowess and innovation coming out of Silicon Valley continues to drive change, in every sector. And, fortunately, retail is no exception.
The entire customer journey is being enhanced by the tools, systems and platforms coming out of the many retail tech veterans and startups. However, while this wave of change is happening, I don’t feel like we’ve reached our full potential. We’re still lacking a seamless connection between the powerful tech-driven tools and ideas coming from the Valley and the deep-rooted relationships and know-how that underpin the retail sector. Bridging this gap will create an indomitable force that will change the retail sector forever.
This powerful and optimistic theme was the “big thought” at our recent Retail Influencer Network event. We gathered the best and the brightest minds in retail, including Matt Shayof NRF and industry expert Deborah Weinswig, to talk about the current state of the industry, its challenges and opportunities. Brian Sullivan of CNBC moderated our event and elicited some powerful insights. Here are a few key takeaways from the event:
1. Retail companies need to invest in finding talent that can drive consumer understanding through data and analytics.
Retail culture and roles have successfully evolved in support of omnichannel, but more change is needed. Consumers want personalized experiences when they shop, whether it is online or in-store.
Karen Katz, former President and CEO of Neiman Marcus Group feels that the key to creating this personalized experience is by collecting, analyzing and utilizing data. To do this effectively, retailers need to hire experts. “There are so many people we need with STEM educations, data analytics, and those people don’t think about retail as their first choice. As retailers and leaders of retail companies, we have to focus on attracting that talent to the industry.”
Matt Rubel, Retail Investor, Advisor and Board Member who has led several successful global brands and businesses, agreed that hiring experts that will leverage technology to effect change is critical. He said “Expectations of customers are changing. Our job is to understand the cycle of change and build cultures that will foster that.”
Matthew Rubel, Retail Investor, Advisor & Board Member; Steve Sadove, Principal, Stephen Sadove and Associates
2. Partners and collaborators need to be authentic.
Influencers and partners have been instrumental in building brands and increasing sales quickly, such as Kylie Jenner selling lipstick or Gigi Hadid’s partnership with Tommy Hilfiger. But consumers, particularly Millennials and Gen Z, are becoming more discerning in terms of the authenticity of a brand’s influencers and partners.
Influencers at our event agreed that partnerships that create an emotional connection or influencers who are perceived to be experts in their industry are the most effective. Stacey Widlitz, founder of SW retail advisors and CNBC TV retail analyst said, “It should be someone who represents the brand, or a customer they have been struggling to get to. And someone who has an emotional connection. Serena is authentic for Nike.”
3. Store formats and experiences need to be re-imagined.
Today’s consumers want stores to behave like Netflix, offering a highly personalized experience that offers convenience, value, and ease. AI and predictive analytics can help retailers understand who their customer is, and what their needs are.
Using technology to figure out exactly which of their customers’ needs to address is critically important. Steve Dennis, president and founder of Sagebery Consulting said, “Retailers have to pick a lane. Either go toward efficiency and eliminating friction or to the experimental side. This should be based on their customer and what will make their journey most memorable.”
Nicole Reyhle, spokesperson for American Express Small Business Saturday and author believes that stores need to combine data and technology, but not change completely. “Stores need to incorporate digital, but combine the good old-fashioned ways and modern ways.”
Our influencers noted how Sears is reshaping its floorspace to create more of an experience for its customers. The retailer is trying to build a sense of community by adding “apartments” and devoting an entire wing to digital natives. Macy’s and Bloomingdale’shave carved out “pop up shop” space featuring innovative new products in-store as well.
Kevin Desai, a Partner with Interwest Partners and a venture capitalist investing in early stage technology companies, noted that The RealReal was not only able to find white space in the industry with luxury consignment, but is using the stores differently to simplify drop-offs of goods. Machine learning technology catalogs items, writes descriptions and offers a price in line with customer appetite.
4. Store technology needs to incorporate data and predictive analytics like Amazon does.
Consumers more and more are wanting to be “known” and are expecting to be served in the way they want – and will spend more if it’s done right. Data can connect the dots and merge information to enhance the full customer journey. When coupled with technology like facial recognition, retailers can ensure the customer is known immediately upon entering the store, and associates can tailor the experience and products to suit them personally.
Deborah Weinswig underscored the importance of using data to more effectively market to the customer. “Data that helps you understand what your customer is doing at all times so you can know them in a different way is helpful. And customers are getting more comfortable with this…But AI is a lot of it. You need to know what they’re doing when you’re not watching.”
Source: Karen Katz, former President and CEO, Neiman Marcus; Deborah Weinswig, Founder and CEO; Coresight Research Bringing experts together from various parts of our industry proved to be a powerful step in changing the narrative of the retail industry. Unlike the sensational headlines we see daily, retail is not dead. In fact, it is alive and well. Retailers and brands must simply be willing to adapt to change and embrace the powerful technologies coming out of Silicon Valley. Silicon Valley and retail may not be likely bedfellows, but they are one heck of a power couple.
