Executive Briefings

Survival Strategies for Brands and Traditional Retailers

This just in: People are still shopping in physical stores.

Survival Strategies for Brands and Traditional Retailers

Anyone focused on the endless stream of innovations by Amazon might be surprised to learn that the e-commerce behemoth hasn’t killed off the brick-and-mortar store — nor is it likely to anytime soon. On the contrary, Amazon itself has been deepening its involvement in physical store management, beginning with the opening of a smattering of bookstores and proceeding to the acquisition of the Whole Foods gourmet grocery chain. And the new Amazon Go “store of the future,” with no cashiers or checkout lines, is debuting in Seattle.

Well over half of Black Friday shoppers visited brick-and-mortar stores in 2017, according to Deb Gabor, chief executive officer of Sol Marketing, a brand strategy consultancy. “There are experiences you can get in a physical store that you can’t get online,” she says. “You can feel, see, touch, hold and experience a brand in 360 degrees.” (And, of course, you can sit on Santa’s knee, which for most children is distinctly preferable to FaceTiming with the North Pole.)

That’s a natural advantage, to be sure, but traditional retailers shouldn’t assume for a moment that it’s enough to keep them from being shoved aside by e-tailers. According to Gabor, they need to create “an emotionally bonding experience.”

They also need to get out of their comfort zones. Best Buy added toys and games to its selection over the holidays, taking advantage of the fact that motivated shoppers were already in the store. Other retailers introduced mobile payment systems, dispatching sales staff to roam the aisles with touchscreens instead of requiring shoppers to line up at the cash register. (Such a setup has long been in use at Apple Stores.) The idea, says Gabor, was to make the whole shopping experience more seamless and convenient, at a time when holiday crowds can serve as a strong disincentive to patronizing physical stores.

As Amazon has shown, e-tailers can play the brick-and-mortar game, too, while combining that strategy with their mastery of online merchandising. Traditional retail brands need to respond with their own presence on the web, and find a way to merge the two worlds seamlessly. Wal-Mart and Nordstrom are among those retailing veterans who are offering the “click-and-collect” option, whereby shoppers can buy online and pick up at the store. But that practice has yet to spread throughout the retailing world.

What retailers shouldn’t be doing is competing exclusively on the basis of price. “The scariest trend that I observed [last year],” says Gabor, “was early discounting starting at the beginning of November.” The goal was to drive shoppers into the stores, but the reduced margins threaten to cancel out the profits from increased foot traffic.

Many retailers during the 2017 holiday shopping season lacked the experience and knowledge to compete with Amazon on its own turf, Gabor says, so they opted for price-cutting instead. By next year, she hopes, they’ll be in a better position to adopt an omnichannel strategy that combines online savvy with the advantages of having physical product on display.

Retailers have traditionally earned most of their profits for the year from the weeks between Halloween and New Year’s Day. And the importance of specific sale days, such as Black Friday and Cyber Monday, has increased sharply in recent years. But Gabor sees the battle in future as expanding beyond this limited span of time. The goal becomes to create an emotional bond that gives shoppers a reason to keep coming back the rest of the year.

“How you use the season,” she says, “is not only about how you get in the black, but how you bond with customers over the long term.”

Creating a “bonding experience” isn’t cheap. Often it involves having knowledgeable and well-trained staff on the sales floor to help shoppers make informed decisions about what to buy. Target is among the merchandisers that deployed experts over the holiday season in key categories such as jewelry, home décor and furniture. But the strategy comes at a high cost, and it raises the question of whether retailers can afford to employ such individuals year-round.

Retail jobs are notoriously low-paying, especially for seasonal employees — a fact that makes it even tougher to acquire the experienced staff necessary to enhance the shopping experience.

“Personnel is always a huge challenge for retailers,” says Gabor. Nevertheless, she believes that organizations that invest significantly in recruiting, educating and retaining top talent at all levels will prevail in the cutthroat world of retailing.

Meanwhile, on the battleground that is cyberspace, traditional retail and product brands must be able to go head-to-head with Amazon. Most importantly, their websites should provide access to authentic product ratings and reviews — “a table stakes item,” according to Gabor. That’s the first place that shoppers go as they search for products online.

Moreover, brands need to respond directly to consumer reviews, especially negative ones. A sincere reply to a dissatisfied buyer can go a long way toward softening the blow, while burnishing the image of the brand as caring and responsive to the needs of consumers.

“If the retailer responds in an appropriate and grateful way, makes some move toward thanking you for your feedback, and says here’s what we’re planning to do with this information, it enhances positive brand sentiment,” says Gabor. And in the age of Amazon, every step that a brand can take to distinguish itself in a positive manner is crucial.

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Anyone focused on the endless stream of innovations by Amazon might be surprised to learn that the e-commerce behemoth hasn’t killed off the brick-and-mortar store — nor is it likely to anytime soon. On the contrary, Amazon itself has been deepening its involvement in physical store management, beginning with the opening of a smattering of bookstores and proceeding to the acquisition of the Whole Foods gourmet grocery chain. And the new Amazon Go “store of the future,” with no cashiers or checkout lines, is debuting in Seattle.

Well over half of Black Friday shoppers visited brick-and-mortar stores in 2017, according to Deb Gabor, chief executive officer of Sol Marketing, a brand strategy consultancy. “There are experiences you can get in a physical store that you can’t get online,” she says. “You can feel, see, touch, hold and experience a brand in 360 degrees.” (And, of course, you can sit on Santa’s knee, which for most children is distinctly preferable to FaceTiming with the North Pole.)

That’s a natural advantage, to be sure, but traditional retailers shouldn’t assume for a moment that it’s enough to keep them from being shoved aside by e-tailers. According to Gabor, they need to create “an emotionally bonding experience.”

They also need to get out of their comfort zones. Best Buy added toys and games to its selection over the holidays, taking advantage of the fact that motivated shoppers were already in the store. Other retailers introduced mobile payment systems, dispatching sales staff to roam the aisles with touchscreens instead of requiring shoppers to line up at the cash register. (Such a setup has long been in use at Apple Stores.) The idea, says Gabor, was to make the whole shopping experience more seamless and convenient, at a time when holiday crowds can serve as a strong disincentive to patronizing physical stores.

As Amazon has shown, e-tailers can play the brick-and-mortar game, too, while combining that strategy with their mastery of online merchandising. Traditional retail brands need to respond with their own presence on the web, and find a way to merge the two worlds seamlessly. Wal-Mart and Nordstrom are among those retailing veterans who are offering the “click-and-collect” option, whereby shoppers can buy online and pick up at the store. But that practice has yet to spread throughout the retailing world.

What retailers shouldn’t be doing is competing exclusively on the basis of price. “The scariest trend that I observed [last year],” says Gabor, “was early discounting starting at the beginning of November.” The goal was to drive shoppers into the stores, but the reduced margins threaten to cancel out the profits from increased foot traffic.

Many retailers during the 2017 holiday shopping season lacked the experience and knowledge to compete with Amazon on its own turf, Gabor says, so they opted for price-cutting instead. By next year, she hopes, they’ll be in a better position to adopt an omnichannel strategy that combines online savvy with the advantages of having physical product on display.

Retailers have traditionally earned most of their profits for the year from the weeks between Halloween and New Year’s Day. And the importance of specific sale days, such as Black Friday and Cyber Monday, has increased sharply in recent years. But Gabor sees the battle in future as expanding beyond this limited span of time. The goal becomes to create an emotional bond that gives shoppers a reason to keep coming back the rest of the year.

“How you use the season,” she says, “is not only about how you get in the black, but how you bond with customers over the long term.”

Creating a “bonding experience” isn’t cheap. Often it involves having knowledgeable and well-trained staff on the sales floor to help shoppers make informed decisions about what to buy. Target is among the merchandisers that deployed experts over the holiday season in key categories such as jewelry, home décor and furniture. But the strategy comes at a high cost, and it raises the question of whether retailers can afford to employ such individuals year-round.

Retail jobs are notoriously low-paying, especially for seasonal employees — a fact that makes it even tougher to acquire the experienced staff necessary to enhance the shopping experience.

“Personnel is always a huge challenge for retailers,” says Gabor. Nevertheless, she believes that organizations that invest significantly in recruiting, educating and retaining top talent at all levels will prevail in the cutthroat world of retailing.

Meanwhile, on the battleground that is cyberspace, traditional retail and product brands must be able to go head-to-head with Amazon. Most importantly, their websites should provide access to authentic product ratings and reviews — “a table stakes item,” according to Gabor. That’s the first place that shoppers go as they search for products online.

Moreover, brands need to respond directly to consumer reviews, especially negative ones. A sincere reply to a dissatisfied buyer can go a long way toward softening the blow, while burnishing the image of the brand as caring and responsive to the needs of consumers.

“If the retailer responds in an appropriate and grateful way, makes some move toward thanking you for your feedback, and says here’s what we’re planning to do with this information, it enhances positive brand sentiment,” says Gabor. And in the age of Amazon, every step that a brand can take to distinguish itself in a positive manner is crucial.

Comment on this article

Survival Strategies for Brands and Traditional Retailers