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Winning the retail war: How to compete with retail e-commerce players

Multichannel retail offerings through physical and virtual stores can help traditional retailers deliver a consistent retail customer experience.

Overview

Accenture suggests 10 ways a multichannel retail approach can help in competing with retail e-commerce players.

Today online retailers are the preferred choice for customers worldwide. Does this mean traditional retailing is over? No. Traditional retailers can too march ahead by offering a multichannel retail experience to customers.

Online pure plays have changed the retail game with their new approach to technology, innovation and execution. To compete successfully with retail e-commerce players, Accenture recommends traditional retailers adopt a strategic thinking by applying key principles from Sun Tzu’s The Art of War.

Please scroll below to watch the video or select any of the icons to learn more about each of the 10 ways that help deliver a consistent retail customer experience across all channels.

 

Download PDFYou may download the brochure here.

Background

In today’s price-transparent marketplace, retail e-commerce is preferred because it offers an easier access to a wide range of products at affordable prices. And, the global footprint of the online players continues to increase. Amazon, for example, is not only the world’s leading online retailer, but also has captured a 10 percent share of the North American media market.

So should traditional retailers become online pure plays too? The catch is that a purely online business model has some significant weaknesses. Traditional retailers should capitalize on their own strengths—a great portfolio of the brands that shoppers want, and work toward offering customized multichannel retail experience to the customers.

Learning from The Art of War
Accenture draws inspiration from a set of core concepts and principles developed by Chinese military strategist Sun Tzu.

These are highly relevant for traditional retailers struggling to compete against the retail e-commerce players.

  • First in the field has an advantage: Innovate and differentiate yourself in the ever-changing marketplace that will keep you ahead of your competitors

  • Preparation: Consider and quantify the unknown

  • Disciplined organization: Adopt an organization structure that best utilizes all your resources and capital to focus on the customer experience

  • Understand your relative strengths and weaknesses: Assess the opportunities and threats that are specific to your company, sector and customers, and adapt to the changing market needs

  • Agility: React to opportunities at speed

Recommendations

Accenture shares 10 “must do” steps traditional retailers can take to beat the online players. For starters: get geeky with, innovate faster and deliver personalization for retail customers. Watch the video to learn more.

Innovate faster

Retail innovation in today’s competitive business landscape can help drive profitable growth and compete with retail e-commerce players. Amid the rapid technological and cultural changes, traditional retailers must experiment their way to success by innovating, testing, discarding the failures, building on the successes and implementing new strategies at speed.

For example, Amazon, Apple, Facebook and Google are among the most innovative companies worldwide and are playing in the retail space. Amazon, in particular, focuses its innovation initiatives on meeting customer needs and drives innovation in its work culture, products and services, as well as the operating model and revenue generation. Amazon’s Kindle e-reader or two-pizza team rule are great examples of innovation.

To deliver a consistent retail customer experience across all channels, traditional retailers need to adapt to the changing market needs and pick the right innovations—bringing them to market with the right speed, accuracy and efficiency.

Get geeky

To match this technological innovation, traditional retailers should ensure that their technical talent is at the core of day-to-day operations.

They should be able to spot and leverage emerging trends in retail technology that can help build a stronger customer connect.

Best Buy, for instance, recently appointed Stephen Gillett, a renowned technologist and gamer, as the president of global and marketing strategy. And Walmart, for example, acquired Kosmix, a California-based start-up best known for building a Twitter filtering tool called TweetBeat.

Retailers need to start changing the way they hire, develop and promote technical talent to deliver a seamless retail customer experience.

Personalize content

As customers increasingly demand personalization, traditional retailers should develop targeted offerings to deliver a remarkable retail customer experience.

In today’s online era, a huge potential lies for all consumer-facing industries to fuel a new phase of growth. Personalization for retail customers can give them more control over what they see, when and how.

From the moment a prospective customer creates an Amazon account, the company collects data that allows it to personalize offerings based on preferences, recommendations and habits. Thus, it enjoys an outstanding track record in converting one-off shoppers into loyal customers.

Additionally, Amazon leverages the customer insights to link social media to its sales strategy (social commerce). Its AmazonLocal shoppers can save up to 75 percent on restaurants, spas, entertainment and more.

By leveraging the untapped hinterland of their own customers, traditional retailers can customize their social media offerings and compete with retail e-commerce players.

Do Not Copy

To forge ahead and shape the retail revolution of the future, traditional retailers must recognize and capitalize on their own unique strengths to build effective value propositions and not copy successful online retailers.

Trying to be another online pure play is tempting—but far from advisable. Retail e-commerce players may have unmatched range, prices and loyalty programs, but that is true in some categories and not all.

Thus, not every retailer is threatened. Brand is still a key driver of customer loyalty, and even online shoppers choose to buy from a familiar and trusted name.

For example, Zara and Ikea enjoy their brand heritage and loyalty in continental Europe. In the United Kingdom, the fashion retailer Oasis and the general merchandiser Argos use Shutl, a Web service that connects retailers with local, same-day delivery companies that deliver goods to customers within 90 minutes of purchase.

Traditional retailers should build faster, cost-efficient fulfillment capabilities, coupled with an outstanding service and effective loyalty programs that work seamlessly across channels, to deliver a multichannel retail customer experience.

Sell What They Can't Sell

Traditional retailers can compete with retail e-commerce players on both product range and price by offering private label and branded products with unique features.

Retail private label products should be as good as the leading brand, yet priced lower; or retailers could offer better quality, style or design and price the products higher. This would require retailers to invest in design and testing capabilities, and increase the rate of new product launches.

However, there lies a catch—overall sales could suffer if customers browse only the “what’s new” range. Thus, for many categories, retailers would need to stock more units. Additionally, the traditional retailers must:

  • Shorten the product development cycle time (by as much as 90 percent) to beat online retail players in speed and execution.

  • Stock the branded products that online retailers have to maintain a vast product range. This will also help enhance relationships with key branded suppliers.

  • Create bundled product and services packages that offer the consumer a better overall deal.

  • This customization could help traditional retailers deliver a unique retail customer experience.

Up Close And Personal

To drive customer loyalty and profitable growth, traditional retailers must differentiate service by applying a personal touch at every stage of the purchase journey.

Providing a unique in-store customer experience will be a critical weapon in competing with retail e-commerce players. Delivering a unique multichannel retail customer experience requires a coordinated approach to managing store staff—from recruitment, training and deployment to performance measurement, appraisals and compensation.

Take the example of Burberry’s stores in China, where sales assistants are equipped with iPads to help consumers place orders if certain items are not available in the store. It also has more than 11 million Facebook fans who enjoy special perks.

Apple, for instance, puts customer service at the heart of its retail outlets. Or take the case of Best Buy’s Geek Squad that provides 24x7 technology assistance to its customers.

These examples illustrate how traditional retailers can also create a unique in-store customer experience and stay ahead of the online retailers.

Open Flagship And Convenience Stores

Traditional retailers should provide customers the best experience that the brand can offer—a strong range, great customer service, add-on services, entertainment and multichannel retail integration.

In many countries, stores still account for the bulk of retail sales—more than 85 percent in the United Kingdom, 91 percent in Germany, 98 percent in Italy and 95 percent in the United States. Stores clearly differentiate traditional retailers from the retail e-commerce players.

Opening flagship retail stores can act as a vehicle to provide a remarkable customer experience. Kiddicare (the baby products website from Morrison’s, a UK retailer), for example, took over 10 of the former Best Buy Europe big box stores.

In addition to flagship, convenience stores that are located close to customers and stock high-volume items can address the needs of the time-starved consumers. In the United Kingdom, for example, the fashion retailer House of Fraser has opened two Internet-only stores of around 1,500 square feet in locations where the company does not have a full 90,000 square feet store.

Thus, opening convenience and flagship stores can help create a unique retail customer experience.

Proposition or Die

To stay ahead of e-commerce players, traditional retailers must provide the greatest value proposition to retail customers.

Today, customers expect a seamless shopping experience across all channels. For retailers, becoming an online-only business is not the alternative.

With many stores, whether flagship or convenience, these assets could be the strength and core component of the competition strategy by providing the best value proposition.

For example, ASOS has partnered with collect+ to allow customers to select the nearest and most convenient delivery or return point for their products from a network of 4,500 locations across the United Kingdom (UK). Click & Collect already accounts for 10 percent of all online retail sales in the UK, and for some retailers, it is almost 90 percent.

As long as store staff can ensure that customers receive immediate gratification, each store can contribute in delivering a multichannel retail experience.

Marketplace Rules

In this challenging business landscape, traditional retailers must replicate the retail e-commerce players such as Amazon by letting third parties hold stock for niche items and charge them a commission on sales.

Amazon Marketplace is a proven example of success, where consumers get an easy access to items for which there is limited demand, and it charges the sellers for using its fulfillment system.

Traditional general merchandisers need to replicate this concept and differentiate themselves by finding third-party sellers or integrating fulfillment with their Click & Collect operations. This will be challenging—especially if they have to deliver a truckload of marketplace Click & Collect sales to each store and also match Amazon’s strategy of watching what sells on its marketplace. The benefits of rising to the challenge, however, promise to be huge.

This will help traditional retailers deliver a satisfying and consistent retail customer experience that is backed by consistent product assortment and service excellence.

Same game, different rules

To stay ahead of retail e-commerce players, traditional retailers must consider new strategies for retail growth, such as building additional revenue streams.

For instance, Amazon earns additional revenues from digital content subscriptions and non-retail activities, such as platform services, application hosting and advertising. It recently invested US$750 million in a warehouse systems provider, more than its earnings from continuing operations in fiscal 2011.

According to the cloud consulting company DeepField Networks, one in three Internet users now accesses the Amazon Cloud daily.

In addition, 1 percent of the total Internet consumer traffic passes through Amazon-managed infrastructure.

Private companies can take a similar stance too. For example, the hard discount supermarket chain Aldi invests a whole year’s profits in lowering prices (though it is important to note that investors do not support these decisions for public companies).

Few traditional, publicly quoted retailers will be in a position to build additional revenue streams. For example, Tesco has stretched beyond retail by venturing into banking and mobile telephony.

Adopting strategies like these can help traditional retailers differentiate themselves in the market.

Industry & topics highlighted

Retail