Will you be a David, or join the Goliath?
This is the question many small to medium Australian retailers face, following Amazon's expansion into the Australian market. With huge funding, a large-scale warehousing presence and a focus on the convenience of online shopping, Amazon has caused concern for a huge number of businesses that don't want to join up with the giant.
However, it's not the end. Focus on your strengths, and you may find that Amazon hardly changes a thing for your retail organisation.
1) Build the in-store experience
Physical stores remain the most popular way of doing business, but evolving the in-store experience will be critical as Amazon's influence grows. Research from PricewaterhouseCoopers (PwC) in Q4 last year showed that physical stores were the most popular site for Christmas shopping, but an increasing number of people (especially millennials) are shopping online or via mobile.
Create unique in-store experiences and cultivate an engaging atmosphere that promotes autonomy and, above all, fun. Enjoyment of the physical store is a key component that PwC identifies for consumer satisfaction, with Urban Outfitters and Cotton On Kids cited as businesses that do it well.
2) Use your data to enhance customer reach
No customer transaction happens in isolation. KPMG research shows that 72 per cent of Australian and New Zealand retail customers look for online reviews or details before coming in-store, and that they spend an average of 1.2 hours looking up items online before committing.
However, last year's PwC Total Retail report shows that businesses are failing to capture information about this audience. By setting up accurate and trustworthy site analytics, you can learn a lot more about your potential customers and tailor product offerings or even store layout to suit. Integrate your digital and physical channels, and you get the clear picture on your audience.
3) Focus on audience preferences
The introduction of Amazon doesn't mean every single business has to hit the panic button. IBISWorld Senior Industry Analyst Kim Do believes that most consumers using Amazon will focus on electronics and technology to begin with, and that larger department stores will be hardest-hit early on. Meanwhile, millennials' propensity for spending more online means retailers for whom this is a core audience will also have to change.
When Amazon does compete with your business on these levels, it is critical to focus on its supposed core strengths – speed and accuracy. Strong product sites and top-quality customer service can help you remain competitive.
Amazon's entry is not the end of retail, but it does necessitate significant change. Understand where the US giant is going to impinge on your audience share, and develop a strong user experience in-store coupled with analytics and customer service to come out the other side unscathed.
If you need assistance creating a retail space that can help you stay competitive, speak to the experts – get in touch with Innova today.