Somewhere to Think About
Battling Back – Can brick and mortar retailers compete with on-line retailers?
The Internet and on-line retailers have significantly changed the way brick and mortar retailers operate. However, brick and mortar retailers have an inherent advantage in their location. They survive by getting products—things—near to their customers giving those customers the option of getting something immediately. All the customer has to do is get to the store. Ironically, on-line retailers—Amazon in particular—are attempting to mirror brick and mortar retailers by getting geographically closer to their customers. Amazon builds more fulfillment and sorting centers, and there are reports Amazon is eyeing bankrupt RadioShack’s excess storefronts. To turn the tide of on-line retailer infringement on brick and mortar, brick and mortar retailers must “geo-channel” by leveraging the geographic locations of their stores and being better at telling customers what is in their stores. In simpler times retailers used geographic analysis to determine the best location for a new store. Now, they need to use geographic analysis to determine the best locations for the items they sell.
Brick and mortar retailers and Amazon have one thing in common, they want to be near to where you are.
Brick and mortar retailers have an inherent advantage in their location. They survive and even thrive by getting products—things—near to customers—usually by building and stocking stores. Amazon realizes it must confront this important strength of brick and mortar to increase market share. On-line retailers, Amazon in particular, want to provide immediacy. They want to get close enough geographically to their customers to get products quickly to those customers. Amazon wants to discourage those customers from taking a trip to a store where they could get that product immediately. Proximity is tied to immediacy, and Amazon wants to be like the nearby brick and mortar store and offer you items as immediately as they can. Two-day shipping via Amazon Prime may be good, but it sometimes is not good enough.
A big strength of on-line retailers is certainty of selection. With their inventory management systems, they know what they have on hand and can assure the customer—with a high degree of certainty—when something will arrive on their doorstep. Most retailers of any size maintain inventory management systems. Although there are exceptions, most brick and mortar retailers don’t go the extra step of sharing on the Internet what items are on the shelf at a specific store. A retailer that knows where it’s products are can give consumers the ability to make an informed choice between waiting for an item to arrive at their doorstep in a couple of days or getting it today at a nearby store knowing that the store has it on the shelf.
A brick and mortar retailer with a number of store locations has the ability to turn each store into a fulfillment center. Unfortunately, for many retailers this simply means holding merchandise in a back warehouse to be offered up to a customer once they show up to claim the item they ordered on-line. Brick and mortar retailers need to think of their entire store as a fulfillment center. They can do this by letting the customer who starts their shopping on-line know—with a high degree of certainty—what the store has in stock and where to find it in the store. This gets the customer into the store knowing they can get what they want, and in doing so they will be more likely to make those secondary purchases that brick and mortar retailers thrive on.
Brick and mortar retailers like to use the term “omnichannel” meaning that every retailer’s channel—on-line and brick and mortar—must work together to provide a unified customer experience. A better term might be “geo-channel” in which the retailer has a consistent strategy for letting the consumer know where the retailer’s products are located so that the customer can get them in the way that best suits the customer. This might be home delivery, ship to store, or driving to the store to pick it up off the shelf. Gary Lee of the retail marketing firm, InReality coined the term “everywhere commerce” to describe this.
As retailers gain more experience with geo-channel, retailers can determine where it is best to place products geographically with a bit more sophistication than swimsuits in Florida and snowsuits in Minnesota. Data analysis with location in mind can show which products sell best on-line and which ones do best in specific brick and mortar stores. In simpler times retailers used geographic analysis to determine the best location for a new store. Now, they need to use geographic analysis to determine the best locations for the items they sell. If Amazon wants to be close by like a brick and mortar retailer, a brick and mortar retailer can be more like Amazon by letting customers know exactly what they will find at their nearby store.
To get near to where you are, Amazon continues to proliferate fulfillment centers throughout the United States. In 1997, Amazon had two fulfillment centers, one in Seattle and one in Delaware. One company estimates Amazon now operates 68 distribution centers in the United States. (Admittedly, not all are full-fledged fulfillment centers, and this is well short of the approximately 4500 stores Walmart operates in the United States.) In February of this year, as Radio Shack went into Chapter 11 bankruptcy, there were reports that Amazon was prepared to gobble up excess Radio Shack store locations
It’s worth noting there are at least two things brick and mortar retail can do—at least for now—that on-line retailers cannot.
Brick and mortar stores offer tangibility. In other words, the shopper can use all of their senses to judge whether or not they want an item. They can try on the dress to see if it fits. They can feel the texture of the pillow cover. They can smell the perfume. They can judge if the flashlight really is small enough to merit carrying along on a backpacking trip. They can determine if a kettlebell is the right weight for their work-out routine. Until, we all have holographic computer generated displays in our house—which may eventually happen—we usually need to be in the same location as the thing we’re interested in to best determine if it is want we want.
Brick and mortar retailers can also provide a unique in-store experience. Not all stores have this as part of their strategy. They may emphasize selection and price—which are often the strengths of the large on-line sellers—and count on immediacy and tangibility to bring in the customers. However, some stores invest in a knowledgeable sales staff to provide a customer with the specialized experience that helps a customer decide which product is best for them. Some retailers go further by offering in-store classes, fashion shows or kid’s activities.
Of course, on-line retailers have their strengths.
Their greatest one is convenience. So long as you can wait a couple of days for your item to arrive on your doorstep; you don’t have to take the time to drive to the store, find a parking place, locate the item you want in the store, wait in line to pay for it, get back to your car and drive home. The process takes longer when you go to a store and find they do not have the item you want or don’t have it in the size or color or style you wanted. You’re then off to another store.
The Find, a company that was recently snatched up by Facebook, attempted to help brick and mortar shoppers locate which stores had the products of interest to the shopper. However, The Find—and search engine companies like it—are constrained by what is searchable on the web. If a retailer did not put inventory information on the web, The Find could not find it.
In an effort to link consumers to the things they want by getting the consumer and the wanted thing to the same location, on-line retailers and brick and mortar retailers will increasingly become similar. They’ll evolve to roughly the same spot having come from radically different origins. We’re already seeing Amazon getting its facilities closer and closer to customers. Brick and mortar retailers will find greater success as they enhance their on-line presence by being specific about the items that can be found on any given day at one of their stores.
Some will argue that the demise of brick and mortar retail is greatly exaggerated. That is likely true, but on-line retail has made significant in-roads into brick and mortar retail’s bottom line. The Internet and on-line retail have also significantly changed the way brick and mortar retailers operate. To turn the tide of on-line retailer infringement on brick and mortar, brick and mortar retailers must “geo-channel” by leveraging the geographic locations of their stores and being better at telling customers what is in those stores.
Brick and mortar retailers and Amazon have one thing in common, they want to be near to where you are.
Brick and mortar retailers have an inherent advantage in their location. They survive and even thrive by getting products—things—near to customers—usually by building and stocking stores. Amazon realizes it must confront this important strength of brick and mortar to increase market share. On-line retailers, Amazon in particular, want to provide immediacy. They want to get close enough geographically to their customers to get products quickly to those customers. Amazon wants to discourage those customers from taking a trip to a store where they could get that product immediately. Proximity is tied to immediacy, and Amazon wants to be like the nearby brick and mortar store and offer you items as immediately as they can. Two-day shipping via Amazon Prime may be good, but it sometimes is not good enough.
A big strength of on-line retailers is certainty of selection. With their inventory management systems, they know what they have on hand and can assure the customer—with a high degree of certainty—when something will arrive on their doorstep. Most retailers of any size maintain inventory management systems. Although there are exceptions, most brick and mortar retailers don’t go the extra step of sharing on the Internet what items are on the shelf at a specific store. A retailer that knows where it’s products are can give consumers the ability to make an informed choice between waiting for an item to arrive at their doorstep in a couple of days or getting it today at a nearby store knowing that the store has it on the shelf.
A brick and mortar retailer with a number of store locations has the ability to turn each store into a fulfillment center. Unfortunately, for many retailers this simply means holding merchandise in a back warehouse to be offered up to a customer once they show up to claim the item they ordered on-line. Brick and mortar retailers need to think of their entire store as a fulfillment center. They can do this by letting the customer who starts their shopping on-line know—with a high degree of certainty—what the store has in stock and where to find it in the store. This gets the customer into the store knowing they can get what they want, and in doing so they will be more likely to make those secondary purchases that brick and mortar retailers thrive on.
Brick and mortar retailers like to use the term “omnichannel” meaning that every retailer’s channel—on-line and brick and mortar—must work together to provide a unified customer experience. A better term might be “geo-channel” in which the retailer has a consistent strategy for letting the consumer know where the retailer’s products are located so that the customer can get them in the way that best suits the customer. This might be home delivery, ship to store, or driving to the store to pick it up off the shelf. Gary Lee of the retail marketing firm, InReality coined the term “everywhere commerce” to describe this.
As retailers gain more experience with geo-channel, retailers can determine where it is best to place products geographically with a bit more sophistication than swimsuits in Florida and snowsuits in Minnesota. Data analysis with location in mind can show which products sell best on-line and which ones do best in specific brick and mortar stores. In simpler times retailers used geographic analysis to determine the best location for a new store. Now, they need to use geographic analysis to determine the best locations for the items they sell. If Amazon wants to be close by like a brick and mortar retailer, a brick and mortar retailer can be more like Amazon by letting customers know exactly what they will find at their nearby store.
To get near to where you are, Amazon continues to proliferate fulfillment centers throughout the United States. In 1997, Amazon had two fulfillment centers, one in Seattle and one in Delaware. One company estimates Amazon now operates 68 distribution centers in the United States. (Admittedly, not all are full-fledged fulfillment centers, and this is well short of the approximately 4500 stores Walmart operates in the United States.) In February of this year, as Radio Shack went into Chapter 11 bankruptcy, there were reports that Amazon was prepared to gobble up excess Radio Shack store locations
It’s worth noting there are at least two things brick and mortar retail can do—at least for now—that on-line retailers cannot.
Brick and mortar stores offer tangibility. In other words, the shopper can use all of their senses to judge whether or not they want an item. They can try on the dress to see if it fits. They can feel the texture of the pillow cover. They can smell the perfume. They can judge if the flashlight really is small enough to merit carrying along on a backpacking trip. They can determine if a kettlebell is the right weight for their work-out routine. Until, we all have holographic computer generated displays in our house—which may eventually happen—we usually need to be in the same location as the thing we’re interested in to best determine if it is want we want.
Brick and mortar retailers can also provide a unique in-store experience. Not all stores have this as part of their strategy. They may emphasize selection and price—which are often the strengths of the large on-line sellers—and count on immediacy and tangibility to bring in the customers. However, some stores invest in a knowledgeable sales staff to provide a customer with the specialized experience that helps a customer decide which product is best for them. Some retailers go further by offering in-store classes, fashion shows or kid’s activities.
Of course, on-line retailers have their strengths.
Their greatest one is convenience. So long as you can wait a couple of days for your item to arrive on your doorstep; you don’t have to take the time to drive to the store, find a parking place, locate the item you want in the store, wait in line to pay for it, get back to your car and drive home. The process takes longer when you go to a store and find they do not have the item you want or don’t have it in the size or color or style you wanted. You’re then off to another store.
The Find, a company that was recently snatched up by Facebook, attempted to help brick and mortar shoppers locate which stores had the products of interest to the shopper. However, The Find—and search engine companies like it—are constrained by what is searchable on the web. If a retailer did not put inventory information on the web, The Find could not find it.
In an effort to link consumers to the things they want by getting the consumer and the wanted thing to the same location, on-line retailers and brick and mortar retailers will increasingly become similar. They’ll evolve to roughly the same spot having come from radically different origins. We’re already seeing Amazon getting its facilities closer and closer to customers. Brick and mortar retailers will find greater success as they enhance their on-line presence by being specific about the items that can be found on any given day at one of their stores.
Some will argue that the demise of brick and mortar retail is greatly exaggerated. That is likely true, but on-line retail has made significant in-roads into brick and mortar retail’s bottom line. The Internet and on-line retail have also significantly changed the way brick and mortar retailers operate. To turn the tide of on-line retailer infringement on brick and mortar, brick and mortar retailers must “geo-channel” by leveraging the geographic locations of their stores and being better at telling customers what is in those stores.