Brick and Mortar Retail: A Risky Move for Google and Amazon?

I recently came across an interesting article in Financial Times on Amazon, Google and Microsoft attempting to move into the brick and mortar retail space. In my opinion, this is a very risky move and an endeavor that should not be taken lightly. If not managed properly, it will result in a “me too” agenda leading to consumer dissension. Success, of course, will depend on the overall shopping experience and the unique offer to the customer.

Many retailers are embracing the fact that the new world order in retail is driven by the empowered consumer. The consumer with transparent access to merchandise, price, promotions and sentiment is fundamentally changing the entire shopping journey, whereby the store is often the last place a customer may shop.

Today, many retailers have processes and technology focused on a “product-centric” foundation, which is predicated on the ideas of sourcing, moving and selling merchandise through segregated channels coupled with internal and external supply chain constraints. This paradigm needs to evolve into a more “consumer-centric” focus, whereby, retailers utilize solutions to effectively analyze historical behavior, sense, react and shape demand forecasts that are tied to multi-channel assortments. As has always been the case, getting the merchandise in the best possible place for it to sell is the first step in offering a consumer-centric experience. However, the dynamics of the cross channel shopping path is leading to even higher degrees of inaccuracy and unpredictability in performance of merchandise across all channels. Today, retailers need to have sophisticated systems that offer holistic and seamless cross channel visibility of inventory as well as recommending the most optimal sourcing and fulfillment strategy that is directly tied to the consumer relationship and value to the retailer while considering the most profitable option to manage the orders in real time.

There is no doubt that retailers understand that they must be more effective at satisfying consumers’ needs across all channels. However, the inability to make the most profitable consumer-centric cross channel decision will be extremely detrimental to the long-term success of the retailer. This is something that Amazon, Microsoft and Google must consider and evaluate before moving forward into brick and mortar.

In fact, these traditional online companies need to have an extremely competitive value proposition to entice a customer to make that faithful trek to the store. One of the major drivers for any customer to step foot into a store beyond the shopping experience is that instant gratification of going home with the desired item. The brick and mortar retailer essentially has but one chance to get it right. Optimization of the supply chain becomes your strategic weapon when your endpoint (the store) has far more physical inventory constraints typically not dealt with by an online retailer.

My Personal Brick and Mortar Experience Gone Wrong

While shopping with my family just this past weekend I had an unfortunate shopping experience that truly validates just how important proper brick and mortar execution is in retail. It’s February in the Midwest, so it’s a great time to go looking for spring apparel in anticipation of those warmer sun filled days that lie ahead. My family and I had been to many stores and at two in particular I was compelled to buy several items. The selection was deep, the price was spot on and both the stores actually had the items in stock and in the proper sizes. These were technically impulse buys, but nevertheless I was compelled to make the purchase – motivated by the fantastic window and fixture displays. At each store I actually had the items in hand and was committed to make the purchase. As I walked toward the checkout the entire shopping experience stopped dead in its tracks.

You see, the situation that caused me to retract from my purchase decision was time; I was going to be made to wait in a line to make my purchases. I really do hate to wait, but lets be honest, don’t we all? In this world of instant gratification, many people like myself, just don’t want to wait for anything anymore. In this case, both retailers did not have adequate staff or proper point of sale (POS) stations in place to complete the purchase.

It has been said that making the sale has evolved into saving the sale and in my very recent experience the sale was not made or saved…twice! It’s interesting to see how so many retailers are placing a premier focus on supply chain optimization, localization of assortments, price and promotional strategies, but seem to be taking their eye off the ball in good old fashioned brick and mortar execution. In a time when retail locations are under such scrutiny by omni-channel commerce, it is imperative that retailers execute effectively on all fronts especially in the brick and mortar locations or else they will be left in the dust. At the end of the day, the store is still the best way to build that personal face-to-face relationship with your customer. Those who excel in all channels will separate the winners from the losers.

I am interested in your thoughts, what else do retailers need to consider before moving beyond online stores to jumping into brick and mortar retail spaces?

  1 Comment   Comment

Leave a Comment