The above title is from one of my talks that I am presenting around the world at present. My main objective is to explain to retailers that they will see more change in the next five years than they have probably seen in their whole retail life and more importantly what they need to do about it.
The challenge is keeping up with the dramatic changes that are taking place and the speed at which they are taking place. If before August 2013 I would have said to you that a leading online business is going to buy a newspaper as part of its portfolio you would have probably laughed at me. But, now we see Amazon, the world’s biggest retailer buying the Washington Post, one of the most respected newspapers in the USA.
We live in a period when the unexpected can become the norm.
Many retailers are concerned about how they are going to cope with online retailing. The concern is twofold, how will they compete with new competition and how can they develop their own online strategy to stay in business in the future.
The Last Mile
Retailing has changed completely in the last few years. It used to be defined as an operation that happened in a shop. We encouraged customers to walk into the store , we displayed products attractively and customers, we hope, were tempted to buy. I realise this is a simple definition of retailing, but basically that was what most retailers did and looked on as the task of retailing.
Then over the last few years we have seen two dramatic shifts take place. One was a consumer who became a “weekend experience” and “weekday convenience” consumer and requested we present our offer in a different way and then second was the development of online shopping technology that allowed them to enhance their “weekday convenience” strategy.
This means that retailing today starts in the consumers home and finishes in the consumers home. You may be a retailer with a loyal customer and some of them may never walk in your store.
Online shopping in my view is a straight forward procedure, many retailers have developed it before in a format that was called “Mail Order” in decades. It is not the system that is the challenge, it is the distribution. The hardest part of retailing today is the “Last Mile” Getting a product from your store to the consumers front door in an efficient and profitable manner that maintains the quality of the product.
I still hear perishable retailers who tell me that they are not concerned with online shopping as it will not be possible to get perishable products to a consumer via a “weekday convenience” strategy.
It is the biggest challenge, but the one retailers have to overcome.
Deliver it Now
Consumers now want instant delivery and August 2013 could go down as one of the months that saw the biggest change to retailing in this five year period.
Amazon, as I mentioned ,the world’s biggest retailer, are based in Seattle, and have been working on Amazon Fresh . You order the product and they will deliver for free with a second day delivery service. The launch was so successful they have now quickly developed the same system in Los Angeles and one can imagine the long term strategy.
Consumers pay a delivery fee for the first three months and can then, if approved, opt to be “Prime” members and pay a yearly fee which includes delivery as part of the membership package.
Consumers can opt for a “Doorstep Delivery” service where the products is drooped at the front door or for a “Attended Delivery” where someone is available to collect the product from the delivery driver
When this is accompanied by recipes and other Amazon products this is strong package for the consumer.
The challenge for small to medium size retailers is self evident, but every retailer has the following challenge they have to overcome in the new retail game:
- All products can be delivered via a home delivery service. Food and plants are perishable, but the consumer now expects a home delivery option.
- The consumer will not pay for delivery within set monetary values of product purchased and distance from your business. That cost has to be absorbed in the selling price.
- This is your brand and your retail model. You need control over the delivery package. Do not delegate this to a third party where you have no control.
- You need to add value to the offer, this could include “How to Video clips”, added product or added value.
- Explain the advantages of the consumer coming into the store for the experience. You must provide a unique experience otherwise why would they come to your store.
- Network with other local retailers whom you trust and see if you can add value to the consumer with a fuller delivery offer.
Remember the competition for your marketplace can come from unexpected places and you need to be ready