The Amazon online model continues to apply pressure to the traditional bricks and mortar retail stores. Now with the addition of an app that allows shoppers to check prices on the amazon site while in Best Buy or similar technology retailers they continue to squeeze retailer margins. At the other end is Apple that has invested heavily in expanding its retail presence. Add to this a the multitude of small online technology retailers and the rate of change in technology retailing is going through the roof. So what should the traditional technology retailers do?
Their strength is the in store retail experience, many products consumers still prefer to see in person. Best Buy does a great job of merchandising and displaying the latest in technology. The key is how do they close business in store? Creating a customer focused culture that recognizes the options available to consumers and works to innovate on ways to still win by providing the right value at the right time is a key part of the answer.
For example many consumers still prefer to purchase in store but perceive they might pay too much. Other consumers are price shoppers they are just looking and plan to buy online. It is these two groups of customers where there are opportunities to provide different value. For the first group providing expert advise and education during the sales process is valuable even to those will high levels of technology knowledge. Some customers are prepared to pay a small premium for this type of value added interaction.
For the second group of price shoppers, the task is more challenging and many of these customers will want to purchase online. Why not try differential pricing, here is your price in-store (with the margin necessary to sustain the costs of running the store), versus your online store price (lower factoring in the lower cost model). This recognizes that providing an in store retail experience is expensive and only those consumers that really value this should get that experience. Online shoppers would get pricing that is better than Amazon’s in recognition that the customer made the effort to come into the retailer’s store.
Is anyone doing this? Could this work? I don’t know but it would be an interesting idea to test.
I am not saying this is easy, it’s not easy, but the retailers must change and adapt to the new realities and develop alternative value propositions if they are to be as relevant in the future. They must leverage the knowledge and experience of all of their employees to solve these competitive challenges.
“A market culture is what great companies develop to deal with exactly these types of business challenges”
What innovative new techniques have you seen from the traditional retailers? What else can they be doing to compete?