Kiwi and Australian Retailers Need to do Change to Beat Amazon

Yesterday I saw a story on CNN about Toys R Us filing for Chapter 11 Bankruptcy. It is big news for retailers and their CEO says they will survive by competing with Amazon and meeting customers needs with new store designs. I have no doubt it’s possible, but not if they fall straight back into their old ways. Their biggest problem now is whether manufacturers will even supply them with their best selling products. They can potentially sell more product, cheaper and at higher margins through Amazon.

What I thought was really interesting is that toymakers shares which took a nosedive are rallying again because they are going to shift their focus to the very businesses like Amazon who are decimating retailers who have held steadfast to their traditional way of doing business. People still want to buy toys right.

What worries me for local retailers on this part of the globe is that many of our retailers are even less customer focused than the American stores are that are allowing themselves to be choked into submission.


What’s it made of?

I also maintain that we like to shop and whether it is grocery or other products, people still want to buy. Price is certainly an issue, as is convenience, but the reason Amazon even gets a look into our local market is because we are opening the door to them. We’re not delivering the best experience and listening to customer insights.

There are retailers who are growing and thriving, perhaps because they listen to the voice of the customer. It seems really ironic to me that there are more and more fresh food retailers focusing on high quality meals and selections that are ready to cook, for a premium. This is a market that our traditional supermarkets knew about 20 years ago.

World leaders like Krogers and Albert Hein didn’t just lead on technology, with partners like NCR and IBM they also learned about big data and how to mine that to come up with profitable combinations, but it seems to me that the focus has now been more about how to squeeze the max out of margins and shelf space, rather than ask customers what they want, or deliver products that are compelling to customers. In doing so I wonder if they are throwing away some of the most profitable opportunities. Amazon’s Whole Foods could seriously impact on the core high stock turn grocery sector and especially hurt the owner operators who have invested everything into their businesses. We won’t stop buying food and toilet paper. What will retailers like Foodstuffs, Coles and Countdown do? What will the DIY industry do? I hear IKEA could be coming down under as well and could threaten Mitre10, Bunnings and similar stores too, who don’t seem to be adapting either. Will they try to compete even more on price?

Napolean HillSo perhaps it’s time for retailers who don’t want to go the way of Borders and Dick Smith Electronics need to do something different before it’s too late.

How? The starting point is to never fall back on business as usual, but to remember how it all started. The grocer used to be the center of the community. They knew what we wanted before we knew we wanted it. The addressed my parents by name. They knew which coffee my mother wanted and how thin to slice her veal. They had a relationship with us.

Today’s technology still allows retailers to have a relationship with us. That might sound like an oxymoron, but it is what we do with data. No we can’t have a personal relationship with thousands of customers, but we can harness technology to deliver the same outcome so that the customer feels valued.

Like the Kiwi baby chain I saw on TV and blogged about last week that consults with their customers and even install baby seats in cars for free, teaching people how to use their product, putting their customers on a mailing list, finding out about their families in a safe way that protects their privacy while delivering what they want, there are are solutions that allow retailers to have their cake and eat it. But they have to adapt.

Those businesses who say their model is doomed will create a self fulfilling prophecy for their businesses. Those who are prepared to change can grow and thrive. It’s rocket science, but it is also about using it to understand the customer.

I’ll leave the last word to astronaut Chris Hadfield. What did resonate with, the science or the person?


About Luigi Cappel

Writer for hire, marketing consultant specialising in Location Based Services. Futurist and Public Speaker Auckland, New Zealand
This entry was posted in Big Data, endangered species, Inventory Management, Manufacturing, Market Research, Retail, retail apps, Retail POS, retail survival, retail systems, the future and tagged , , , , , , , , , , , . Bookmark the permalink.

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