What Brick and Mortar Retailers Can Learn from Amazon

Despite 90% of retail sales still happening in brick and mortar stores, it’s clear that Amazon and other data-driven e-tailers are changing the face of retail. A recent analysis by Deutsche Bank illustrates how leading US brick and mortar retailers’ sales revenue has been holding flat for much of this decade—while Amazon’s North American revenue has skyrocketed. So what can traditional retailers learn from the e-commerce giant to stay relevant in an increasingly digital world?

The Amazon Effect

Today’s shopper journey is far different than it used to be. On any given day, a consumer might research style trends at home from her laptop, pop into the local store for a size check during lunch hour, and purchase an outfit in her favorite color with a tap on her smartphone while commuting home from work.

While Amazon continues to set the bar for delivering seamless and personalized experiences across all digital channels and devices, traditional retailers have opportunities for improvement. In fact, our recent research of 1,000 U.S. consumers reveals that while more than half of consumers surveyed (56%) feel that Amazon demonstrates an understanding of their needs and preferences on a regular basis, only 25% of consumers feel that traditional retailers live up to the same level of performance.

Amazon excels at leveraging past search and purchase history, across every device, to predict and influence shopper behavior. Well-timed and on-the-mark recommendations simplify the shopping experience and create incredibly loyal shoppers for the e-commerce titan.

Considering a 2015 study by IDC that demonstrated omnichannel shoppers have a 30 percent higher lifetime value than those who shop only using one channel, brick and mortar retailers would be wise to emulate Amazon’s laser-focused approach to using customer data for personalizing and streamlining every facet of the shopping experience.

The Brick and Mortar Opportunity

If traditional retailers could find a way to take advantage of existing digital profiles and known shopping behaviors to personalize the in-store shopping experience, they could transform their physical locations into much more strategic omnichannel assets.

Connecting the dots between online and offline interactions could have a major impact on business performance. In fact, our research reveals that more personalized and connected mobile, online and in-store experiences would increase brand loyalty AND increase the likelihood to shop at a particular retailer for nearly 90% of consumers.

Unfortunately, today, the vast majority of brick and mortar retailers do very little to connect the physical and digital experiences for their shoppers. There is hope, however. Retailers in categories that have historically made significant investments in mobile and in-store loyalty programs (e.g. grocery, big box and drug stores) fare significantly better on the personalization front than their less integrated counterparts. And new technologies that take advantage of mobile device location are helping many more retailers bridge the online and offline divide.

Location Matters

Recently, Amazon has made moves to extend its assault on traditional retailers. In addition to launching its own brick-and-mortar bookstore (with rumors of more physical stores to come), the company has also introduced new ways to emulate the immediacy of shopping in physical stores (e.g. same-day delivery, Amazon Dash button and replenishment service). Traditional retailers have a huge head start over Amazon when it comes to physical locations, and if they move quickly to upgrade the in-store shopping experience, they could help to widen this gap.  

Mobile presence technologies like GPS, WiFi and Bluetooth beacons offer retailers a tremendous opportunity to connect the digital and physical worlds for retail shoppers. By understanding physical world behaviors and combining that data with known digital behaviors, retailers are now able to create rich omnichannel customer profiles that can be used to deliver seamless and personalized experiences wherever and whenever their customers want.

The age of the always-connected consumer is upon us, and the winners will be those retailers who are able to take advantage of the vast new sets of consumer behavioral data. By doing so they will demonstrate a greater understanding of individual consumer preferences and needs than even Amazon is able to do.

To get ahead, download the Modern Marketing Essentials Guide to Cross-Channel Marketing now. It'll equip you with the information you need to create the most cohesive, valuable, and frictionless customer experience possible, making you a winner.

Modern Marketing Essentials Guide to Cross-Channel Marketing