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NRF: Retailers Must Do What Amazon Can’t to Remain Competitive

Any talk titled, “Even Amazon Can’t Do This…Yet” would undoubtedly draw curious retailers eager to learn what the e-commerce king isn’t capable of and who want an answer to the threat of online shopping.

At a National Retail Federation convention session Tuesday, Lee Peterson, executive vice president of creative services for WD Partners, a team of creatives who innovate the customer experience for multi-unit food and retail brands, gave a standing room only audience an answer. He said, retailers have got to invest in the one asset online can never trump: people.

Peterson’s presentation was based on WD Partners’ latest research report, “Amazon Can’t Do That: Consumer Desire and the Store of the Future.” For the report, researchers spoke to more than 1,700 consumers and held seven in-depth focus groups and asked individuals to rank key in-store and online shopping attributes, discuss why certain things resonate more than others and to explain what they would want the store of the future to look like.

The premise behind the study, Peterson said, was to find out what the store of the future will be. Retailers had been repeatedly coming to WD Partners saying they wanted the store of the future and the company decided it was time to find out what that really meant.

Peterson and WD Partners set out to create a presentation that was so clear and easy to follow, “like if you were explaining it to a second-grader,” he said, and in the midst of a convention of information overload, the simplified delivery resonated well with the audience.

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Not long ago, retail was simple, Peterson said. There were stores, more stores, and more still, and then there was e-commerce. Now living and shopping is all kind of done together, he said.

“Customers can buy anything, anywhere, anytime,” Peterson said. “Customers are always shopping.”

So, Amazon is the 900 lb. gorilla in the room, Peterson said. When it comes to e-tailing, the company really can’t be beat and they are doing more and more commerce as the years progress, he added.

According to Peterson, 180 million customers bought 3.5 billion items from Amazon in the last year. “That means every adult in the U.S., every other week bought something from Amazon,” he said.

The company even recently began offering the first ever Sunday delivery through the U.S. Postal Service and has reached a new level of dominance.

“The very concept of online shopping has become synonymous with Amazon,” Peterson said.

According to WD Partners’ report, 50 percent of people said they go to Amazon first when they want to purchase something online. The company even ranked first in the Harris Poll RQ Study for most trusted retailer, Peterson said.

But “Amazon isn’t a company you want to hug; it’s a company that does exactly what it says it will every time,” Peterson said.

And therein lies the opportunity for brick-and-mortar retailers to capitalize. With the right mix of stimulating store elements and the right kind of tailored shopping experience and the right kind of store associates helping the process along, retail stores could become the kinds of places customers love to go to.

The “Amazon Can’t Do This” report found that the pros of shopping online were the ease of getting what you want with one click, the ability to compare prices, reviews and recommendations–which was hugely important, Peterson said. Suggested selling, where consumers are shown items they might like based on past behaviors, and access to unlimited options were also favored for online shopping.

The positive aspects of shopping in stores were instant ownership, touch and feel, the store experience (good design, cool store), shopping with friends and access to store associates.

At first glance when reviewing the research results, it seemed that stores were winning, Peterson said. The top two features for physical shopping, instant ownership and touch and feel, beat all online components as far as appeal is concerned.

The number one feature in terms of appeal when shopping online was reviews and rankings. “To get reviews in-store somehow will be key to in-store experiences,” Peterson said.

“Customers get excited online, but it doesn’t compete with in-store,” he said.

For now, emotional experience trumps information, but not for long.

WP Partners took a closer look at the study results, categorizing the responses by the responder’s age group and found a very different message.

Among Millennials, the generation retailers increasingly seek to target, the most appealing aspects of a shopping experience were unlimited options, ratings and reviews, and instant ownership. The least appealing were store design and display and store associates.

“Millennials are rejecting the idea of going to stores,” Peterson said.

Among Boomers, touch and feel, instant ownership and price comparison were the most important aspects of the shopping experience.

Everyone is always talking big data, big data, Peterson said. “I got some big data for you. Young people don’t like your stores.”

Peterson said the window of opportunity is closing fast for retailers. A look at the report’s aggregate findings shows stores looking pretty good, but the data breakdown shows stores becoming less relevant, he said.

Regardless of age group, store associates consistently ranked at the bottom in terms of appeal in the shopping experience and consumers said they avoid stores because the customer service is so poor. One survey participant said of store associates, “They don’t know anything about anything.”

These are the people retailers trust with their business, the ones who give a face to the brand and shoppers say those people don’t know anything, Peterson said. “I think that’s the retail crime of the century right there.”

Retailers have to invest in people, Peterson said, they have to reinvest in the role of the store associate and do better to train that person. “Maybe start by hiring people who like people,” Peterson said.

He highlighted the fact that Nordstrom has found a way to do it. The high-end retailer consistently ranks among the best for customer service. Peterson mentioned a visit he made to a 4,000 square-foot Apple store where thirty-two blue-shirted associates were tending to every customer in the store. At Whole Foods, Peterson overheard a woman ask an associate for help choosing pickles because the options were too many. That associate proceeded to open the pickle jars, letting the woman sample the pickles until she found what she liked. “Now, that’s a customer for life,” Peterson said.

“Emotional connectivity is the ultimate differentiator between shopping online and shopping in-store,” he said. Retailers will have to do better to provide customer service and make store associates knowledgeable go-to resources for an improved shopping experience.

Stores have to evolve and actually be something to their customers. The stores of the future will be social, open and captivating, Peterson said.

The social store will be intimate, it will be a hybrid of seamless in-store and online shopping, it will be designed for impact and it will be educational and teach customers about the product.

The open store will be a hub; it will be mobile and put technology front and center; it will foster voyeurism and exhibition; it will encourage curiosity and it will be inspirational.

The captivating store will be transparent; customers will be able to gain access to any information they need; it will always be more than a store; perhaps a place for social gathering; and, its interior will rival nightlife venues in terms of design.

Following that look toward the future of retail and outline of things best-in-class retailers will have to do to remain appealing, Peterson left the audience with a few lessons in what not to do:

  • Don’t be loud and have too many things going on in the store
  • Don’t be contained and keep shoppers restricted
  • Don’t be boring
  • Don’t be disengaged
  • Don’t be warehouse-esque, because no one wants to shop like that
  • Don’t be cluttered
  • Don’t be horizontal with rows and rows of merchandise, vertical displays are your friend
  • Don’t be littered with random technology
  • Don’t be terrifying
  • Don’t be conservative
  • And most importantly, don’t be old school–always be thinking about the future

Peterson ended the session saying, “Humans are and always will be socially driven, but if we don’t invest or reinvest in stores, we’re going to lose cultural relevance.”