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How to Coexist Alongside ‘Apex Predators’ Like Amazon and Alibaba

Competing in today’s retail market revolves around purpose. But rather than a push for corporate social responsibility, this means positioning a retail brand to serve a specific need in consumers’ lives.

During a keynote address at the Sourcing Journal Summit 2020, R/Evolution: Overhauling Fashion’s Outmoded Supply Chain, Retail Prophet founder and futurist Doug Stephens laid out why this focus on purpose is now more important than ever in the hunt for wallet share.

According to Stephens, the past 10 months have been a “steroid drip” for e-commerce powerhouses like Amazon and Alibaba, as consumers relied even more heavily on online shopping. These mega retailers are also expanding into more categories, spreading their activities beyond selling goods with financial, healthcare and education endeavors. These retailers have evolved from strong competitors to what Stephens calls “apex predators.”

“They will achieve the highest level of evolution,” said Stephens. “They will be at the top of the food chain with no natural enemies, except themselves.”

What is a traditional retailer to do in the face of these giants? Rather than trying to be all things to all people, merchants need to focus on excelling at one positioning advantage that will make consumers shop with them rather than a behemoth. The four quadrants on which they can compete are culture, entertainment, expertise and product.

In addition to one main specialty, retailers must also play in two of the other axes to succeed. For instance, a sustainability-focused brand could have culture as its main strength, with an added focus on product design and expertise, such as bringing in environmental experts as influencers.

Traditional brands also have another weapon in the battle for retail dominance: brick-and-mortar stores. As e-commerce picks up and the endless aisle experience becomes more sophisticated, the inclination would be to shrink the square footage to make stores more productive. However, Stephens made the case for keeping larger stores with less merchandise, enabling brands to build immersive experiences of value for the customer. A physical store also supports the online channel in its market, boosting e-commerce sales in the area by up to 35 percent.

“Don’t make the store smaller; make the experience larger,” Stephens said.