Showrooms for Amazon

One issue guaranteed to spark heated conversation and debate with our brick-and-mortar retail clients is how to respond to Amazon.  And the story is only getting worse with the Amazon Price Check feature- they’re actually paying customers to shop physical stores and then buy via Amazon.  The retailers’ nightmares are playing out every day in every aisle: shoppers browsing, perhaps trying products out or even getting help from sales staff then whipping out their phones, buying on the cheap and walking out.

So where does it all end?

Well, it’s going to mean a lot of pain for physical retailers, that’s no surprise.  In the near term, the retailers least impacted will be those with the scale to reduce the price gap to online retailers, and those with strong proprietary brands that are exclusive to their stores.

But in the long-term, it would be wise to avoid investing in retailer real estate.  Margins of bricks-and-mortar retailers will fall, there will be store closings and banners falling.  But who will remain?  Believe it or not, the answer to this bleak future lies in the past: retail in the ’50s was high-service, was based on knowing the customers individually, and earned high loyalty.  People knew they may not be getting the lowest price, but they happily paid it.  This blog post puts the keys to success a bit better, and definitely more pointedly.