How Retailers Can Survive (and Thrive) the Ecommerce Threat

For most of my career I’ve worked in retail and have been fortunate to be around during some great runs with prominent national retailers such as Toys R Us and Staples.

Those two great retail names have their challenges today, and truth be told, a great many other retailers do now as well. Retail has always been an exciting business, but these days it is downright scary.

Speaking with industry executives today, what I hear most often is fear and confusion about the future and particularly the concern that the ecommerce revolution will make their brick-and-mortar network obsolete.

The reality is that it's not an “either/or” future. Consumers want it all and it's our job to give it to them. Successful retailers need to retain the physical and embrace the virtual world of ecommerce and create a seamless shopping experience. Whether it's on their tablet, smartphone or in-store – yes, the store is not going to disappear – retailers need to provide consumers with what I call omni-channel retailing.

What do retailers need to do to create an omni-channel environment? First, they need to ensure that all their systems and back offices are aligned to provide those seamless experiences. So no surprise that some of the companies who are best at logistics such as Walmart are well positioned to transform their brick-and-mortar into ecommerce fulfillment centers and better compete against the likes of Amazon. Others, Staples among them, are similarly looking at that built-in advantage of a painstakingly assembled store base and figuring out how it can serve as an ecommerce delivery platform.

For years now, retailers have bemoaned the “showrooming” phenomenon in which savvy consumers cruise the electronics aisle to fine-tune their product search before ultimately buying online.

Retailers such as Best Buy have out of necessity combated showrooming by adopting price guarantees. Just as importantly those guarantees now give retailers license to welcome showroomers into their physical locations. Those smart and information hungry showroomers are showing up in person largely because they are seeking the knowledge, excitement and human interaction that they cannot get online. It’s the retailer’s job to amp up that energy at the store level and try and replicate it at the ecommerce level.

"What I hear most often is fear and confusion about the future and particularly the concern that the ecommerce revolution will make their brick-and-mortar network obsolete."

Some companies are embracing the showrooming trend. Just look at Nike with its flagship stores which represent brand advertising venues more so than retail locations. Or Apple, where shoppers are encouraged to explore and experience its products. Or Nespresso with its Boutique Bars. They are likely not selling many $1,000 machines, but they are serving to educate the consumers about the single-serve coffee category and building the brand’s high-end status. The blurring between retail and ecommerce into the holistic experience that consumers want can be seen with online-only retailers such as Warby Parker which is now opening select physical locations.

Warby Parker's transition to a physical retailer is part of the newly emerging trend of “webrooming.” Just as it sounds, it's the opposite of showrooming. It starts with shoppers going online and educating themselves as well as narrowing their price range and product selection down to a manageable assortment before popping in to one or two select retail locations.

To thrive in the future, retailers have to live and breathe on the web with an online presence at least as good as the competition. Perhaps more crucially, they have to make their stores a place people want to go. To do that they need to dial up the sensory experience. Going to a store can’t be a chore when consumers can sit in front of a screen and order products with a simple click.

While many people immediately think of Amazon when they hear ecommerce, I think of Starbucks. Here’s a company selling experiences, although most of us think we are merely getting a better cup of coffee. Starbucks original innovation was European-café quality coffee, but it has since become the country’s first smartphone powered retailer. Forbes noted recently that the Starbucks’ mobile app is the most used digital payment app in the country with about 10 million users at an average of 5 million transactions per week.

Starbucks is wedded to its brick-and-mortar concept, people seek out its restaurants (and often use their app to find locations in unfamiliar cities and neighborhoods). But by riding the crest of the ecommerce wave, the chain has become a part of daily life for millions of people who see that green corporate logo every time they look at their phone screen.

Starbucks has seen and embraced the digital future. It doesn’t have to be scary, especially when you can become part of your customers’ daily lives. Now it’s up to the rest of the retail world to come along.