How retail stores can compete with Amazon

Dylan Brown
by Dylan Brown

You: “Alexa, can retailers ever compete with Amazon?”

Alexa: “No. (Laughs uncontrollably.)”

In an era where Amazon ships over 5 billion items per year – 8 million of which were processed on Prime Day 2019 in the UK alone – going head-to-head with the e-commerce giant would be a big mistake.

But instead of attempting to turn your brand into something it isn’t – like the best e-commerce platform in the world – retailers need to take a David versus Goliath-like approach to the market by being innovative with the tools they already have and using them to engage their specific target audience.

Amazon’s CEO, Jeff Bezos, has some great advice retailers should take note of:

“One of the only ways to get out of a tight box is to invent your way out.”

And: “If you double the number of experiments you do per year you’re going to double your inventiveness.”

Over the 25 years since Amazon was founded, it has moved from bookselling to web services, to movie-making, to selling almost anything and everything.

Given its success, the e-commerce brand has grown to represent a wider trend taking place in the retail sector – the demand for a simpler, faster-paced online shopping experience. 

UK e-commerce sales are expected to increase by 14.6% (€200b) by the end of this year, and the average online shopper’s spend is expected to increase from €2,515 in 2015 to €3,620 in 2019.

As a result of this change, modern consumers are more fickle, impatient and demanding than ever before – and yet they’re still eager for positive and engaging in-store experiences.

Here’s what retailers can do to stay relevant and competitive in our post-Amazon world:

Convenience: the true source of Amazon’s power

Despite having been around for longer than the entire Generation Z consumer demographic, Amazon has earned a place in the hearts and minds of youth audiences.

In a recent survey of over 2,000 UK shoppers, we found 45% of all respondents spend over 50% of their online budget through Amazon and men in particular choose to shop with Amazon over other retailers 52% of the time.

For everyday items such as groceries, we found that both Millennial (24 to 37 years old) and Gen Z (16 to 23 years old) males are less likely to regularly shop on the High Street when compared to older generations.

We also uncovered that 22% of Gen Z respondents spend between 41-50% of their money with Amazon, compared with 18% of Millennial men, with a strong emphasis on electronics, sportswear and DIY.

These younger generations of consumers now have considerable influence, with Gen Z now commanding over $44 billion in buying power – and projected to occupy nearly 40% of all consumer shopping by 2020. In addition, 93% of parents say their Gen Z offspring influence household spending.

With its next day delivery options and straight-forward purchasing process, Amazon have not only popularised, but continuously reinvented the e-commerce sector, but behind the hype, the real reason for Amazon’s success is its convenience. Convenience, however, is only a small part of the larger retail equation. 

Why consumers still prefer shopping in-store

Online shopping has never been easier, yet 53% of respondents still prefer to buy the majority of their non-grocery items in-store, according to our survey results.

The main reasons cited were convenience (35%), habitual shopping (34%), and a desire to have a hands-on experience with the product before purchasing (51%). 

The latter finding is by far the most interesting – other studies have also indicated that the ability to touch, feel and see products in-person still holds real value with today’s technology-addicted consumers.

Modern consumers aren’t drawn to material status like their older counterparts once were (or still are), with three out of four Millennials stating that they spend their money on experiences over branded goods.    

This is something Amazon clearly agrees with – the brand is part of the wave of 850 or so online retailers that are investing in brick-and-mortar (or clicks-to-mortar) stores. 

The answer: beautiful stores, powerful experiences 

One of the biggest competitive advantages retailers have over Amazon is their ability to create powerful brick-and-mortar experiences. And when combined with a smooth omni-channel experience across multiple devices, physical high-street retail can show strong appeal and maintain its competitive edge over online for the long-term. 

That’s why retailers need to fully utilise their biggest assets – beautiful stores, engaging and technology-driven in-store experiences and enthusiastic store associates with the ability to make all customers feel important. 

To ensure customers have a great in-store experience and keep coming back for more, retailers should also consider investing in their team’s product knowledge and industry expertise.

According to our study, only 13% of shoppers across all age groups now head in-store to seek expert advice.

Sure, it’s easier to search for product advice and peer-to-peer recommendations online these days, but the fact is that many in-store sales assistants don’t have the required knowledge or information to be able to offer on-the-spot expert opinions. 

Retail brands who can enable their sales teams to advise as well as serve will be able to offer a more enticing way of engaging with shoppers. 

While retailers need to face-up to the ever-present challenge represented by the convenience and maturity of e-commerce, especially the dominance of Amazon, there’s still plenty of opportunity to attract and engage modern consumers with authentic and powerful brand experiences both online and in-store.  

For more insights into the buying behaviours of younger consumers, such as how they engage with brands on social media, download our free white paper here.

Or to find out more about creating powerful in-store experiences, read our case study with Samsung



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