Amazon wants to get into large-format stores - but what will it do different this time? We should definitely not be in a hurry to write an obit for brick-and-mortar retail. Some of us may have read a recent article in The Wall Street Journal, which says Amazon plans to open large retail ‘locations’ in the US.
The finer details of Amazon’s move into regular retail is not yet clear. Yet, brick-and-mortar retail is the very business that Amazon decided to disrupt. Disrupting brick-and-mortar retail was the strategy for Amazon’s existence and growth. So why the about turn?
One trend is emerging out for sure. How Amazon combines its digital and brick-and-mortar retailing strategies will define the future of shopping. As we all know, what starts as a trend in the US generally ends up in similar or variants globally.
Knowing how Amazon operates, it seems unlikely that it will sell the same products in the two different shopping formats. There could be a demarcation strategy as to what category of products will be sold through digital channels and those through physical stores.
This is where all the current brick-and-mortar retailers, who also have online channels, need to focus. A majority have been selling the same or similar products at lower prices through their online channels, thereby hastening the process of demise of their own brick-and-mortar outlets.
There are several products that consumers buy routinely without much thinking. There is not much joy in shopping for them. It is becoming more likely that most of this sort of shopping will move fully into the digital space.
Hypermarkets and grocery chains must realise that consumers have already experienced that bulky products like house cleaning agents or detergents can be delivered as effectively via online orders.
Hands on anyone?
However, there are categories where the shopper would like to try out products in person before deciding to purchase them. This is particularly relevant in apparel, which becomes a guessing game for customers.
These are also categories where personal advice from an expert on what suits the customer best can add a lot of value. Big data analytics and artificial intelligence are already the backbone of both digital and physical-format shopping.
Whenever technology is introduced to society, there needs to be a counterbalancing human response that is ‘high touch’. So, as digital shopping gets more high-tech, brick-and-mortar needs to be seriously redirected to be the ‘high touch’ face of it.
In all probability, Amazon brick and mortar will capitalize on this. The big question is whether digital-shopping behaviour will continue even after the Covid scare is gone.
Let out the shoppers
Most disasters of the past have shown that if there is an emotional state that is dominant while a crisis is on, the post-crisis emotional state tends to be the exact opposite. Every social force seems to create an equal and opposite force, and our post-pandemic scenario may be no exception.
Shopping malls will surely be a popular relief destination. It will be worth watching what new strategies brick-and-mortar outlets adopt to make shopping more fun as they take advantage of this retail rush. A huge amount of emphasis needs to be on serious re-training and re-skilling.
A major focus of the revised retail strategies of physical stores should be to eliminate the multiple pain points that shoppers typically encounter. Amazon is moving in this direction already.
The trial stores that it opened in a few US cities used technology to do away with check-out counters, one of the biggest and most obvious pain points of brick-and-mortar shopping.
In Dubai, a few players who have really used the pandemic to seriously raise the bar in terms of adaptation of technology are Carrefour and Lulu and noon is catching up fast.
Maybe a noon could break the barrier, and we could see a few large format noons across the region…