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What is the Amazon Effect and should we all be worried?

August 25, 2018
August 25, 2018 Andy

What is the Amazon Effect and should we all be worried?

As consumers, we spend a lot of our time buying stuff online. As I write this I’m sure most of you will be thinking Amazon (oh the power of branding). But they’re not the only one responsible for the struggling bricks and mortar stores – House Of Fraser being the latest faller. Talk is of the Amazon Effect. But what is it and should we be afraid?

Since 1994, when the company first opened its online doors, Amazon has revolutionised the way we shop. The company introduced us all to a frictionless shopping process with immediate results – right through to delivery – and we bought into it in our millions.

Fast forward nearly 25 years and we all want the same experience – whether online or in a shop. That’s the Amazon effect.

So, what can bricks and mortar retailers do to fight back? Are we doomed to a world where every high street is full of coffee shops, charity outlets and hair dressers (we have about 20 in my local high street)?

For those retailers that want to avoid going the way of House of Fraser, BHS or Woolies (remember them?) they need to offer a technology driven experience that meets consumers’ very high standards.

Stores are hitting back hard however and rethinking exactly what their purpose is. Some are using brick and mortar to support online stores. These new age retail stores have no dedicated inventory, just serving as a place to collect their online orders or return stuff. The stores have coffee and a place to sit down and are designed to serve the online experience, not compete with it.

Others are tracking customer behaviour and their paths much more intensely, using the data in much the same way that ecommerce companies track their websites. Relatively simple changes like changing the location of certain items are helping to increase sales, while better staff training, improved customer service and better engagement are all helping to promote loyalty.

Recent surveys have found that today’s shopper wants stores with a mobile experience, faster checkout times, location aware coupons and a personalised service. Mobile and offline stores can work together to facilitate shoppers who are more independent. Shoppers who already know what they want when they go in provide retailers with an opportunity to offer a mobile experience that makes it as easy to pick up what they want as quickly as possible. Perhaps they can have a coffee while they’re there too.

According to a Forrester Report, $1.26 trillion worth of offline retail sales were influenced by digital media in some way. The same report estimates that number would be $1.4 trillion in three more years.

What does the future look like?

Stores that will be most competitive against the likes of Amazon will be those that can offer something the online giant cannot. This will mean the opportunity to physically experience the product (try on clothing, listen to a sound system or view the picture quality of the TV monitor, or offer more convenience) – remember those days? However, behind all of thise lies technology. It’s the technology that will be the driver.