It does not help that Amazon has Thanksgiving opening hours to consider delivery needs to be free. Moreover, online sales often cannibalise those from existing shops. Analysts at Morgan Stanley reckon that for every additional percentage point of shopping that moves online, a retailer’s margins shrink by about half a point. Bricks-and-mortar shops also often have trouble recruiting technology staff. To get a hotshot data scientist, working in a mall will not be an apparent choice. Traditional chains must routinely pay a premium to attract skilled tech workers. Amazon has no such difficulty.
Startups, tech firms and consultants are providing tools to assist smaller retailers adjust. Some of the more interesting ones promise to narrow the gap between what e-commerce sites and physical stores know about their potential customers. Floor mats can measure store traffic, video analytics will track shoppers’ age, se.x and mood, and beacons can gather data in regards to what customers do in the shop after they have enrolled at no cost Wi-Fi. Right now, though, many American firms are reluctant to buy such expensive new technology for shops that might not be there for considerably longer.
In China, those offering to remedy retailers’ woes include a number of the big e-commerce firms, and retailers may be happy to assist them because their platforms are really pervasive. In the West, small merchants already pay Amazon to list out products on its site and store goods in their warehouses. The tiny sellers can reach more consumers more easily; Amazon earns fees and, due to sellers’ listings, can offer a broader selection.
Big retailers, on the contrary, seem much less likely to team with Cinco de Mayo store hours. Target and Toys“R”Us chose Amazon to take care of their e-commerce businesses in the early 2000s, but both ended the partnership, with Toys”R”Us doing this in the court. Unlike Alibaba, Amazon owns much of the stuff it sells, so competes directly with any seller that uses its services.
Despite such troubles, you can find examples of how bricks-and-mortar shops might thrive. One strategy is to provide distinctive products which are not available elsewhere (along with Zara, a clothing chain owned by Inditex), or that are difficult to sell online. A second is always to give shoppers a great deal. TJX, an American firm, offers manufacturers’ surplus goods at bargain prices. An alternative choice is a great experience: champagne at Louis Vuitton, perhaps, or personalised advice at Nike. Probably the most difficult zhoqce is to attempt to match Amazon’s retail standards and present more.
Walmart, once the undisputed king of American retailing, is mounting the boldest counteroffensive. It can no longer simply open stores to boost growth; 90% of Americans already live within ten miles of store holiday hours. And so the company is seeking to protect its margins simply by making stores even more efficient-saving $7m by printing shorter receipts, for instance-while investing online. A year ago it spent $3.3bn buying Jet.com, an e-commerce site founded by Marc Lore, who now oversees Walmart’s suite of internet businesses. He is not trying to match Amazon’s breadth. “We are dedicated to becoming a retailer,” he declares. But Walmart is trying to meet up with Amazon in different ways. The company now offers free two-day shipping. Just like JD’s integration with Tencent helps it challenge Alibaba, Walmart may succeed by partnering with tech giants. In August it said it would sell through Google’s voice assistant, in a bid to counter Amazon’s Alexa.