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Brick and mortar retailers take heart: Jeff Bezos predicts that Amazon will go bankrupt.
The bad news is that he doesn’t expect this to happen for several decades. And by then, “shopping” as we know it probably won’t exist. Indeed, Amazon’s new holiday ad featuring talking-logo boxes somewhat creepily implies that the traditional retail experience has already been transformed beyond recognition.
Be that as it may, waiting for Amazon to fail isn’t an option. An assessment of retailer prospects suggests that the situation, while dire, isn’t hopeless. Industry research shows that almost half (49 percent) of consumers still prefer to shop in a store. And while online sales are growing by 15 percent annually, compared to only 5 percent for brick and mortar, people spend more of their shopping cash in stores (64 percent vs. 36 percent online). Moreover, experts point to several players who have successfully adapted their traditional brick and mortar retail strategies to the requirements of today’s online/offline world.
So what’s the secret? How can retailers compete against Amazon? Effective use of technology innovation is one obvious key. The rapid growth of conversational Artificial Intelligence (AI) capabilities, for example, offers enormous potential to redefine the shopping experience. As voice-based digital assistants such as Siri and Alexa become ubiquitous in consumer homes, the deployment of such tools in both physical retail settings and online is inevitable. Customers who value convenience will increasingly demand Siri-type assistants to help them find what they’re looking for. Ultimately, in-store digital salespeople may displace mobile phones as the information source of choice.
While retailers today have multiple opportunities to use technology to drive innovation and deliver a memorable and unique shopping experience, speed of deployment is imperative. Retailers must be able to rapidly assess multiple technology options, prioritize those options, implement quickly and then build on success.
An Agile development methodology can support this objective by facilitating ongoing and close collaboration between developers and business users via face-to-face communication. Frequent version releases and openness to changing business requirements can provide the urgency needed to evaluate options, identify a winning approach and leverage technology. And while the significant cultural change required by Agile poses a challenge for traditional organizations, a scalable approach that leverages targeted initiatives can drive the needed transformation in a gradual and organic manner.
Another critical success driver is ensuring that technology aligns with evolving consumer habits and preferences. To take the conversational AI example, a retailer deploying a voice-activated, in-store interactive digital assistant needs to carefully consider the “personality” type that’s appropriate for the company’s brand and target audience. Addressing this consideration requires increasingly close partnerships between the IT and marketing functions. In addition to taking new approaches to defining shared objectives and priorities and measuring results, both parties need to adopt a collaborative “walk a mile in my shoes” mindset.
Black Friday, Cyber Monday and the rest of the holiday shopping season will give retailers a fresh set of data with which to evaluate their existing strategies, assess their competitive positioning and begin planning for next year’s holiday season. What the landscape will look like then is anybody’s guess. But Jeff Bezos’ prediction notwithstanding, it’s a safe bet that Amazon will still be around, likely with another new ad claiming to own the shopping experience. Will traditional retailers be ready to push back?