Bricks-and-mortars won’t go down without a fight.
A recent report, “Brick-and-Mortar Retailers Fight Back: Winning Strategies to Compete with Online-Only Players” released by Applied Predictive Technologies, a Mastercard company, revealed the strategies that retailers with a high physical presence plan to roll out in order to compete with online-only competitors. Ironically, one of the top pursuits is to invest in digital footprints.
The report was based on a global survey that polled 256 retail executives located in the U.S., U.K., France, Germany and Japan. The study aimed to collate the top strategies being deployed by said executives in order to heighten brand profiles in increasingly saturated landscapes and maintain revenue.
“The survey shows that retailers are acutely aware of the competitive threat from e-commerce sites,” the report said. “A little under half of respondents (47 percent) say they face ‘significant’ competition from online-only rivals, with a further 37 percent facing ‘moderate’ competition. Amazon.com is the dominant source of such competition, as identified by 42 percent of respondents, followed by eBay with 14 percent.”
Due to the heavy online-only competition, the report said that six out of 10 respondents had closed physical stores directly in response to the challenges posed by heightening digital-centric alternatives. What’s more, the survey found that 44 percent of respondents had lowered in-store prices due to the ongoing threat posed by online retailers – their steep pricing cuts were noted as the top obstacle among the participating retail executives.
Respondents also said they were taking a page out of Wal-Mart’s playbook and using price matching as an alternative to all-out price reductions. Additionally, respondents said they’re incorporating loyalty programs in effort to grow brand loyalty — they said that e-commerce sites have an intuitive marketing advantage over traditional retailers as they exist within the spaces that shoppers are spending a huge amount of time: social. They also have the data to back up various strategies.
“Just under three in ten respondents (29 percent) count marketing and branding among online-only retailers’ chief competitive strengths,” the report said. “Loyalty programs are one way to do this, as they allow retailers to assess the habits of individual customers. More than half (54 percent) of survey respondents have introduced such programs, and nearly one-quarter (24 percent) plan to do so in the next two or three years.”
And where traditional retailers might find challenges in securing foot traffic to their bricks-and-mortars, the physical store also has the potential to serve as an advantage. “Customer experience is seen as one of the strongest competitive advantages of online-only retailers, cited by 27 percent of survey respondents,” the report said. This calls for empowering store associates who are on the front lines of consumer interaction. According to the survey, 70 percent of respondents said they’ve trained staff to be more knowledgeable and 58 percent have invested in customer service training for in-store associates.
The report said the store of the future would largely update the spaces to focus on experiences, events and in-store assortments. According to the report, 80 percent of respondents plan to have a specific space for in-store demos and events. Sixty-eight percent will broaden their in-store assortment and 45 percent will grow a localized selection. Thirty-nine percent will extend in-store pick-up for online orders.
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