Brick-and-Mortar Retailers Responding to Amazon’s Power

It is a great time to be a consumer. We have more choices of vendors and products than we have ever had. Plus, prices keep decreasing on many products that we love. With data at our fingertips, we can use our smartphones to find out if something we’re looking at in a store is cheaper elsewhere. This is awesome, right? As I said, for customers: yes. But for brick-and-mortars: no.

If you’re a brick-and-mortar retailer trying to compete with a giant like Amazon, things are tough enough. Amazon doesn’t have the overhead you do, which means they can often price their goods much cheaper. The problem has been growing over the years as smartphones gain popularity. It has reached a point where retailers are being forced to come up with responses or solutions to the problem. What good is your store if customers only use it to browse? No good at all. But what should they do?

Retailers Fighting Back

This year, it looks like retailers are really pushing solutions into high gear. Yesterday, Barbara Thau at Forbes reported on big retailers’ actions to combat Amazon’s influence. She writes, “Chains ranging from Target and Macy’s to Family Dollar are ratcheting up exclusive, private-label brands.” These brands and products will only be available in their respective retailer’s stores. Plus, the retailers are hoping they can price close or equal to Amazon with some of these products.

This move is very important, especially this time of year. Holiday shopping is approaching and a large chunk of retail profits are up for grabs. In addition to the private brands, as Martha C. White reports for NBC News, “Shoppers can expect to see promotions that can be redeemed only online or only in-store, price-matching and location-based mobile discounts.”

As Barbara Thau writes, this holiday season you’ll even see “interesting frenemy relationships.” Certain retailers are joining up with other retailers that are seemingly in competition with them. For example, Target and Neiman Marcus will sell a variety of products only at their two chains, and Macy’s will have Toys “R” Us shops in two dozen high-traffic stores.

Retailers have the Right Perspective

Instead of whining and complaining about how smartphones and online shopping steal their revenue, retailers are staying smart. They are looking at the big picture and finding creative ways to address this problem. I was really happy to read that retailers are utilizing mobile deals to be redeemed in-stores. This is a great way to encourage retail purchases. Besides, smart shoppers are going to have their phones out anyway.

It’s not going to be easy for brick-and-mortar retailers to compete with Amazon, but they will survive. The ones that will thrive will be the stores that really do their homework. Price matching without ruining their margins will be key this season.

Not the End of the World for Traditional Retail

It’s easy for issues like this to get exaggerated, but I don’t see this as being a doomsday issue for retailers. There are many people out there who still enjoy going to a store to see and feel what they are going to buy, rather than trusting it’s exactly what they want. In my experience, this is especially true when people are buying a gift for someone else, which is the bulk of holiday shopping. For me, I do almost all of my shopping online, but when it comes to the holidays, the majority of it is done in-store. I know I can get great deals on products, get them immediately, and know exactly what I’m getting. Retailers need to focus on the concepts that get people into the store even more this year. Retailers will adapt, and this story is proof that they are on the right track. Necessity is the mother of all invention, after all.

What do you think about Amazon and traditional brick-and-mortar retailers? How should they compete? What do they do wrong and what are they doing right?

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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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