Retail death fears wildly inflated

The news about Amazon’s entry into the Australian market sparked a lot of media commentary and debate about the alleged “death of retail” and for some, the “death of brands,” thanks to Amazon.

That’s right, apparently, we’re all going to start buying Amazon-branded toothpaste, washing powder and TVs because they will be conveniently and cost-effectively shipped to us by the benign retailer and because going to the shops is apparently such a dreadful chore.

This, of course, is utter nonsense, for a number of reasons. Firstly, shopping is well established by retail psychological experts as not simply about the act of shopping. In Why We Buy, retail guru Paco Underhill wrote: “We use shopping as therapy, reward, bribery, a pastime, as an excuse to get out of the house, as a way to troll for potential loved ones, as entertainment, as a form of education or even worship, as a way to kill time.”

And make no mistake – we Kiwis love to shop. It’s easy to get out to the shops, with good roads and relatively convenient parking.

Secondly, it assumes brands will just lamely sit still and allow their market share to be massively eroded by commoditisation. It hasn’t really happened with own brands in major grocery and general retail, and there is no real evidence to suggest Amazon can achieve what so many others haven’t. As the leader of an agency plugged into the views and strategies of several major corporates, I can say with confidence and conviction big brand owners just won’t sit still.

Thirdly, it assumes Amazon possesses the key cards and that somehow you can only buy directly from them. The whole omnichannel buzz of the last few years has made it abundantly clear savvy retailers must offer several ways to serve, and deliver, to the customer. Engagement online, in-store, click and collect, delivery and via online help tools – all of these critical elements are pushing an evolution (it’s frankly too slow in New Zealand to call it a revolution) in how you can buy.

I would argue, however, that one of the most crucial requirements is the in-store experience (which, in most cases, is getting better and better) to help differentiate from the convenience of an online experience. In my view, and as all the prevailing research indicates, the majority of people still want to touch and try before they buy.

Finally, there are no set rules about who is going to win the future of retailing. What we are seeing in New Zealand is retailers are taking proactive steps to protect their customer base, and therefore develop a much greater insight into what motivates people to buy the things they need and want.

The recent loyalty wars are an example of this. With the tussle of Fly Buys, Air New Zealand and Smartfuel, as well as several major retailer schemes such as New World Clubcard and Farmers Club, we’re seeing evidence of a play to develop much stronger relationships with, and understanding of, shoppers. This, in turn, means that the retailers involved are now able to serve their customers’ needs, irrespective of how they want to shop.

On a personal level, until Amazon can work out how to properly segment and target me with recommendations on the sort of relevant books and music I want to buy, there remains a reasonable window of opportunity for Kiwi brand owners and retailers to prepare themselves properly for the new zeitgeist.

After shopping with Amazon for more than 20-years it still seems to have a rudimentary insight into my buying preferences. And frankly, I’m a lot less complicated than delivering a toaster by drone to an address in the Wairarapa.

Ben Goodale is managing director of justONE
Published in the NBR