smp interview author and retail Analyst Natalie Berg
Natalie Berg is a retail analyst, author and founder of NBK Retail, a consultancy specialising in retail strategy and future trends. She was one of the guest speakers at smp’s exclusive Power of Amazon event, designed to celebrate best practice across this constantly evolving, exciting platform.
Click and collect ten years ago was virtually unheard of. Now it’s a staple on the high street.
Multi-day lead times were acceptable. I think in the future same-day delivery will be the norm in urban areas.
Ten years ago Amazon was number fifty five in the Global retail rankings. Today they’re number four. Ecommerce was the holy grail. And although Ecommerce is still a growth story, I would argue that digitally native brands and online retailers are recognising the value and importance of having a physical presence as well.
The role of the store used to be transactional, it used to be a place to go and buy stuff. That’s rapidly changing as it becomes more experiential and a hub for fulfilment as well.
smp> Is there still hope for the high street?
NB> There’s a growing disparity of winners and losers on the high street. And that’s only going to continue.
A phrase I keep using over and over again is ‘Retail Darwinism.’ So, I think what we’re seeing now is either you evolve, or you die. Which sounds very harsh, but it’s true. That’s what’s happening on the high street. For those retailers that are agile and are willing and able to evolve, then actually I think it’s a really exciting time to be in retail.
smp> How has Amazon changed things?
NB> When we think of the phrase ‘The Amazon Effect’, it tends to have a negative connotation. We think of those stores that have closed. We think of Amazon’s rivals who have gone under as being ‘victims of Amazon.’ But I don’t think that Amazon is the death knell of retail. It’s not the death knell of the high street. Yes, 20% of retail sales now take place on line. And yes, Amazon accounts for a big, big chunk of that. But Amazon isn’t killing retail, it’s killing mediocre retail. And I think there’s a big differentiation there.
smp> So would you say Amazon has actually had a positive effect?
NB> Amazon has been a force for good. They’ve given us access to millions of products at our fingertips, that turn up the next day, the same day. And that has significantly raised customer expectations.
One of the reasons Amazon has been so successful is because they focus on how they sell as opposed to what they sell. It’s really about the customer experience, that frictionless experience – the ease of buying through Amazon that has set them apart.
Amazon’s past innovations have become today’s norm. When we shop online today, we’ve grown accustomed to things like user-generated reviews and ratings, personalised product recommendations, one-click checkout. But we have Amazon to thank for that. It’s about stamping out complacency. And the one who wins here is the customer. The customer has a much better experience today because Amazon is breathing down everyone else’s neck.
smp> What should retailers do to reconnect with their audience?
NB> At the end of the day, you have to be relevant. It’s the number one rule in retail; being relevant to your customers. And if you can’t stand out from your competition, or if you can’t ensure that you’re offering something that your customers want, then yes…the doomsday clock is ticking.
They need to level the playing field with eCommerce by becoming frictionless. But also, they need to distance themselves from eCommerce. W.A.C.D – What Amazon Can’t Do! Retailers are redefining the physical space to become more experiential, collaborating with each other. We’re seeing all kinds of really interesting forms of collaboration. The future of retail is blended – offline and online.
smp> How has Amazon changed the path to purchase?
When consumers start their product search, they don’t go to Google they go to Amazon. So that’s quite powerful in itself; that you become the starting point for your product search.
Their devices seamlessly funnel shoppers through to their own platform. So, Alexa for example will only produce two search results, if you ask Alexa to add something to your list.
Algorithms promote their own products
And they’ve created this eco system that has become so entrenched that Amazon becomes the first port of call. When you’re a Prime member, Amazon becomes the first port of call, the default shopping option. And actually, that’s one of the reasons why they’re so attracted to grocery now, because with grocery products, with the grocery category, they get frequency – because we need to buy our groceries every week; that’s something that Amazon hasn’t had before. And if we’re buying our groceries through Amazon, you have to be a Prime member to buy fresh groceries from Amazon, you’re more likely again to make Amazon your first port of call for other stuff that isn’t grocery. So, it’s all about feeding that fly wheel and that eco system.
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