Success SERIES
What Are You Doing To Stay Ahead Of The Amazon Effect?
Let's take a look at how you can weather the storm.
  • From 1970 to 2015, shopping centres grew at twice the rate of the population, and the retail industry experienced explosive growth.
  • Up to 10% of retail purchases now occur solely online, forcing businesses to adjust to e-commerce.
  • Recent years have seen the closure of many well known retailers such as Toys R Us, Borders and Radioshack.
  • 42% of NZ retailers reported that they failed to hit their sales targets in 2017.
  • Amazon has grown to take half of all online purchases in the U.S, and their expansion into Australia is their most affordable offering of their Prime service so far.
Is Brick and Mortar Retail Nearly Dead?
There has been a fair amount of hysteria amongst those taking a view of the retail industry, there are many questioning if brick and mortar businesses have the ability to weather the "Amazon effect". The online giants aggressive pursuit of retail sales, has led many to believe that existing businesses in the industry should be deeply concerned. This is only half true, as it turns out.

Yes, the way retail purchases occur is changing, and changing quickly. As technology drives more and more innovation, retailers must adjust to the ever developing needs and expectations of their customers. This is a rate of change that many retailers will simply not be able to keep up with, but it would be wrong to assume that it foretells the end of brick and mortar.
Instagram has moved into the e-commerce space, with it's new feature that allows you to buy directly from stories.
The age of e-commerce, is something that many figures within the retail industry view for what it is - a valuable opportunity.

There is now a chance to interact with consumers at a wide range of touch-points. This is reflected by the fact that in 2017, over half of all retail purchases in the U.S were digitally influenced. People feel more encouraged to make a purchase after engaging with an online platform, be it a company website, Instagram account, or Facebook page.
How Can The Accelerated Rate Of Closures Amongst Brick And Mortar Retailers Be Explained?
Well, it would be false to say that e-commerce comes without any challenges. Clearly there are a significant amount of people taking their money online, and opting out of actually visiting any stores in person. This presents a challenge to existing retailers who have traditionally relied upon this form of patronage, and there are some businesses that are not able to adapt.

The plight of these businesses is worsened by the rate of growth experienced by the retail industry from 1970 to 2015, where malls grew at twice the rate of the population. This was observed in the US, which is where you will hear the loudest of the voices decrying that Amazon brings the end times in its wake, but it also mirrors trends in retail around the world.
It is the unsustainable growth of the retail industry, that has led to so many businesses being less resilient to disruptive change. Without thinking ahead, many businesses did not place importance on keeping up with digital trends. They invested in share buybacks rather than their stores, and when the growing pains of the industry caught up, they were burdened by large amounts of private-equity debt and had little or no flexibility to readjust.
How Can Retailers Adapt?
The Amazon effect must be taken seriously, cultural tastes have grown and digital trends must be adopted to reflect this.

Physical stores need to leverage assets that e-commerce giants such as Amazon don't have, and integrate online shopping elements into their stores experience.

Going to the mall or other shopping locations must be made into something memorable, something that does not aim to compete solely on convenience or price.
"Shopping malls are a treasure trove in regards to memorable shopping experiences."
There are many examples already, where we can see a shift in focus towards crafting a memorable experience for customers.

Barkers in New Zealand has reworked a number of their retail locations, so that they now host a groom room where you can get your haircut, and a cafe that serves quality food and coffee.

The shopping experience has been designed in recognition of people's changing shopping habits. The clothing at the store is often used for people to find out what size they are, with many future purchases occuring online. The cafe and groom room provide reasons to visit the stores regularly, which also maintains the customers awareness of the latest products on offer.
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Shopping malls are a treasure trove in regards to memorable shopping experiences. The generous space within can be crafted so that it provides something for every kind of shopper, and activations can be used to make a normal day into a special occasion.

A mall in Dubai set a high bar for what can be done with activations when they turned their atrium floor into a giant game of monopoly, with anyone who spent over a certain amount being able to play and win.
It is crucial for brick and mortar retailers to utilise the fact that they are tangible and touchable. The fact that they play host to a space that can build so much more into the experience of shopping, than just the click of a button.
You can read more experiential marketing examples here.
To gain an advantage over figures such as Amazon, retailers will need to take the best examples of e-commerce and incorporate them into their own methods. Shopping must be convenient and provide a frictionless, personalised service from consideration, to purchase, to delivery or pick up. This requires the integration of technology into all levels of the business.
So Where Do I Start?
To know what changes are necessary, ask yourself, who is buying your products? What do you know about them? How do you make sure that you don't just sell to them, but that you form an ongoing relationship?

The crucial part of doing this is to understand who you are selling to. Interlike's own photo marketing tool provides a means to not only boost and assess the performance of an activation, but to also gain valuable insights about your customers in the process.

The Interlike Selfie Station is a must have for any activation.
Read our case studies here to see how you can increase your eDM loyalty sign ups, generate quality customer content for social media, and deepen your understanding of the people visiting your location.

One thing is for sure, those who do not look to adapt to e-commerce will join the likes of Borders, Toy R Us and Radioshack. Not even large multinational businesses can whether the storm without attempting to change. Brick and mortar retailers must incorporate the best practices of competitors such as Amazon, while leveraging the assets that these competitors are without.

Play monopoly in your mall, make your customer a coffee while you cut their hair, make it an experience that they could never get with a click on a screen. Learn about your customer by being smart with the latest digital trends, you will come out stronger for it.
Get in touch
If you want more ideas about how to stay on top of the latest digital trends, call us on +64 9 3604026 or book a free discovery session here. Our success experts are always up for a good chat and a coffee.
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