Speculation abounds on the state of the economy and where it’s going next. The only thing truly clear is that uncertainty is currently the predominant driving force for retailers and wholesalers.
Typically, in uncertain times, traditional thinking is to hold steady and hunker down. While this wisdom may have served businesses well in the past — say, pre-pandemic — indications are that staying conservative today is more apt to move a retailer or wholesaler into irrelevance rather than ensure its survival.
The good news is that there are now tools, tactics, and technologies that that can help you become more creative in driving revenue rather than staying statically risk averse.
Note that no matter how uncertain times may be, three principles are fixed in retail: knowing the customer, knowing the competition, and recognizing and responding to changing dynamics in the market.
And the bedrock solutions and methodologies retailers use to thrive rather than simply survive also remain steadfast:
- Scalable, end-to-end operational systems (connecting and optimizing everything from inventory to customer engagement to accounting)
- Complete collection, centralization, and dissemination of actionable customer, market, internal, and competitor data (there’s no substitute for master data management in retail).
Here are some examples…
Best Buy and Circuit City
In the recent past, Best Buy and Circuit City were fierce competitors with comparable merchandise offering and pricing. That one failed and one thrived serve to illustrate the points above.
What Best Buy recognized was the dynamics were changing for their customers. Customers were now buying new technologies with which that had limited experience and comfort.
Knowing this about their customers became the impetus to create a new operations model where more than a product was sold: confidence was sold. Best Buy did this by making an investment in building out their “Geek Squad,” a service model built on both product and customer data.
Customers could make a purchase and schedule any level of support including in-home delivery, installation, setup and training. Best Buy then expanded this to instore ad hoc support inquiries. What started as primarily support of personal computers grew to cover product lines of new technologies including digital cameras, flatscreen TVs, and mobile phones.
This new service model not only created an additional revenue stream but offered a powerful differentiator in the market. Customers now could buy with confidence as after-sale support assured them that they would realize full value and utility of their purchase. Best Buy in turn realized the full value of the customer’s loyalty.
This approach served to get them through an economic downturn that claimed Circuit City and several other electronics retailers as casualties.
Amazon and Whole Foods
Amazon’s acquisition of Whole Foods was about more than groceries.
Much like Best Buy, Amazon knew its customers and understood the importance of convenience to them. On the other side of the equation, though Whole Foods was successful in its own space, it could see the need to expand its reach and capabilities.
The acquisition gave Amazon an immediate national brick-and-mortar presence, and Whole Foods a robust digital ordering platform: win-win. Amazon also gained a base of demographically desirable shoppers to whom they could offer additional products and services beyond grocery.
The pandemic brought changes to the partnership as well, serving as a catalyst for scaling Whole Foods to offer scheduled home deliveries and grocery pick-up at the store. These service offerings built immediate customer loyalty during the pandemic, and also helped assure growth beyond it having connected customers with a new — and now expected — level of convenience.
Additionally, Amazon was able to leverage the brick-and-mortar presence by offering order pickup and returns at Whole Foods locations for anything ordered online through Amazon, providing yet another additional level of service and convenience to customers of both organizations.
This series of wins for Amazon, Whole Foods, and its customers was made possible through an investment in data management and integrated operations, which created a 360-degree view of the “Amazon-Whole-Foods-customer” rather than one customer of two different companies. This thoroughly integrated model develops a full picture of each customer from countless touchpoints, resulting in a crystal-clear view of not just their purchases, but their preferences.
Using what you have… and what you don’t
While what Best Buy and Amazon did differs drastically — one leveraged existing resources, one formed a new partnership/acquisition — the fundamentals are the same. In each instance, the retailer understood its customer, the competitive environment, and the imperative for change.
In so far as these businesses turned trying times into profitable ones, the Amazon story makes a little more immediate sense, as the online shopping/home delivery model it perfected years ago went sky-high during the pandemic and has essentially changed how people shop.
But the Best Buy story is, in many ways, a story of leveraging uncertainty, too: the customers’ uncertainty.
It knew it had the resources to serve customers in a traditional “IT tech support” method, with its Geek Squad delivering break/fix support services to customers. But in positioning this team as support for ALL devices and equipment it sells, Best Buy turned a supporting team into a sales team by removing customer uncertainty and replacing it with customer confidence.
What’s next in retail? No one can say for certain. But with the right foundation, the right data, and the willingness to be bold and creative, success is certainly in the cards.