The future of retail is in customer centricity, which is easy to say but much more difficult to define, understand, and implement as a corporate culture and business strategy.
Most retailers either fear, hate, or admire Amazon as a competitor. Sometimes they experience a mix of these emotions, as many of Amazon's practices were adopted by the retail industry at large to one degree or another. The company is the "poster child" of customer centricity.
Bezos created a culture that expects everyone in his organization to put the customer first. As evidence of his customer focus, Bezos "was known to leave one place empty at the conference table and tell his staff they should consider the seat occupied by their customer: the most important person in the room."
I have been an Amazon customer for over 20 years and have experienced some disappointments here and there, but overall, no retailer in my life has earned as much loyalty as them. A company does not need to be the best in its market. It just needs to be better than its competitors to be a leader.
Product price, brand value, and other marketing pillars are no longer the most critical factors in a consumer's decision-making process. At a certain level of affluence, the "absolute value" of the experience that a retailer is likely to deliver becomes the deciding factor. Regardless of the type of merchandise you sell and the method you use, people decide whether they had a good experience as your customers or should try someone else. These people share their opinions with others like they always have. However, now these opinions have a much more significant impact on shoppers than advertising.
Today's best advertising investment available to a brick-and-mortar retailer is creating an in-store experience that resonates through word-of-mouth marketing opportunities. In the online environment, Amazon became the first option for any consumer searching for a product to buy because Amazon was one of the first to weaponize customer reviews, a form of word-of-mouth marketing, in its SEO (search engine optimization) strategy.
You do not have to like Amazon to learn from its successes and failures:
- The success in generating shoppers' traffic by leveraging the WOM marketing strategy is undeniable, and it needs to be interpreted for adoption by a physical retailer.
- Until recently, the frictionless internet shopping experience was incredibly effective, from locating the desired item to returning it. Recently, overloading shoppers' searches with sponsored products created an unfortunate deterioration of customer experience. It is challenging to balance a desire for a higher profit rate against the fear of losing the loyalty of your customers. In the vocabulary of Wall Street - "Bulls make money. Bears make money. Pigs get slaughtered." It's best to control your greed and look for better margins by optimizing your business practices that do not worsen customer experience.
- When Amazon leaves its native digital domain and faces the same challenges brick-and-mortar retailers face, its most significant weakness becomes apparent:
- Retail employee management has apparently remained the same since the WFM acquisition and is not noticeably different from other brick-and-mortar retailers. It is naive to expect a near-minimum-wage employee without proper training and no career path to provide your customers with an exceptional experience. The last-mile delivery service performs barely tolerable in large urban areas but very poorly in smaller communities. I can't imagine the cost of lost or miss-delivered packages Amazon has to shoulder.
- Management of partnerships with brands to provide better in-store customer experience is only slightly better than most of the other brick-and-mortar stores. On the one hand, they implemented a WFM-wide portal to schedule in-store sampling events, but the portal allows access to brands only when brands often use their demo companies as partners to manage these store demos. Daymon Interactions operates this portal and charges the brands a substantial fee that serves more as a price of admission than a value-added service. The only advantage of using it is that it saves about half the time it takes to book a demo by chasing down someone in the store. The service does help to minimize lost selling opportunities and waste of money for the brands and brand ambassadors due to product inventory issues. However, since using the portal is mandatory, and a gate fee is substantial, many brands shy away from partnering with WFM and investing their marketing dollars where they get a better return. While WFM has enough clout to summon some brands to fund store demos, they cannot force brands to deliver exceptional customer experiences to their shoppers.
The lesson to learn is this - if you want to provide a quality experience to your customers, you cannot ignore, neglect, or use your natural partners as a piggy bank and your employees as serfs.