How can stores compete with Amazon?

Jan 15, 2014

"It’s easy to compete with us, just do what we don’t do." – Sam Walton

At a Breakout Session Tuesday at the NRF Big Show convention, Lee Peterson, EVP of created services, WD Partners, presented the findings of his firm’s comprehensive white paper, Amazon Can’t Do That: Consumer Desire & the Store of the Future.

The study, based on surveys of 1,700 consumers across demographics, explored how the store can compete against the conveniences and ubiquity of the Amazon shopping model.

Encouragingly, the study found that "stores are winning," Mr. Peterson told the packed house. The core reasons people shop still favor physical stores.

Immediacy in taking home product was valued above all, with 79 percent of survey respondents pointing to "instant ownership" as the most appealing attribute of any retailer. A close second, "touch and feel" — another solely physical store attribute — was found particularly appealing by 75 percent. Third, "exclusive products and bargains," largely tied to store bargain shopping, rated 65 percent.

Online’s strengths showed up in fourth with "reviews," at 59 percent. Other largely-online attributes came in close behind with "unlimited options," 48 percent, and "one-click shopping," 47 percent.

Mr. Peterson said while Amazon ranks highest in trust, the largely "functional" nature of online shopping still fails to "excite" as much as physical stores, which gains an edge in driving "emotional" connections around shopping.

"Amazon isn’t a company you want to hug; it’s a company that does exactly what it says it will do — every time," he said.

More worrisome for the future of physical stores was the finding that Millennials ranked "unlimited options" and "customer reviews" as their top two shopping ideals, with "instant ownership" falling to third. This group came of age with online shopping and "shop anywhere anytime." Millennials grew up with a more impersonal big box in-store experience than past generations.

According to Mr. Peterson, to evolve, stores should:

  • Be social,
  • Be open,
  • Be captivating.

The "store of the future" should try to incorporate online’s strengths, including peer recommendations and using technology to extend access to "endless aisle" inventories, according to Mr. Peterson. An efficient and pleasant buy-online, in-store pick-up service should go a long way to joining the two worlds, the white paper finds.

In appearance, stores should "encourage curiosity," "be inspirational," and make use of "voyeuristic" elements particularly evident from the outside. The more stores look cluttered with horizontal presentations and conservative displays that resemble an Amazon warehouse, the more they’ll compete with Amazon, Mr. Peterson asserts.

Social advantage should be particularly played up, with food and drink kiosks, educational and entertainment options, and perhaps concierges to encourage conversation. But the biggest opportunity for retailers is investing in employees, with the survey showing only 31 percent felt associates were a key driver of a store’s appeal. Nordstrom, Apple, Whole Foods, Starbucks and Sephora were cited among those already capitalizing on their associate’s ability to engage customers.

"Human beings are, and will always be, socially driven," said Mr. Peterson. "It’s time for retailers — at least those that want to survive the coming rationalization the industry faces — to invest in the one asset online can never trump: people."

How will physical stores have to evolve or be reinvented to compete with Amazon and online shopping overall? Can in-store associates be counted on as a primary differentiator to online selling?

Join the Discussion!

18 Comments on "How can stores compete with Amazon?"

Notify of

Sort by:   newest | oldest | most voted
Adrian Weidmann

The old adage for retailing was “location, location, location.” The digital landscape has, for the most part, made this irrelevant. The new mantra should be “people, people, people”! They are your only brand ambassadors that can truly connect emotionally with your customers. For too long, retailers have been trying to use technology to replace people in order to reduce payroll. In doing so, they have been turning themselves into an Amazon warehouse. The true way to compete with Amazon is with empowered brand ambassadors.

Bill Davis

Stores need to do a much better job of monitoring consumer behavior, with their permission of course, in store. Online, a consumer’s actions are tracked at all times and this needs to become more prevalent in-store to deliver a more satisfying in store experience. Consumers are open to this as long as value is being delivered and they are not being pestered.

I am not sure if store associates will make a difference for the majority of brick & mortar retailers. That will require retailers to focus more attention on their people and many have refocused their energies here. Some will succeed, but it’s not going to be the majority of retailers.

And traditional retailers need to become far more technology savvy then they are today. Amazon has significant advantages that have been developed over the last 20 years so retailers that commit to this have a better chance of competing against them imo.

Max Goldberg

Physical stores need to be easy to navigate, with the prices of every item clearly visible. Sales associates should be empowered to provide information that consumers desire, resolve issues and have access to the Internet to ensure that consumers can always find what the products they want to buy. Return policies need to be liberal. And if an item is out-of-stock, it should be sent to consumers without charge. Finally, there needs to be a seamless, omni-channel experience. Online and in-store prices need to match.

Todd Sherman
Todd Sherman
3 years 9 months ago

The way shoppers are increasingly using mobile technologies opens the door for retailers to use Amazon’s own playbook – using technology to help the shopper make a purchase decision. Combine that with the mentioned benefits of the physical store and retailers have some unique advantages they can deploy to compete.

For example, Amazon is the number one place to start product research. That’s because Amazon provides significant product information (formatted in ways that make it easy to digest and understand), customer reviews (what’s better than gaining insights from actual experiences with the product?), and guided discovery (such as “Customers Who Bought This Item Also Bought…”). Retailers can leverage these same techniques in-store while also connecting the shoppers to the physical store.

I don’t agree with “the more stores look cluttered with horizontal presentations and conservative displays that resemble an Amazon warehouse, the more they’ll compete with Amazon.” That’s not what Amazon does. Amazon provides a highly personalized presentation by using technologies to sift through the tens of millions of products available and surface those most likely to interest each shopper.

Richard J. George, Ph.D.

Sam was right. Physical retail has three strengths: proximity, service and sensory experience. The proximity advantage and to some extent, the service advantage is fading. Online has not been able to replicate the sensory experience. If physical stores are going to keep the more mature shoppers and gain favor with Millennials, resources need to be invested to enhance customer service. In addition, the sensory experience needs to be fortified and communicated.

Like Sam said, physical retailers need to do what Amazon and online retailers don’t do.

David Livingston
3 years 9 months ago

Sure all the cliches and buzzword of the month things like social, open and captivating. What I’ve learned working in retail or being a customer is that people will go to places that make them feel better about themselves for going there. My friend from church who always makes sure I get the best deal for auto maintenance, the Korean dry cleaner who flirts with me, the waitress that always makes a fuss over me. Of course I’m going to patronize those places and not really care how much I’m spending. Look at the prices Whole Foods can extract from consumers wallets while they leave the store happy.

Without having competent, approachable, and social in-store associates, you are helpless in competing with Amazon and most likely anyone else.

Ed Dunn
3 years 9 months ago

Ensure the customer that their credit card transaction is secure to do business with, and take data breaches seriously. Amazon does not have the data breach problems we are currently seeing with physical stores.

Vahe Katros

The physical store needs to have Amazon level fulfillment and store associates need to have quick answers. The in-store environment is emotional, you’ve got to be able to close the deal.

Less is more, make the floor less of a warehouse and more like a showroom. Make one portion of the store the showroom and the other portion the warehouse.

Unify your in-store themes and make it easy for people to put pieces together – again, less warehouse and more solutions.

Sales people – have enough of them – seasoned people who love/know what they sell.

Bob Phibbs

Adrian is spot-on. Making your brick and mortar store a distribution center where employees are merely asked questions, call up product info and search stock on an iPad, will further erode morale in the store.

I don’t care if you can swipe an iPad and find you have a ladies shoe in a size 8 and go back and get it. The best retailers always knew their merchandise, its fit and similar items. If they were out of something, they tried other options using their own brain power to make the sale.

Just because a woman in this instance wanted the 8, doesn’t mean that’s all she will buy. A great salesperson knows this.

An app, an algorithm, a scanner doesn’t.

Kevin Graff

This is the second article I read today that stresses the ‘social’ nature of humans/consumers. That’s exactly why brick and mortar will always be here. There’s no social interaction and limited excitement when buying online.

Retailers need to do a much better job of engaging consumers in the store, and in particular, by stepping up their game through improved staff performance. Anyone can design a great store, do awesome displays and run fun events. The differentiator will be how staff brings all of the above to life.

Chris Petersen, PhD.

Maybe physical stores don’t have to be reinvented so much as they need to invest in core differentiators they already have. According to the survey, major differentiators for physical stores are “being social, engaging and exciting.” Those differentiators require “people” who care about consumers and engage them.

In the rush to compete with ecommerce on price, many physical stores have stripped out costs by reducing staffing, training and demos. Before reinventing the “box” (the store) retailers would be well advised to evaluate their store experience and staff engagement from the eyes of the consumer who votes every day with their wallet/plastic.

Gene Detroyer

Can in-store associates be counted on as a primary differentiator? Not when you have 100% turnover and hire the cheapest labor you can find.

The physical stores will evolve into showrooms. Note the survey. The Millennials don’t need “instant ownership.” They can wait for a day or two. (Are there people who can’t?) Therefore, without instant ownership, the stores become a showroom that can provide all the attributes of today’s physical stores and offer all the important attributes of online.

Martin Mehalchin

Long-term success for retailers with physical stores will be driven by a variety of strategies. In-store associates, while important, will in most cases not be sufficient as a primary differentiator. Other strategies that will also be key include savvy integration of technology into the customer experience (as referenced by Todd Sherman above); exclusive product offerings (whether in-house brands or exclusives from vendors), and localizing the assortment and experience to each particular market.

Ed Dennis
Ed Dennis
3 years 9 months ago

Stores must evolve into service providers. The consumer must view the store as a consultant, ready to advise on the best course of action to solve the consumer’s problem. This service, like the dry cleaners, the gas station, and the local restaurant cannot be delivered via the web right now.

If a retailer told me that my best option for a purchase was Amazon, I might trust that retailer to assist me with future purchase decisions. Additionally if that service could be delivered by a local retailer in my home, that starts to really add some value. Yeah, I might be able to order a TV cheaper over the net, but if I can get setup, adjustment and advice on a sound system for only a few bucks more, then why not buy local?

But understand, what I am buying is service NOT the widget. The widget just happens to come with the service. In store associates will have to be the difference makers. Without associates there is no reason to to visit a service provider.

Dominique Levin
Dominique Levin
3 years 9 months ago

I think that the integration of online and offline is a huge trend. If you can bring digital into the store and offer the “reviews” and “huge selection” of online WITHIN your store environment you have a big winner. It is much harder for online only retailers to achieve “instant gratification” and “touch and feel” than the other way around. I am looking forward to Store 2.0.

M. Jericho Banks PhD
M. Jericho Banks PhD
3 years 9 months ago

Are we assuming that physical stores must raise their level of competition with I don’t assume that at all.

Physical stores are already competing with in the only ways they can: With their own retail websites or by actually selling products on the Amazon site. They will not, IMHO, have a great deal of success changing shoppers’ preferences from online shopping to in-store shopping. Among other things, online customers like shopping in their underwear at 3AM. B&M stores can’t compete with that. simply provides a well-executed, very different sales channel. When catalogs were in their heyday, merchants didn’t agonize over losing revenue to mail-order purchases. Instead, they embraced catalogs with their own versions and went about their in-store businesses as they always had.

Kenneth Leung

I think store associates plus technology is the key. The two things stores can provide are human customer service and instant availability (or at least seamless transition to home delivery if there is store out-of-stock). Ultimately, I can order a lot of things on but for certain categories like clothing or high-end gift items, I would go to the store. When I go there, I expect helpful associates that will greet me and make me feel comfortable, and help me complete my purchase either in the store or do delivery to my home.

gordon arnold

E-commerce was a natural evolutionary enhancement when Information Technology (IT) and the internet were introduced to the catalog sales business aspect of retail. When one investigates the strengths and weaknesses between the brick & mortar vs. e-commerce, the two do a fine job of differentiating themselves apart from one another quite easily. As long as there is next-day shipping and low prices, e-commerce will exist and ultimately settle into its own market. Brick & mortar will adjust likewise. A better solution for corporate stability and growth would be for each aspect to maximize their own potential against their own competitors.


Take Our Instant Poll

If only about a third of shoppers believe store associates are a major driver of the appeal of physical stores, what should be the goal?

View Results

Loading ... Loading ...