Are you ready for the retailer-as-service revolution?
Through a special arrangement, presented here for discussion is a summary of a current article from the Spieckerman Retail blog. The following article synopsizes key takeaways from Episode 24 of the Spieckerman Speaks Retail podcast.
Services and solutions have quickly become retailers’ growth engine of choice. Major retailers like Walmart, Kroger, Target and Amazon.com have branched out into health services, ad marketing, financial services and more. Media coverage has largely portrayed these efforts as a defensive scramble among retailers, but recent quotes from Walmart CEO Doug McMillon paint a different picture.
Addressing Walmart’s acceleration into services, Mr. McMillon said, “We feel emboldened and are now moving with even more speed and aggressiveness. For an increasing number of customers, Walmart will be seen more like a service.”
His comments illustrate a new approach and identity — retailer-as-service — that differs from retailers’ past service expansion efforts in three ways:
- Employees are included: When you think of a retailer positioning itself as a service, you assume that it is serving consumers. Increasingly, however, companies are viewing their own employees both as beneficiaries and as prospects for growth. Walmart’s press release on its formation of a FinTech upstart in partnership with Ribbit Capital stated that the venture will “deliver innovative and needed options to our customers and associates — with speed and at scale.” Focusing on employee health, whether financial or physical, reduces risk, cuts costs and plumps up profitability.
- Suppliers are customers: Suppliers have also emerged as powerful prospects. A web page outlining the “key advantages” of Kroger’s in-house Precision Marketing arm boldly states, “We know your customers better than anyone” and promises to “grow your brand equity alongside Kroger, the third largest retailer.” Here, deep-pocketed brand marketers can help retailers hedge against the volatility and limits of consumer spending.
- Platforms are parlayed: After years of monetizing its supplier relationships, Amazon is now bringing employees into the fold through its Amazon Care service, which provides tele-health and in-home healthcare to employees. The company is offering the Amazon Care model to all Washington employees as well as other in-state employers who want to add its capabilities to their benefits packages. Employees are a great beta test to ensure smooth sailing for scaling.
The retailer-as-service model illuminates retailers’ commitment to expand beyond purveying products, by tapping into captive customers and monetizing platform-building moves.
- Walmart, Inc. Investment Community Meeting – Walmart
- Walmart Announces Creation of New Fintech Startup – Walmart
- Kroger Precision Marketing
- Amazon Care to launch across U.S. this summer, offering millions of individuals and families immediate access to high-quality medical care and advice—24 hours a day, 365 days a year – Amazon.com
DISCUSSION QUESTIONS: Which aspects of retailer-as-service will have the greatest impact on retailer profitability and viability? How should brand marketers respond as retailers begin to see themselves as services to them?