The three big trends
Shoppers are already used to jumping online to get a winning combination of low prices and cheap (or free) delivery, but from his research, Cole expects we’ll see more of these shopping trends:
More undercutting to score bigger overall sales. “What we’ve seen with Amazon is, to start with, it’s willing to lose money on some items to get bigger baskets and more sales overall.”
More ‘showrooming’ via mobile phones. People go to a store, spend 20 minutes with the salesperson looking at a television set, then without even waiting to leave the store, pull out their phone and try to buy it online. The stores have no choice but to match those prices and conditions.
More click-and-collect. “Supermarkets, stationery suppliers and hardware stores all have big click-and-collect plans,” says Cole.
Given these trends, there are two strategies that store owners may want to consider. The first is offering customers an incentive to pick up items they’ve ordered online at the bricks-and-mortar store. That way, they’ll walk through the store and potentially buy more while collecting their package.
The second is to give commuters an option so they can collect their online orders on the way home without even getting out of their car, just like drive-through food.
“Is human nature in Australia different from American human nature? I suspect not,” observes Cole. “[In the US] we also have great nostalgia for the smaller merchants in our communities.”
However, huge retailers such as Amazon and Costco meet two basic needs: they’re cheap and they’re convenient. Indeed, Cole’s research into Costco found that the chain’s eight stores in Australia are already some of its most successful in the world.
It’s a tough call for small businesses competing against giant retailers, but Cole suggests two ways that smaller enterprises might swing the odds in their favour:
Sell something the big players don’t have – businesses that design, make and sell their own products have more opportunities to stand apart.
Band together – independent supermarkets might be able to reclaim customers by sharing marketing and buying power to offer good prices on more interesting stock than the big players (and possibly by taking a hit on staples such as bread and milk).
But it’s not only small businesses that are facing competition from Amazon. “Interestingly,” Cole notes, “Amazon in the US is inflicting immense pain on Walmart (on latest reports, the world’s highest-earning retail chain), so the big chains are getting what they deserve.”