Believe it or not, as successful as Amazon has been, and as disruptive as they have been, they’re not the largest reason retailers close their doors.
They certainly play a role. However, even the most generous of estimates of Amazon’s growth don’t account for the overall decline in sales many retailers experience. So, blaming Amazon for lower sales amounts to an excuse rather than a genuine reason for falling behind in the marketplace.
Besides Amazon, what else drives why the marketplace sees so many leading retailers belaboring declining sales, filing bankruptcy, and closing more physical locations?
These factors play a much larger role than Amazon does, according to Brendan Witcher, principal analyst at Forrester:
- No Knowledge of Customer Pain Points
Customers want to buy what they need at a price that makes sense. They want to be able to return the item without any hassles.
Retailers complicate the real issues customers face. And as a result, their stores don’t offer experiences that solve customer’s problems.
- Undifferentiated Store Experiences
Strange as it sounds, in-store experiences haven’t really changed for the past century.
A whole century!
If your store is just a building that houses your inventory, why go to it when you can simply order a product online?
Offer samples, smells, sights, sounds, demos, helpful (not pushy or salesy) store associates, or create a marketplace-like atmosphere like you get at the now-Amazon-owned Whole Foods.
That’s the key to winning the in-store shopping game.
- Use Opinions Instead of Data to Drive Strategy
Because of the internet and mobile technology, customer expectations have shifted quickly. Without data, you have either an opinion or a guess. So whatever you decide to do, make sure you gather data and analyze what it means before you act.
Otherwise, you’re acting foolishly.
- Focusing on Products, Rather than Experiences
Any consumer knows they can find the exact same thing somewhere else for a similar or lower price. Once you turn your products’ sales into a pricing game, you begin competing with Amazon, Target, and Walmart. In other words, you’re bound to lose.
Even if you’re a small company, focus on giving customers a reason to shop with you. These days, offering products only made in the USA could be a powerful reason for a niche market, for example.
You’ll have to discover this for yourself. But, it’s a key to long-term retail success.
- You Have Too Much Bureaucracy
Your employees need freedom to make decisions, take risks, and fail. They can’t be faced with limitless rules that basically turn them into order-taking robots.
That keeps your business the same. In America, where innovation reigns supreme, stifling risk is the surest path to mediocrity – or even bankruptcy.
Amazon lost 15% of its stock value 107 different times. It fell from a high of $113 at the end of 1999 to $5.67 in September 2001. And it lost more than 50% of its share value on 3 occasions, including during the 2008 financial crisis.
Risk includes short-term failure. But it also makes your long-term success likely.
Is Amazon a reason for declining sales? Yes. But Brendan Witcher argues that, because of these factors, it’s a symptom, not a cause. Take an honest inventory of how you’re doing business to see if any of these factors may be holding you back.