Some Good News for Brick & Mortar Retailers
Much has been written about the doom of retail at the hands of online merchants like Amazon. But traditional retailers – especially grocers – have several advantages over online that should keep shoppers coming back for years. Retail is changing, but not failing. Here is a list of 11 key advantages of traditional retailers over Amazon and other online retailers.
- Hype Awareness – Although it’s not quite “fake news”, eCommerce gets far more press coverage relative to sales. For some perspective, an October 2016 study by Kantar reports that total online shopping represents 1.4% of U.S. grocery sales. Of course, this number should grow, but all of the eCommerce news coverage could be making the issue seem larger than it actually is, at least at the moment.
- Supplier Protection – Many CPG/FMCG suppliers tend to protect their retail partners by altering the role Amazon plays in their marketing efforts. These brands use Amazon’s SEO dominance to share product information and shopper reviews while keeping Amazon pricing higher to avoid undercutting their established retail partners.
- High Online Grocery Pricing – Online retailers still don’t compete with traditional grocers on price. Amazon prices are higher than traditional retailers for most top promoted products. The data below compares average promo price in supermarkets vs. Amazon’s lowest price:
Source: Market Track, Average Promoted Price, 10/1-11/21/17 vs. Amazon’s Lowest Price on 11/22/17
- Reverse Showrooming – Many shoppers now read Amazon’s online reviews and product specifications before buying locally in a traditional store. But make no mistake - reverse showrooming is not a retailing strategy. It’s a shopping strategy that can benefit brick & mortar retailers.
- Changing Sales Tax – For years, Amazon avoided state and local sales taxes, giving them an advantage over brick & mortar retailers required to collect up to 12% sales tax. Now most state governments are using legislation to collect more sales tax online – creating a more level playing field and reducing a huge advantage for online retailers.
- Easier Returns – Most traditional retailers accept returned products sticking out of its original torn packaging. While returns can be a hassle for any shopper, returning products purchased online can often take much more effort. At one point, we’ve all discovered that unboxing is much easier that re-boxing.
- Hands-On Product Interaction – For many categories, shoppers like to touch, smell, and sometimes taste new products before they buy. Brands invest millions each year on displays, free samples, and demonstrations that allow shoppers to interact with their products. Despite product photos and demonstration videos, online retailers can’t match the in-store sensory experience.
- Trip Frequency – Shoppers can visit supermarkets, drug stores and mass merchandisers multiple times per week, while the majority purchase online far less frequently. Market Track’s Shopper Insight Series Survey tells us that 76% of consumers go grocery shopping at least once a week. Meanwhile, only 41% of respondents said they shop on Amazon once a week or more.
- Sign-Up Shyness – With all of the recent security breaches, shoppers are more reluctant to release credit card & email info to another online vendor. This can help both traditional grocers AND Amazon by preventing new online players to get a foothold. When you ask, “Who is the #2 online retailer?” most shoppers don’t seem to know or care.
- Shopping Local – While the intentions to shop local are not always reflected in shopping behavior, this is a clear advantage for traditional brick & mortar retailers staffed by local workers selling local products – and paying local taxes. This advantage is magnified in perimeter food departments like produce, bakery, deli, and floral.
- Impulse Purchases – What do we want? Immediate gratification! When do we want it? Now! No one shops Amazon because they’re hungry. You can’t smell the fresh bakery department though your phone – yet.