was originally published on this site
As those of interest in the world of retailing wait with bated breath for the opening of Amazon’s first brick and mortar store, reportedly to open on Manhattan’s West 34th Street across from the Empire State Building in time for the 2014 Holiday period, one of its children, Zappos, has already opened its first free-standing store in Las Vegas. Said to be a pop-up store, open 24/7 between November 21 and December 31, it sounds to me like it has the kind of compelling experience that could lure shoppers year round. Its various experience-augmenting uses of technology might also preview some ideas for adoption by Amazon in its new space.
In 20,000 square feet of space, they’ve merchandised different areas to accommodate varied categories of apparel and accessories, including a shoe room. The experience is also showroom-like, without deep assortments, a shopper can scan an item at a kiosk or on their mobile device, to see all available colors and sizes, which when selected, can be shipped “Fast & Free” as promised by Zappos. The blended offline/online experience is then topped off by offering food, drinks and entertainment, a huge Christmas tree and fake snow in the parking lot.
From Clicks to Bricks: No Surprise
Zappos’ Vegas launch and parent Amazon’s announcement of its first physical store opening in Manhattan is not a surprise to me, as it was predicted in the book I co-authored with Michael Dart, The New Rules of Retail—first published back in 2010. The logic was the same then as it is now. Amazon (and by inheritance, Zappos), has a “big data” base, guessed to be larger than the Pentagon’s, and they know how to use it. It provides them with razor-sharp knowledge such as what Jane Doe, who is married with two kids and a dog, living in the East Side of Manhattan (or anywhere), is eating for breakfast, what brand of jeans she wears, the charities she gives to, the music she likes, and so forth. Therefore, Amazon has the capability of assorting any location across the country with precisely those items that are locally preferred. Yet, they will also have screens for downloading and selecting from Amazon’s total inventory.
The personalized knowledge that Amazon continues to build on, and that all retailers are pursuing, is collected over time across all accessible consumer browsing and transactional points. It tracks consumer shopping behavior and can be drilled down to individual profiles. This is the “big deal” part of the buzz concept of “Big Data,” because it tells the retailer not only what brands the Jane Does on the East Side prefer, it can also indicate what kind of shopping experience, environment and service they expect. Most retailers have not yet scratched the surface on big data analytics and its laser-like ability to localize, even personalize the shopping experience. It will be interesting to see how Amazon uses its supposed advantage in this area.
If Amazon demonstrates this pinpointing capability of merchandising the store with a localized assortment, as well as personalizing the shopping experience, they will have raised the competitive bar and sent a message to all retailers that understanding, analyzing and using big data to personally engage customers had better be moved to the top of their priority list.
Another motivation for Amazon’s decision might very well have been the unprecedented success of Apple’s stores. Of course, this also raises the question of how Amazon will create some kind of neurologically compelling experience within their stores. Another factor favoring Amazon’s decision are the research findings that consumers who have the option of shopping both online and off are spending three to four times as much as those shopping just one channel.
So what might a neurologically compelling experience look like in an Amazon store? Given the range of products they sell, I would speculate they will select two or three product categories, probably those that consumers prefer to touch, feel, smell and try on. This would suggest apparel, accessories, beauty products and as with Zappos, footwear. It also might include locally preferred books and electronics. The merchandise would be narrowly assorted, again based on neighborhood preferences. And, the physical layout might be “showroom-like” as opposed to more traditional stores. Of course there should be Internet screens throughout so that customers can download and view the full line of products if those on display are not to their liking, or like the Zappos store, be able to order sizes and colors that may not be in stock. And, for apparel, they might even have virtual fashion mirrors through which customers can download items, using hand gestures, that they can view superimposed on their bodies for an idea of what the outfit will look like, and how it might fit.
In the beauty category they might copy Macy’s interactive touch-screen beauty kiosk that educates the customer about which products would best fit their persona. Amazon could also borrow from Burberry’s high-tech, higher touch in-store experience. One such example is the customer’s ability to scan a displayed product’s bar code with their smartphone, which then triggers a storytelling video of the designer describing the fabric used, where it was made and what inspired the design. And Burberry’s audiovisual extravaganza of LED screens streaming videos and cool music throughout the store could add to the experience—to say nothing of providing food and refreshment stations.
Taken to an imaginative extreme, but highly possible for Amazon to pull off, given their big data capability, they could take a page out of Apple’s playbook and have “yellow-shirted” genius assistants who engage customers on a personal level and educate them on the new “Amazon Way” of satisfying customers (I can’t imagine what that might be, but I’m sure Jeff Bezos can figure it out. It is a great idea).
Another reason for Amazon’s brick and mortar strategy is that they had to be all ears when global e-commerce CEO of their Nemesis Walmart, Neil Ashe, said in an interview at the World Economic Forum that the company was continuing to build out new warehouses across the country used to distribute online orders. Additionally, their 4500 retail stores could double as distribution centers. The big “Aha!” about that statement was that these locations are now a place from which to distribute goods as well as a place to shop. How smart is that?
A final point, and another of the “new rules” in our book, is that all retailers and brands must adopt the strategy of what we coined ‘preemptive distribution.’ Simply put, since the POS is the consumer, wherever they may be, and since they demand (because they can) that whatever it is they desire be in front of them either digitally or physically, whenever they want it, then retailers must operate on a matrix of all possible distribution platforms, all seamlessly integrated and interchangeable, for shopping, ordering, purchasing, paying, pickup, delivery and returns. The buzzword, of course, is omnichannel.
Finally, regarding Amazon’s 34th Street location, in the (perhaps) distant future, Macy’s might have invited Amazon to physically set up within their flagship store on Herald Square. Just as Topshop, Bonobos and Brooks Brothers set up in Nordstrom’s store and Sun Glass Hut and many others in Macy’s, it has been proven that there is a huge synergistic benefit to be gained by this strategy. For example, a Brooks Brothers-loyal customer learns they’re located in a Nordstrom store across the street, as opposed to having to make a long trip across town. The consumer goes to Nordstrom for Brooks Brothers, and while there, notices something across the aisle they love. Thus a purchase is made of another Nordstrom product; likewise for a Nordstrom customer discovering Brooks Brothers and purchasing the brand while there.
This arrangement or collaboration or whatever you want to call it, is the future. Retailers and brands do not decide where or how consumers will seek their products or services. The consumer will decide, and the retailer had better be there: wherever, whenever, how, and however they desire the retailer to be present… or else! Period!
Thus, Amazon is still breathing as it makes itself accessible “offline” on 34th Street in Manhattan, and likely soon to be rolled out across the country. Between Amazon and Zappos, it will be interesting to see how these masters of Online will transform the Offline shopping world, too.