Retail Trends: Will Amazon Price Check Mean RIP Bricks and Mortar?
By Bob Phibbs
This is part of a series of retail expert discussions from the National Retail Federation's Big Show in New York last week. The goal was to have a point/counterpoint discussion of some of the hot topics in retailing. Sponsored by Alert Technologies, these dialogues allowed us to interact and help you as a C-level executive look at some of the more complex issues concerning bricks and mortar stores, their employees ability to serve the customer and interactions with technology.
This debate features Bob Phibbs, the Retail Doctor and Kevin Graff from GraffTV discussing bricks and mortar retailers, the effects of mobile shopping and in particular the Amazon price matching app. Here is the video to watch and an edited transcription below.
Bob: Amazon is going to be the death of a lot of independent retailers that are here at the NRF show. And I think a lot of these people don't realize how quick that little price check app is going to hasten the demise of a lot of chains. That's because the most expensive products are the very ones that people are going to check on.
So, the most profitable items you have in your store are the ones are that are going to be scanned. I'm not talking about a little widget for four bucks down at the Five and Dime, I mean the really expensive stuff, consumer electronics or those kind of things. That's my point.
Kevin: Well, interesting perspective, and I'm not so sure that I could disagree more than with anything that you just said.
Kevin: I mean, I think there's some truth to what you're saying, as there always is, but I think common sense and history tells us that we will be just fine as we go through this. I think what Amazon is doing, and it's not just what Amazon is doing, it's what everybody's doing around this show with mobile and social this, and connect to that, and e-com that's been around now for a little while. It keeps advancing and it keeps growing in terms of significance, but look, retailers adapted. If nothing else, retail is a survivor. We've survived the arrival of the mall. We survived the arrival of big box retail.
Bob: I'm not that old, but OK.
Kevin: Do you remember the invention of the cash register? Monumental shift in how we did things.
Bob: I don't think that's the same because then it was just there for your four walls, and now, here for your four walls, Amazon accounts for 20% of all purchases online. That is huge; that is globally what they do.
Kevin: 20% of all purchases online, but not 20% of all retail purchases.
Bob: Well, that's the whole point though, is that it is so trusted that they, by default, become the trusted player.
Kevin: Are you going to scan me to see what you can get me for online?
Bob: It's only pennies, folks at home. You can check that out, Graff Retail TV.
Kevin: But if it's what this is going to do, and this is the good news. The reason I'm happy to see things like Amazon's price check come out in mobile and all of its different formations come out, is because from a consumer's point of view, and we're all consumers first and foremost, what it drives is a better shopping experience period.
Bob: How do you see that?
Kevin: Well, think about this. Every time, I'm up in Canada, I always say the best thing that ever happened to Canadian retail was the arrival of Walmart. Walmart arrived in Canada in 1994.
Bob: Made everybody up their game.
Kevin: Everybody had to up their game, but we took a look at the retailers that were most threatened by them, retailers like Canadian Tire. If you saw what they were then to what they are now, it's a classic example of what's going to happen inside. So, is there going to be some shake-out? Yeah, there'll be some shake-out, honest, but there's always shake-out. At the end of the day, the consumer wins.
Bob: But retail, we just heard today, is responsible for one in four jobs in America.
Bob: So, if we took a hit of, let's say, 20% of people go mobile or something, into this one player...
Kevin: Right. Well, we re-allocate those jobs obviously. I'm thinking somebody's doing all this programming and picking and packing...
Bob: Doesn't take it, doesn't take that many people. Here's my thing.
Kevin: I'm not the economist on this, Bob.
Bob: Here's my thing. So there you are, you're our number one sales person for widgets.
Bob: OK, you're working with Bryan over here and he's working with widget central and you're the number one guy, you're a commission-based guy. You finish the sale and you're like, "Great, I'll take it," and he says, "Wait a minute, let me just get out my scanner." He scans it...
Bob: He finds he can get it for $300 less, throws it in your face and says, "Are you going to match price?"
Bob: So, a lot of debate is going to be about this because right, a lot of retailers will say. "Well, we will match."
Bob: So, how often can you do that?
Kevin: Now, it will be policy driven at that stage of the game.
Bob: And what does this guy want to do? Does he want to work in that environment still?
Kevin: Well, see, and that's the thing that changes it. So now, how does a retailer evolve against that? And you see it out there right now but in different formations where one retailer will sell one item for one price, another one will sell that same item for a completely different price in town, and still sell lots of it. Case in point, take …
Bob: But you have to go there. That's my point.
Kevin: Think about it. Go into the mall, you can buy a pair of Levi's jeans, right, at Walmart, $5 cheaper than at the Levi store in the mall, but the Levi store in the mall still sells hundreds and hundreds of jeans at $5 more. Why? Because they give you something more that you can't get at the Walmart store.
Bob: I'm totally with you.
Kevin: That’s what happens with retail.
Bob: But when I'm in that "something more" Levi's store, and I'm in it. I had that experience and gosh, they loved me, and I know Cary.. .
Bob: She's so wonderful, and she does it, and then I go, well I think about it, and I scan it, and it's free shipping and returns. That's what I'm saying...
Kevin: And is it a game changer? Yeah, it's a game changer.
Bob: It's a huge game changer though.
Kevin: What's rule number one, and I know you say this to all your clients out there. You're not going to be all things to all people.
Bob: Absolutely not.
Kevin: There is going to be that bottom feeder that's going to look for that lowest of lowest of lowest price out there. I get that. Absolutely.
Bob: Tell me you're not going to be a bottom feeder.
Kevin: You're the guy that crusades against Groupon all the time, are you not?
Bob: I am. That was another discussion which we'll have up here, too.
Kevin: But not everybody is going to be that bottom feeder, when you look at how this shapes out.
Bob: But that's not a bottom feeder. If you and I were going to buy a plasma TV, and we had a great experience at Best Buy. You cannot tell me you would not be curious with that $3,000 system, you would not be curious what Amazon was.
Kevin: Absolutely, but at Best Buy they're also going to show me the best way to be able to install it.
Bob: They should do it.
Kevin: Or they're going to provide an educational component to that, and I can't get all of that online. That's the differentiating factor. You're not wrong, this is going to be challenging.
Bob: Well, and you're not wrong either. This is the debate. This is why we wanted to have this debate is because this is what we're not hearing in a lot of the booths here, right? We're hearing that if you've got a tablet, baby, everything's great.
Bob: You're going to be fine. If you've got a virtual wallet, if you have a little app, everything's great, and you and I both, because Kevin and I are very similar personalities in that we both think it's about the person, the humanity...
Bob: ...that moment that somebody walks into your store.
Kevin: That's what we're probably not seeing enough of around here. It kind of gets lost in the noise of all this technology and all this IT, and this is all really great, and I think it's all really cool, and it's important. I'm not here to say that's not important. I'm not living under a rock in the past, but what I do recognize is that we're just going to continue to find better ways in retail to represent it. If we want to be bricks and mortar retailers, we've got to start creating better shopping experiences in there, and that's going to come by adopting some of this technology inside the stores.
Bob: With the employees though, not instead of them. That's my thing.
Kevin: Exactly, but there's going to be some stuff that we're going to do in the absence of employees that's going to make the shopping experience better, but I'll tell you, everybody's going to step up their game from an employee perspective. So whether it's staff coverage, whether it's staff ability, whether it's staff knowledge, all that's going to pick up.
If traffic counts are going to go down into your store, you better get your conversion rates up and you better get your average sale up.
Bob: Because the people that really want to be there, really want to be in your store.
Kevin: Absolutely, and the fastest way to be able to do that growth in your business is going to come through your staff. Get them off their butt, get them waiting on some customers, teach them a little bit more, teach them how to sell, teach them how to drive.
Bob: And hire them better, to start with.
Bob: But they really need to enjoy going in there and meeting another person.
Bob: That's kind of shocking.
Kevin: Why would you want to work in retail, if you didn't, right?
Bob: That's a great place for us to end.
So what say you? Is the Amazon price check app a gamechanger? Do you expect bricks and mortar to thrive? Please enter your thoughts in the comments below.
If you haven't downloaded my special report: Bricks and Mortar Retailing At Risk in the Digital Age, you can still do so here.
My thanks to Marge Laney at Alert Technologies and our cameraman Brian Laney who made this all sound and look great!
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