Mid-Size Retailers: Even up the Odds
Retail is intensely competitive. You either need to go really big, or find a niche where your service, quality or convenience appeal to your most important customers. And that personal touch better be pretty appealing to pull customers away from Amazon, Wal-Mart, Home Depot and other giant competitors with crushing economies of scale. Otherwise, the one that gets crushed will be you.
If that’s not worrisome enough, there is a new challenge facing mid-sized retailers as they fight to protect market share. Those behemoths, in their relentless quest for growth, are spending more than ever on marketing and improving the customer experience, both on- and off-line. Why? They need more customers. If you are a mid-sized retailer, they need your customers. They want your share and they don’t want to share. They want it all. They may not have the flexibility to match your quality or personal service, but they can invest in marketing technology that makes them seem personal and they are right now – big time.
I had exactly this conversation recently with an executive who has been the head of e-commerce merchandising for several retailers in the $2 million to $7 million revenue range, but it applies to retailers of all sizes. Consumers not only appreciate, but will come to expect, more personalized interactions to win their loyalty. He was not simply talking about the Amazon-famous “customers who like this also liked that” general suggestions.
He was talking about the Amazon-ilk’s recent push to make “the best” personal product recommendations that are most relevant to each individual customer from among all available products. Plus, the right offers and messages appropriate to each customer’s lifecycle stage, at the right time for any one customer. Or employ a variable offer campaign to reach millions of customers at once. Wow.
If customers get that from Amazon, guess where they will shop first?
But smaller retailers don’t have to roll over and play dead. They are not going to outspend the big boys, so they have to be smarter — and the tech weapon that lets them pull it off is predictive analytics geared to their needs. Instead of vast, sweeping big data initiatives that seek to solve it all, the mid-sized retailer can take advantage of evolved technology to zoom on in their absolute priorities to keep and attract customers cheaper, faster and more accurately then they ever thought possible.
Technology has evolved to let mid-sized retailers fight back. They can discover immediately usable predictive metrics about loyalty, risk, and value of each customer, and product recommendations ranked by likelihood to buy. And they don’t have to drown in a sea of data to do it. But if they don’t seize the opportunity to take advantage of these available technologies to compete on their own terms, drown they will, in the wake of giants like Amazon.