As consumer shopping habits continue to evolve away from traditional brick-and-mortar stores, the speed and cost of delivery have become a critical component of a true omnichannel retail strategy.
Amazon, for example, recently announced that it would offer free grocery delivery to Prime members at Whole Foods stores in certain markets. That comes on top of heavy investment in its Prime service so that it can offer free, one-day delivery on millions of items.
Beyond Amazon, other big box retailers such as Walmart and Target are also leveraging their scale to manage fulfillment costs and get products to the consumer’s doorstep fast and free of charge.
So how can the middle market compete?
Focus on discounts and promotions. In a recent survey from the National Retail Federation, free shipping and shipping promotions ranked fourth on the list of factors that consumers said would affect their choice of retailer this holiday season. The top three factors were sales and discounts, quality of merchandise and selection of merchandise.
This may give some hope to middle market retailers looking to capture their share of holiday sales, particularly those that have a robust loyalty program that offers valuable data and insight into the preferences of their customer base.
Be smart about what you discount. An informed strategy for discounting can also help manage the resulting margin impact of lower selling prices. Many RSM retailers are focusing their discounts and promotions on products that also have higher-margin complementary items in an effort to both increase the average ticket and balance the resulting margin dollars.
Promote what each individual customers wants. Big box retailers give their customers access to personal shoppers to guide their customers through a shopping experience and use information about each customer’s preferences to promote items they are more likely to purchase. Many middle market retailers don’t realize that there are companies that allow a smaller retailer to outsource the same process and create the same unique experience with targeted advertising to their customers. Digital transformation does not always mean a complex and expensive internal software implementation that disrupts the entire organization.
Source: National Retail Federation