Competing With Amazon On High Street

The retail juggernaut Amazon’s decision to move more of its operations to bricks and mortar could be one of the biggest challenges to face the high street since the introduction of the internet.

Although all major retailers have internet presence, few are as successful in their market area as Amazon and none have the pervasiveness of the tech giant. Although Amazon will have challenges developing and implementing the locations and logistics that have been well established by the incumbents, the size of the organization, its commitment to continuous re –investment of profits and its ability to trial and embrace new technology will make this company an awesome competitor.

Amazon will enhance and improve the technology it has developed and will probably offer the services to retailers using their cloud server technology.

This will be problematic for the retailers that adopt it. In that most major retailers will be reluctant to utilize a technology that could in theory provide confidential data of their operations and their customers to their biggest potential rival.

If Amazon’s technology gives it such competitive advantage, how can the incumbent retailer compete on a like-to-like basis?

The answer, of course, is for retailers to research, test, and implement alternative suppliers of technology so they can own their own solutions and compete accordingly.

The main technology utilized to provide the building blocks to compete is oriented around the Internet of Things (IofT) .  IofT incorporates sensors to measure parameters such as temperature, movement, light intensity, humidity, water presence, energy, to mention a few.  These sensors, ideally wireless for ease of deployment, can be connected to cloud based computers where data can be stored, processed and presented to management to assist in the monitoring of the current operations in real time and in the design of better systems.

Wireless sensors of this type can be obtained from companies such as  Wireless Sensors. Here up to 50 different types of individual sensors can be acquired as well as a cloud connectivity service to permit access to data. For example a supermarket can you use wireless temperature sensors to monitor if any refrigerators or freezers are not maintaining optimal temperatures.

For multi-store operators, stores can be compared on performance parameters and strategies implemented to instigate savings or improved performance.

The areas of the business that can be seriously enhanced by this technology are:

Sales and Customer management

Marketing

Product Quality

Predictive maintenance

Energy Management

 

Sales and Marketing

What can be achieved is a significant understanding in customer behavior and customer and market intelligence that can be used to improve the in-store customer experience and as a net result increased turnover and utilization of in-store personnel.

To compete effectively in the future, retailers will need to improve the customer experience. This can be achieved by measuring and monitoring customer behavior in and outside the store.  Issues like the flow of  customers through the store, in-store customer hot spots, queues, can be identified easily and used to improve the customer experience.  Thereby, ensuring that most customer visits are successful for the store and for the customer.

Improved Energy Management And Savings

Significant savings can be achieved by monitoring the environment so far as temperature humidity and light are concerned.  So HVAC and lighting systems can be controlled to optimize the energy usage  as well as providing a more comfortable environment for customers and staff.  Monitoring power usage and implementing power saving strategies can offer significant operating savings.

One of the main non-staff expenses of food retailers is associated with fridges and freezers -major consumers of power. By ensuring that all these devices are operating at an optimised level major savings can be made as well as ensuring product quality of chilled and frozen products.

Predictive Maintenance

Most large retailers are responsible for the ongoing maintenance of their own equipment and some of the building assets they are leasing. Such things as HVAC systems, escalators, lifts and any other electromechanical device requires routine maintenance to ensure continuous reliable operation.  By monitoring the electromechanical performances of theses systems it will be possible to optimize maintenance to ensure that equipment is kept within specification without unnecessary downtime.  In addition optimised maintained equipment will also minimise energy usage.

Conclusions

Bricks and mortar retailing are undergoing massive change and challenges. To survive and prosper the incumbents will need to embrace technology.  If not already happening, teams need to be established to review the current technology and trends. The process is to measure and monitor, review and theorize, design and implement. Test sites need to be developed to experiment with the technology and to develop ongoing strategies which can provide a continuous process of improvement in terms of customer satisfaction and cost savings. For those that embrace the strategy, there will great opportunities;  For those that are business as usual, there will be a downward spiral of performance.