TORONTO, Canada - Amazon recently posted its eighth straight quarter of growth. In fact, in the first quarter of 2017 its revenue grew by a jaw-dropping 23 percent, hitting net income of $724 million. Amazon Prime subscribership jumped to over 80 million members, representing a gravity-defying increase of 36 percent. And, while slowing marginally, Amazon Web Services, the company’s cloud computing cash cow, continued to post growth in the mid-40 percent range, giving Amazon plenty of cash to burn on furious innovation.
For one, Amazon continues to expand the capabilities of its Alexa Voice Service, the operating platform of its popular Echo digital assistant, a technology that not-so-subtly aims to disintermediate not only Google but every retailer on the planet from the consumer product search process, 55 percent of which already defaults to Amazon.
In addition, Amazon is steadily adding products to its Dash Replenishment Services platform which builds re-order capabilities directly into products like printer ink cartridges, water filters and appliances, to name only a few.
And in a move that elicited a collective “holy crap” from the grocery and convenience industries, Jeff Bezos and team unveiled Amazon Go, an automated store design free of checkouts, cashiers and lineups. The first such store is currently in beta on its Seattle campus and the word is they intend to roll out hundreds more across the United States.
Making their spider web of value even stickier, Amazon will spend a whopping $4.5 billion on original and licensed content this year to feed its burgeoning video streaming business, falling just shy of Netflix’s $6 billion investment. As Bezos himself has said, “When we win a Golden Globe, it helps us sell more shoes.” And speaking of shoes, Amazon has also secured the number two spot in US apparel sales, second only to Walmart, which it is expected to eclipse very soon.
For some brands, a list of wins this long would represent a lifetime of achievements. For Amazon, it’s quickly coming to be seen as a decent quarter. Amazon, it would seem, is unstoppable, invincible, undefeatable.
Yet, despite all these recent achievements, innovations and accolades, there are some adjectives that I can’t ever recall hearing mentioned in the same sentence as Amazon. Conspicuous by their absence in most commentary on the internet giant are words like fun, beautiful and joyous. You’ll very rarely, if ever, hear Amazon described in these terms.
And that’s no coincidence. Amazon isn’t a fun experience. Friends don’t meet for dinner and then go on an Amazon shopping spree. People don’t take selfies of themselves ordering things on Amazon. I’m a card-carrying, dyed-in-the-wool Amazon Prime member and order plenty of stuff but I’ve never perceived my time doing it to be fun.
As for beauty, Amazon is about as aesthetically pleasing as a wood chipper. But, like a wood-chipper, Amazon is purpose-built, not for beauty but for efficiency, expediency and volume.
And, regardless of its early success, I have yet to hear anyone recount stories about what a “joy” it is to shop using Echo. Nor can I recall anyone giddily running from one room to another pushing their Dash Buttons. The point of these technologies is not to elicit joy but rather to eliminate altogether any consciousness of shopping.
Amazon is a passionless yet wickedly effective means of consuming. They’ve taken what used to be a sometimes painful, arduous multi-site online buying experience and literally brought it down to one-stop and zero clicks with Alexa. It is the all-you-can-eat buffet of consumerism. It’s the Wikipedia of shopping, which is to say that whatever you’re looking for is probably there but getting it is never what you’d call a memorable experience.
And so, as "cheap" is to Louis Vuitton, Fendi and Rolex, fun is to Amazon — it’s simply not in the brand’s DNA. Nor was it ever intended to be. Jeff Bezos never set out to create a delightful shopping experience. Amazon is quite simply the shortest distance between wanting and getting.
THE ART OF RETAIL
So, if truly great retail can be considered fine art (which I fully believe it should be) then Amazon is the paint-by-numbers equivalent. It’s fast, easy and simple but about as artistic as Dogs Playing Poker. In other words, Amazon has — to its credit — reduced shopping to a science, but in doing so has also sapped it of its aesthetic, social, kinetic and human joy.
And it's this one tiny yet glaring chink in Amazon's seemingly impenetrable suit of armour that may just offer their competitors an opportunity to inflict a small wound, or at least save themselves from outright annihilation. Using art to counter Amazon’s science, retailers may just stand a chance of surviving, if not thriving in their shadow.
But it’s a strategy that demands that these same retailers finally come to grips with a longstanding and inconvenient truth. Most retail experiences aren’t fun, beautiful or joyful either. There’s a reason people aren’t going to the mall anymore. There’s a cause for all the store closures.
So how does one engineer joy? How does retail reclaim its artistic ground? How do stores become fun again?
It begins by getting out of the store business entirely.
Don’t build stores. Build stories.
Ultimately as humans we acquire products but we invest emotionally in stories. The world doesn’t need another concrete commercial real estate box with racks, registers and shelving, or another cold, catalogue-like website. It needs physical and online shopping places that celebrate unique brand stories. It needs enchanted spaces and installations that promote interactions with products. It needs powerful experiences that engage on every sensory level. Great retail must be nothing less than a form of performance art where the cost of admission is a purchase only-too-gladly made.
Don’t conduct commerce. Create community.
Visit any major city and you’ll see the same thing — people gravitating to and congregating in public spaces. Parks, squares and plazas are communal gathering points. Yes, your business succeeds by selling things. But all those things are sold to people and people are, by nature, social animals. Building a tightly connected community of customers who are galvanised by a common passion, place, idea or interest is the surest way to cultivate a sense of community and an atmosphere of fun. Doing so raises your stores and websites beyond the level of commerce and into the realm of becoming powerful places for communal gathering.
Don’t sell mass. Sell me.
Mass is the realm of Amazon, which has little interest in personalising products. Personalisation costs time, money and effort — all of which dilute Amazon’s competitive advantages of selection, speed and affordability. So, find a means of personalising and customising products and solutions for your customers. This can be by leveraging clientele data, using technology to offer personalised solutions, or by offering bespoke and customised options, replete with concierge levels of service. Regardless of how you achieve it, it’s essential to leave every customer feeling that your store, your products and your staff were there especially for them.
Don’t measure sales. Measure experiences.
In a world where online sales are growing exponentially, relying on sales per square foot, per hour or per sales associate as a measure of store productivity is folly. Focus instead on creating experiences per square foot. Ensure physical opportunities to try, play, learn, be inspired and perhaps even co-create in the space. Deploy brand ambassadors to share their expertise and experience with your guests. And don’t worry — sales will get measured, your accounting department will make sure of it!
It’s experiences that you, as the retail leader, need to focus on, because it’s the experience that will not only differentiate you relative to competitors, it will also help you outperform in your category. Studies indicate that businesses that outperform in the realm of customer experience can, depending on their product category, enjoy up to a 35 percent revenue lift compared to mediocre competitors of the same size.
Forget the petri dish. Use a palette.
Amazon has, as they say, “scienced the shit” out of retail. Their technological prowess and financial war chest for experimentation is formidable. More reason that rank and file retailers are wise not to chase Amazon’s technological vapour trail. Doing so has proven to be a costly road to ruin for many retailers.
That said, retailers must also embrace the fact that there are now technological table stakes involved just to play. But instead of trying to lead with technology, begin by more artfully engineering a new and exciting path to purchase in your category. Reinvent the journey. And after breaking this new, unique and remarkable customer journey into its most granular moments, ask a simple question: where could technology remove friction or deliver joy? I assure you, creating a unique, ownable and repeatable path to purchase is the heavy lifting that most brands are afraid of doing or simply too lazy to take on. But once complete, finding the right mix of technology to bring it to life will be the easy part.
Don’t train. Rehearse.
This isn’t your grandma’s retail era where a little product knowledge and a smile are enough to get by. The future of retail is about mind-blowing and meticulously staged performances. From the moment a consumer connects with your brand to well beyond the purchase they must feel a part of a production so perfectly executed, so meticulously performed and so brilliantly written that that it’s memorable and begs to be shared.
Can Amazon be combatted? Undoubtedly. But in order to do so, retailers must start from the premise that their stores, stock, people and merchandising is merely an empty stage. The story, the narrative, the action and interaction are what bring that stage to life.
For most retailers, it’s a story that is just waiting to be written.
Originally posted by Doug Stevens on Business Of Fashion, May 2017.