How Retail Underdogs Can Avoid An Amazon Holiday Blowout
During the holiday shopping season, countless consumers will use digital payments and commerce technology to buy gifts from distant companies — some overseas, some just in neighboring time zones — and have them shipped seamlessly to their destinations.
But the same technology that enables those transactions also can bring the benefits of consumer intimacy to small and medium-sized businesses (SMBs) that are often struggling to win more market share in a retail world dominated by the likes of Amazon, Walmart and other large retailers.
That was the main message of a recent PYMNTS interview with Peter Spee, vice president of strategy and general manager, Americas, at AEVI, a FinTech player that wants to bring acquirers closer to their merchants.
Among the most important tasks for SMBs during the 2018 holiday shopping season — and, of course, beyond — is to, in Spee’s telling, keep abreast “of the moods and trends of consumers” and know what they are looking for in terms of “pricing, inventory and product comparisons.” From that work should spring a “seamless” consumer experience that includes not only payments — and relevant payment options — but delivery and even financing services.
That might sound obvious. But that doesn’t mean every SMB is on board with such thinking — or has made the financial commitments to do so. The new Retail Innovation Readiness Index from PYMNTS, powered by AEVI, found that 65.4 percent of retailers said they innovate to improve customer loyalty — a finding that underscores the importance of Spee’s comments about SMBs.
But that report also documented the existence of an innovation divide that is based on company size — SMBs tend to face more challenges when implementing innovation than do larger firms. That said, about 88 percent of smaller businesses surveyed for the Index believe that innovation is essential for survival. That means, at the least, the idea of innovation in this digital payments and commerce world has taken root, even among businesses that might need more of a helping hand to achieve innovation than bigger retailers.
The rise of apps are helping SMBs in the innovation game, Spee said. Those businesses “have access to similar tools that consumers are using” — which can, at times, be a double-edged sword. Apps make it easier for SMBs to dig deeper into consumer behavior — to get to their consumers and offer them personalized offers and upsells, along with associated features like delivery — but it also means consumers are more sophisticated and demanding when it comes to browsing, shopping, buying and post-purchase services. SMBs cannot afford to fall behind.
Among the areas where SMBs could use more focus are pricing and price comparisons. Larger rivals often have entire departments tracking those details, Spee said. During the holiday shopping season, SMBs might have the advantage of, say, a warm, inviting store that draws in consumers off the street. But those same consumers can simply use their mobile devices to compare prices. What happens when those consumers learn that the SMB prices are higher — even significantly higher — than the prices offered by competitors?
Well, that SMB might have to get creative, Spee said. They might “install the product in a consumer’s house,” he said, “or offer a combination of products” in some package deal that makes up for the price difference. “SMBs can offer the personal touch.”
Providing a personal touch requires consumer data and an understanding of consumer data that necessitates a well-trained staff, who will need at least a few hours — ideally, “an entire day,” Spee said — to get familiar with the retail data systems in play. Still, that’s an especially challenging tasks for SMBs, given staff turnover. A robust loyalty program also could provide information about consumer behavior and lead to more personalization on the part of the SMB, he said.
As important, if not more, is “orchestrating all these interactions into one seamless experience,” he said. That can mean, for instance, making delivery an easy option to select during purchase or having a simple, flexible point-of-sale system instead of a complicated operation fixed to specific points in a particular store.
“You want to be able to take the sale to anyone in the SMB’s store or retail environment,” he said, adding that such a capability not only works to increase consumer satisfaction but increases efficiency in that retailer’s daily operations.
Digital technology can certainly bridge distances but, as Spee explained, it can also help SMBs better know their customers and keep them loyal even as larger merchants boost their own offerings.