How can consumer companies compete effectively against Amazon's dominance in retail?
Companies must differentiate on experience, community, and product exclusivity while building direct-to-consumer channels that Amazon cannot replicate.
- US store closures exceeded 8,600 in 2017, surpassing the 2008 financial crisis peak, driven by e-commerce displacement - Digital retail grows at 15% annually with mobile commerce growing at 25% as smartphone adoption reaches 80% of US shoppers - Generation Z represents a fundamentally different consumer whose expectations require new engagement models - Differentiation on experience, community, and exclusivity provides defensible positioning against Amazon's scale advantages - Companies that build direct customer relationships and curated digital-physical channels will outperform platform-dependent competitors
Credit Suisse estimates that there could be more than 8,640 store closings in 2017, which will be higher than the historical 2008 peak of approximately 6,200 store closings. However, U.S. Consumer Spending rose 0.8% in September 2017, growing 4.3% since September 2016, showing that spending is not the factor. Digital shares of total retail sales in the United States has been growing 15% annually over the past 5 years. Turn to the mobile channels, the growth is 25%+ in 2017 alone. 60% of Americans have smartphones, and 80% of them are smartphone shoppers.
Leading to four trends that could most affect consumer companies in the future: the changing face of the consumer, most notably Generation Z; new patterns of personal consumption; technological advancements; and structural industry shifts. All pointing to the same conclusion: that digital User Experience plays a key role in the ongoing changes to the culture of how people shop.
How Well Do You Know Your Customer?
With UX Analytics, you can measure how your traffic engages and differs from country to country, device to device, time of day, mood, reason for visiting your site, and source of origin. Companies can achieve the highest and best use of their digital content through setting clear goals of their digital properties. What do you want your customer to do when he reaches your site?
UX Is the New Salesperson
Store closures are growing at a rate not seen since the great recession, yet spending is growing faster than savings. In the past, the consumer used to enter the store and receive basic interactions: being greeted, being provided with suggestions of what to buy, being answered general questions or exchange options by the salesperson. Today, customers who now buy online are expecting the same level of experience, hence the development of AI and bots to achieve personalized customer journeys. Shoppers only know what they see when landing on your digital retail property or through research.
UX Analytics helps companies attain insights to understand the real behavior of their digital traffic. By setting clear calls to action, which are the goals you want to achieve on your digital properties, and learning what key attributes are achieving those goals, companies can achieve real conversion growth.
Amazon's structural advantages in logistics, pricing, and selection have forced a fundamental rethinking of the consumer retail model. With store closures accelerating and digital retail growing at 15% annually, traditional retailers face an existential need to differentiate on dimensions that e-commerce cannot replicate, including in-store experience, community, exclusivity, and personalization. The consumers most likely to remain loyal are Generation Z shoppers whose expectations differ fundamentally from prior cohorts. Companies that invest in direct relationships with high-value customers, curated assortments, and digital-physical integration will sustain margins in the Amazon era.
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