Retail has never been easy – the siege on small business

Retail has never been easy – the siege on small business

Article by: Blake Doyle

The environment for online retail is getting more competitive and affording consumers more options and more purchasing flexibility.

For several decades, smaller, nimble local retailers who could outmaneuver retail giants on service or selection were able to dodge and weave with the behemoths. Dancing with giants always holds the possibility of getting stepped on and the giants are doing stutter-steps to grab market share from one another.

Blake Doyle
Blake Doyle

The world’s largest retailer, Amazon, is more aggressively zeroing in to the local retail environment. Amazon will now offer free one-day delivery. You can even order by voice using an Amazon Alexa.

Not one to lose market share, this week Walmart announced next-day delivery for 200,000 items on its website. As more shopping continues to move online for convenience and efficiency, all retailers will need to adapt to participate.

On the Island, grocery retailers have been experimenting with moving the grocery experience online. Sobeys have partnered with Ocado to deliver their web solution. Superstore is now selectively experimenting with home delivery and have a rapidly growing ‘click and collect’ service of placing your order online and picking it up at the store.

Shopping online is not exclusively driven by savings, but more of convenience. A survey of 34,000 households buying groceries online indicated shoppers were less price sensitive and less inclined to search for substitutes. People also chose more nutritious options and decreased snacks and sweets by 13.6 per cent. Retailers need to consider this ‘value of convenience’ and how purchasing patterns may change online versus the more costly instore experience.

Brick-and-mortar stores are under attack in their own domain as technology companies experiment on dual fronts of online and storefront. “Amazon Go” is a retail store with no real staff or checkouts. Inventory is scanned when selected and your account is debited automatically when you exit the store. No checkout lines.

Local retailers from supermarkets to drugstores to hardware stores to fast-food chains are expanding cashier-less checkouts. Driven by declining labour availability, increasing input costs (minimum wage) and accessible affordable technology – more and more retail is losing a human element to either your palm on a phone or in a faceless checkout.

Successful adaptation is a trait inherent in evolution. Changes is not limited to large retailers; within a few years the cost of technology will drop to a point where it will become universally accessible – but there will be fewer retailers left to implement the technology.

Today, Walmart can reach 87 per cent of its U.S. market with next-day delivery while Amazon can reach 72 per cent with same-day delivery. The siege on small retail is not yet complete; from drones to driverless cars, Island retailers will have to compete.

As a retailer in the early nineties, I remember the threat Walmart represented to small ‘mom and pop’ shops. They had rolled across the U.S. at the pace of their transfer truck fleet, and were moving into Canada. Many didn’t survive. Today the threats move at internet speed.

Island retailers need to take this battle to the more fertile ground of online opportunity, and not be threatened by others encroaching on our territory. Nimbility will no longer be enough, specialization to niche is the new battle cry.

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