Retail Re-imagining Post-Amazon

Interesting Podcast and transcript:

Retail Reimagining: Why Being Great Is no Longer Good Enough

 The retail industry is undergoing a major repositioning as legacy stores and brands that were once customer favorites fall victim to shifting consumer demands. Nine West, Toys R Us, Claire’s, Macy’s, Aerosoles, BCBG, Payless and countless others have either filed for bankruptcy, closed hundreds of stores or simply pulled the plug on the whole operation. In her new book, The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption, Wharton marketing professor Barbara Kahn explains how retailers can weather these radical changes. Kahn joined Knowledge@Wharton to explain why in today’s retail environment, it takes more than a great sale to keep customers coming back for more.

An edited transcript of the conversation follows.

Knowledge@Wharton: This book could easily be titled The Amazon Revolution. What is it that Amazon knows about consumers that other retailers don’t?

Barbara Kahn: The interesting thing about Amazon is that they have, as they call it, a maniacal focus on the consumer. If you look at retailers in the past, the customer was not part of the proposition. Amazon understood that the customer experience really matters.

Knowledge@Wharton: Walmart is also a huge player here. In what ways does Walmart need to copy Amazon, and in what ways should it follow its own path?   ...  

Kahn: Walmart disrupted the retail industry in the mid-1990s. I wrote a book about it then. It was called Grocery Revolution. What Walmart did was an operationally excellent strategy at the time: They evened out demand, got rid of high-low pricing and went to everyday low pricing. They understood that customers want low prices, and they really attacked it from an operational point of view. But what Amazon showed was that it’s not just about price, although price clearly matters to a certain segment of consumers. But it’s also about convenience. Frictionless. Make it easy. Walmart hadn’t done that before. In response to the competition, or the competitive expectations that Amazon has imposed on the industry, Walmart has to make their world more frictionless. And they have to embrace online shopping and e-commerce in a way that they hadn’t previously.

Knowledge@Wharton: In the book, you share a framework for helping to make sense of all these changes in retail. What are some of the key elements of the framework?


Kahn: I did a lot of research, and I’ve been studying the industry for a while. [In the book,] there is a description of some of the different research, but it’s important to lay it on a framework and to think about the strategic implications. That’s what I think the value of the book is. So, it’s a very simple framework. It’s deceptively simple, but it has really strong implications. ... "