Retail’s triple threat

Picture three briefcases. One is marked price, the second range, and the third customer experience.

The old rules of retail (as well as the laws of human physiology for that matter) say that you can only handle two at a time.

Choose price and range and you give up experience for example (think discount department store). Go for range and experience, and price has to be left behind (as in a luxury flagship store).

And opt for price and experience, and you may need to restrict range (a warehouse club is a good reference here, where each category has only a few SKUs).

Well, that thinking is past its use by date. In this have it all world, the best merchants deliver, in their own unique ways, on all three dimensions.

As a case in point, McKinsey & Company recently published a presentation highlighting what it calls Amazon’s ‘triple threat’ value proposition.

When compared to the top five US retailers* on 100 random items, Amazon was consistently five to 13 per cent lower on price**.

Line up range and Amazon offered seven times the average number of SKUs in each category.

And in terms of customer experience, the American customer satisfaction survey showed Amazon’s scores were 13 per cent higher.

Price leadership. Assortment leadership. Superior customer experience. Slam dunk.That’s not where it stops.

McKinsey says that Amazon is working towards removing 88 per cent of the top reasons that people shop in a physical store rather than going online – immediacy, enjoyment of shopping, quality of product concerns, no delivery costs, and easy returns.

To counter immediacy for instance, Amazon is building same day delivery capability.Retail guru, Martin Butler (here in Australia for the Westfield Breakfast Seminar Series), has his own view on the Amazon advantage.

Butler believes that Amazon has been voted the world’s favourite retailer (OC&C Insight 2011/12) because it is “fast, easy and trusted”.“What part of those qualities don’t you like,” quips Butler.

“Do you want it slower, more complicated, and less reliable? With Amazon, it’s a bit like having a friend that you can trust to deliver. The system just works and customers love them for that.”

In Australia and NZ, Bunnings is one example of a retailer that represents a triple threat.

At Bunnings, “lowest prices are just the beginning”, because you also get a wide range and staff who know their stuff (albeit in a shed-like environment).

No wonder Bunnings is one of the country’s most loved brands.Businesses such as Amazon and Bunnings provide a new benchmark for what it means to be a great retailer in the 21st century.

So it’s up to you to choose. Do you want to be victim or perpetrator?

Are you going to be at the receiving end of a triple threat, or will you be the store offering the magnetic combination of price, range and experience?

Time to rewrite the retail rulebook.

* Non-food and non-club, determined by 2011 revenues

** Evaluation of “price” includes sales tax and shipping

Jon Bird is CEO of specialist retail marketing agency IdeaWorks (, and chairman of Octomedia, publisher of Inside Retail. Email: Blog: Twitter: @thetweetailer

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