LAS VEGAS-“The tech titans are in many ways trying to disrupt every other company in our economy and are the ones to watch if you are a retailer.” So said Lori Schafer, executive advisor of retail at SAS Institute Inc. in Middletown, MA. The “titans” Schafer refers to are Google, Amazon, eBay, Facebook and Apple—companies she says are the “internet challengers.” They are the ones who have been throwing the “initial punches, a counter attack and perhaps more” and are the ones to keep an eye on,” she said.
Schafer spoke on a panel titled “Clash of the Titans” at ICSC’s RECon 2013 event. Led by moderator Jeffrey Newman, senior partner and chair of the real estate department of Sills Cummis & Gross PC, the session discussed the likely future scenarios between the internet and the brick-and-mortar contestants and how the various participants will seek to enhance and grow their models through a combination of virtual and actual physical forays.
“These companies are moving into retail, movies, television, financial services and will soon be going into healthcare and insurance,” Schafer explained. “They are out to get their claws in every industry.”
The other tech companies, like Microsoft for example, “are big technology companies, but they aren’t the ones that invented where the future is going.” Every retailer, she says, needs to pay attention to the titans.
There are a lot of Wal-Mart watchers in the room, added Schafer, “but anyone who is watching Wal-Mart, better be an Amazon watcher. Amazon is redefining where we will be in 10 years.”
According to Deborah Weinswig, managing director of Citigroup Inc. in New York, “there is a lot of change in what we are seeing in terms of how brick-and-mortar retailers are interacting with the customer.” Current brick-and-mortar champions, like Wal-Mart, Target, Home Depot and Costco for example, are really enhancing their offerings with a variety of internet and social media initiatives, she says, in order to compete.
But Weinswig warns that “if Amazon can get you what you want, where you want and how you want it in same day, it will become an issue for brick-and-mortar…it changes the way retailers should think about physical retail.”
To put some number behind it, Schafer points out that right now, Amazon is a $60-billion retailer. “In 2010 it was the 10th largest retailer in the US. In 2011 it was the 17th largest. In 2012, it broke the top 10. In late 2014 and early 2015, Amazon is expected to reach $100 billion. And in 2017, it will reach $200 billion,” she said.
She added that Amazon is not just a retailer. “They only own 40% of their goods. They also are into business-to-business type retail with amazonsupply.com, which sells everything from generators to air conditioners. They have set up their own studio in the UK so they don’t have to play as much with Hollywood. They are creating their own movies etc. etc they have the kindle, the kindle fire, they have the amazon phone etc. that is just a few of the things they are doing.”
When asked what retailers could do to catch up, Weinswig stressed the importance of adapting. “JC Penney, for example, is wounded. They tried a lot of different things at the same time because they were aware that a lot of changes were happening in the industry,” she said. “They tried to change their store, their product and the way they interact with their customers, but it didn’t work all at once.”
One retailer she said is doing it right is Macys. “Macy’s has been successful due to e-commerce sales. You can ship product out of stores, ship products to stores. They are making sure they are nimble.” However, Weinswig said that a retailer like Macy’s needs a healthy JC Penney because they need traffic into the malls.
Brick-and-Mortar retailers are fighting back to change, said panelists. “They are alive and well and we are starting to see retailers not only grow e-commerce but they are also growing square footage,” added Weinswig.
Michelle Crames, VP of Social Commerce Solutions Revionics in Los Angeles, says that “No one can put their head in the sand anymore and say they aren’t competing with Amazon. So now it is about differentiating on their strength.”
Crames says that “Understanding your customer and personalized experience is key. And then the next step is to use channels with social and mobile to amplify that.”
In terms of who is in control—the retailer or the consumer, Crames saidthat the consumer is taking control. However, she said that “the amount of data that these companies have on consumers is also helping control—that data also lets the companies dictate what the consumer wants before they know they want it.”
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