A new study looks at the rise of online-only commerce and how it has challenged conventional retailers to reinvent themselves for the digital age.
The report from The Economist Intelligence Unit, the research arm of The Economist Group, and software provider Advanced Predictive Technologies, is based on a study of 256 retail executives operating out of the U.S., the United Kingdom, France, Germany and Japan. The study indicates that retailers are acutely aware of the competitive threat from e-commerce and are working on developing and executing counter strategies.
According to the report, 47% of survey respondents said they face significant competition from online-only retail rivals, with a further 37% facing moderate competition. Amazon.com came in as the dominant source of online competition, identified by 42% of respondents, followed by eBay at 14%. Pricing, delivery speed and cost, and marketing and brand recognition are the chief competitive strengths of digital retailers.
Among the ways brick-and-mortar retailers are combating online rivals, according to the report:
- Dropping In-Store Prices. In the study, 44% of respondents said that they had dropped in-store prices over the past three years, with a further 12% planning to do so in the next three years.
- Price Matching. 71% of respondents said they had introduced some kind of price matching, and about a third plan to do so in the next two to three years.
- Loyalty Programs. 54% of survey respondents said they had introduced loyalty programs, and 24% plan to do so over the next two to three years.
- In-Store Experience. Satisfactory interaction has become a critical factor and 70% of survey respondents said they had established training programs to ensure their staffs have more knowledge they can use on the job, and 58% said they had trained employees to be more focused on customer service.
- Product Selection. To defend against the endless aisle, 68% of survey respondents said they have increased their product selection.
- Store Locations. To make real estate a more effective competitive tool, 51% of survey respondents said they had prioritized stores in higher-value markets.
- Local Products. To more effectively leverage their participation in community, 45% of respondents said they are offering a localized selection of products.
- Customizable Items. To capitalize on consumer interactions, 43% of survey respondents said they had introduced customizable products and 33% said they had plans to do so.
The response of retailers to online competition has naturally included increased investment in digital operations, reported by 75% of survey respondents. In addition, 67% of respondents maintained that they had increased their collaboration with online partners.
