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Winning the Battle

Advice for retailers as they compete against online pure plays

By Chris Donnelly, managing director, Accenture Retail

Ahead of the holidays, 56% of U.S. consumers told us that they expected to ‘showroom’ as they bought gifts this year — underlining the threat of online pure play retailers to the success, and even existence, of traditional retailers. However, traditional retailers can compete and even win this battle.

Customers don’t just want to shop online but in-store, with mobile devices or through call centers — whichever route offers them the convenience of access and value that they are seeking. Their key demand is for the experience to be seamless across channels. To succeed, traditional retailers must deepen and sustain their innate strengths, and learn to match the online pure plays for innovation, technology and execution.

In developing a roadmap to help traditional retailers achieve this goal, Accenture has reflected on the principles of Sun Tzu, a Chinese military strategist from the 6th century B.C. For Sun Tzu, “The Art of War” was summed up by five core concepts; agility, preparation, understanding your strengths and weaknesses, disciplined organization, and first in the field having an advantage.

Agility: The online pure plays don’t just innovate — they do so at speed. In the current retail environment of rapid technological and cultural change, retailers that thrive will be those that are able to experiment their way to success — innovating, testing, discarding the failures, building on the successes, and implementing them at speed and scale.

Preparation: In contrast to the fit-for-purpose, single-channel technology environments enjoyed by the online pure plays, many traditional retailers are stuck with legacy systems and must consider both the store and online channels whenever they contemplate change. They need to start embracing their inner geek. Placing at the core of their operations are digital natives who are able to keep pace with the latest offerings, spot emerging trends and have the confidence to exploit them.

Understanding your strengths and weaknesses: Competition on both product range and price is possible. One route is private-label goods that are either as good as the leading brand, yet priced lower, or offer better quality or design and are priced higher. The creation of bundled products or bundled product and services packages that offer a better deal, beyond that offered by the online retailers’ range, should also be considered.

Disciplined organization: If integrated with other channels, stores can become key components of a traditional retailer’s strategy to compete with online retailers, and play an important role in the multichannel experience. They can provide consumers with more convenient options than long waits at sorting centers or for deliveries to arrive, such as Click and Collect, or the “drive-through” option offered by French hypermarkets. Store staff can help ensure that customers are comparing like with like in terms of the product and the delivery cost.

Customer service will be a critical weapon. The social interplay that shoppers can enjoy via sales associates can be a key differentiator, if traditional retailers can apply the personal touch at every stage of the purchase journey. Stores need sales associates who can help customers pick just the right product for their needs and help them remember their store visit as an enjoyable and fulfilling experience.

First in the field has an advantage: Trying to be another Amazon is not advisable, and traditional retailers have strengths of their own. Brand is a key driver of customer loyalty, and even online shoppers will choose to buy from a familiar and trusted name. If traditional retailers can build faster, cheaper fulfilment capabilities, and couple them with outstanding service, they will be able to press home their brand advantage.

Traditional retailers can beat the online rivals with seamless, personalized, multichannel offerings. Through faster innovation, technologically savvy staff, embracing social media, exceptional in-store service and making every store count, they can boost the power of their brand to drive customer loyalty and profitable growth.

Chris Donnelly is the global managing director of Accenture’s Retail practice. Donnelly has more than 21 years of retail experience and works with many of the leading global retailers on the critical issues facing their business. He can be reached at christopher.donnelly@accenture.com.

© 2014