Yesterday, we blogged about Amazon using brick-and-mortar stores as its showrooms. But what if the online giant builds its own physical stores?
As Sean Deale of InStoreTrends.com reports, Google, eBay, PayPal and Amazon are building a physical stores in order to overcome the obstacles they face as online retailers. The end goal? "To reduce brand and device confusion among customers, provide additional points of purchase in an attempt to boost impulse buys, spread awareness about product capabilities, and create hype," Deale writes.
More specifically, the Androidland store that opened last week in Australia with carrier Telstra "offers a whole range of different Android products for sale, along with other Google-related attractions like a giant, multi-screen display for exploring Google Earth," reported Engadget's Donald Melanson (Dec. 2). Yes, they are selling phones in this bright green theme park (see above photo).
Smaller, independent retailers have faced the threat of big-box, big-budget retail in the past. What makes this any different?
This particular trend is less about the direct threat to small retailers -- it is more about the importance of physical presence for the big players and their ability to establish relationships with customers face-to-face.
It also speaks to the power of physical retail space, which very few players have leveraged to its full potential (think Apple). Interestingly enough, it feels like the independent retailers have an advantage here, but their problem is an inability to figure out how to use it. The simple recipe for now would be a complete shift from transaction to customer service.
How are these companies mirroring the Apple Store approach?
At this point all eyes are on Apple stores, the buzz they create and profit they are making. Very often, it is forgotten that the success of Apple comes from the quality products first, and then from the whole ecosystem that includes in-store, out-of-store and online activities, not to mention from the careful considerations of front-of-house and back-of-house operations within the store.
Other retailers are simply copying the look and feel, or a few elements here and there. The ROI is certainly not as good as Apple's, if good at all.
Androidland, though, might be worrying for independent wireless retailers. It has all elements to be a success, and an easily scalable one. The majority of smartphones are on Android OS, and all those phones would be displayed in these stores. That might cause a significant shift of customer attention from small retailers, similar to the effect that Apple stores have for iPhones.
So if the physical presence is directed at creating a great experience, then it will create additional value, as it has in Apple's case. If it is just a physical extension of a delivery mechanism -- as is the case for eBay or Amazon -- it will serve the function, but will not pose a major threat the small retailers. Amazon is already a big threat for small retailers anyway, but that is a different story.
What do independent wireless retailers need to do to compete with these new types of stores, which are platform driven (as opposed to carrier, or manufacturer driven)?
You can't beat these guys using their weapons. Wireless stores should be hubs for personal communication devices, so retailers should start communicating! They should show they're offering more than just a competitive price. Show some character -- distinctive character -- and be part of the community. They should establish stronger relationships. They do need some tools to help out, knowing that customers have their own set of tools (like price comparison apps, for example). The good news is there are people out there who are thinking about these problems, including iQmetrix.