Two Things Changing Retail Forever

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Triggered by Walmart’s recent announcement that they are launching a delivery service called Walmart GoLocal (that can be shared with any, and all other retailers, including competitors), I suddenly realized that we are witnessing a breakout moment that will forever change the face and defining characteristics of retail. And it’s not just Walmart’s delivery service, because there are several other previous models such as Target’s Shipt.

[callout]Platform sharing and services are now blasting into the open as the giant players Amazon, Walmart, Target, Costco, Kohl’s and others are aggressively rolling them out.[/callout]

My point regarding these two transformative drivers of change is that they were only visible as mere sprouts a couple of decades ago and not clearly defined as game-changers. Platform sharing and services are now blasting into the open as the giant players, Amazon, Walmart, Target, Costco, Kohl’s and others are aggressively rolling them out. Both changes would not be possible without technology.

Amazon Forerunner

Amazon, as usual, given its superior understanding of technology, the internet, and how to innovate in a gazillion ways, pioneered these two dynamics. Consider Amazon as a marketplace, aka an endless platform upon which they share it with any and all products, brands and services, including competitors to their own private brands. In fact, Amazon has over 91 products and services you might not even be aware of. Click on the link for an awestruck moment.

My reason for calling out Amazon is that it is huge in the category of services. Even if they are not the first to offer services, they are arguably the biggest. And because of their enormous global marketplace platform of endless aisles, Amazon can exponentially expand more quickly and easily than the brick-and-mortar giants. However, Walmart along with the other mass brands will accelerate the expansion of service offerings as they grow online capabilities and create more headaches for Amazon.

Retail as Services Portfolio

Walmart’s CEO Doug McMillon, had this to say about services, “For an increasing number of customers, Walmart will be seen more like a service. Customers will think of us as the merchant that serves their wants and needs, but in ways that take less time and effort.” He said they would use their physical and digital platforms to drive businesses beyond retail — from advertising to health care (and more), and this is the beginning of a new tech era portfolio business model, made possible by the consumer reach of Walmart combined with the capabilities of AI and technology.

Astoundingly, Costco’s roster of services account for about 20 percent of their annual sales of roughly $30 billion. Eye-popping right? And why? Because Costco constantly delivers beyond expectations. Over time they have won their customers’ unquestioned loyalty and trust. This allows the brand to expand its DNA to include almost anything their consumers need and want – or more interestingly what they didn’t know they wanted until Costco presents it to them.

The Costco line-up: pharmacies, food courts, hearing aid centers, photo processing centers, travel centers, optical dispensing centers (at a majority of its warehouses), Budget truck rental, business printing, prescription programs, RV rentals, mortgage purchase and refinancing, life insurance, dental plans, identification protection, Costco auto program, auto and home insurance, business and personal checks, bottled water delivery, business health insurance and Costco auto leasing. Costco has insanely loyal customers because it builds its business based on responding to their wants and needs.

Platform Sharing

Retailers and brands can achieve targeted ubiquity by sharing their distribution “platforms” with every other retailer or brand (even competitors) that are aligned with and are targeting the same core consumers. Over the past couple of years, we have begun to see powerful examples of this platform sharing: Sephora from JC Penney now to Kohl’s; Amazon at Kohl’s; Ulta in Target; Disney Stores at 160 Target locations; ToysRUs shops in over 400 Macy’s locations; Apple at Macy’s; every major electronics brand on Best Buy; and many high-profile apparel retailers on the Nordstrom platform.

What’s New?

Retailers offering services and sharing their stores and websites with other brands, the old “shop-in-shop” concept, are not new. What is new is the internet, technology, and particularly AI and analytics, propelled by a more powerful and demanding consumer. And yes, with shrinking store space, there is more room for other retail shops, even competitors.

Strategic-minded leaders realize the synergistic advantages of offering services and sharing their platforms with other brands and retailers. I do believe Amazon and its tech-driven and endless aisle innovative ecosystem, driven by a consumer-obsessed Jeff Bezos, was a new model for legacy retail. As he was paraphrased in Brad Stone’s book, Amazon Unbounded, Bezos drilled into his organization that every decision to be made, in any and all functions of the business, starts with determining how it would exceed consumer’s expectations. Amazon also led the way to achieve personalization and localization through its superior use of AI and analytics. The legacy world is still playing catch-up. But that’s only online. On the ground, Amazon is now playing catch-up with them.

Legacy Retailers’ Unique Opportunity

In terms of offering services and platform sharing, the legacy retailers who are transforming their models finally understand the full extent of consumers’ first. They identify their core consumers down to their personal lifestyle desires and shopping behavior, and then figure out what products, brands, services and experiences will exceed those expectations. And further into the “weeds,” they know where these customers are located. So, the strategy becomes clear: essentially identify and understand the DNA of every core customer and capture new ones whose DNAs are aligned with that core. The tactical implementation then kicks in to develop powerful loyalty. All of this, as proven by Amazon, is achievable through AI and data analytics, which the legacy brands are ramping up.

Platform sharing creates synergy and is currently a unique advantage for brick-and-mortar legacy retailers, creating a win-win shopping experience for customers of both brands. And the advantage for partners in legacy stores? They don’t need to spend millions and years building out new stores.

Your Consumer Will Love You More

And the final word on the real win is that the consumer will love you more. I paraphrase this assessment by none other than Pete Nordstrom, whom I interviewed in a recent webcast. He said Nordstrom is a powerful retail brand, but not the only retailer their loyal consumers shop. So, rather than their loyalists having to spend time going to other retailers or brands, why not have all the brands and services they love on the Nordstrom platform? They will only love Nordstrom even more!




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