NRF 2018 Takeaways: 3 Types of Retailers That Will Survive & Thrive

Optimism. Innovation. Determination. That’s how I’d describe the atmosphere at NRF 2018.

Sure, 2017 was a difficult year for the retail industry in general. Big box retailers struggled. Toys ‘R’ Us filed for bankruptcy. JC Penney and Macy’s were among a number of large department stores to close down several outlets.

But the hyperbole used to describe the health of the sector as the ‘Retail Apocalypse’ was largely unfounded.

That’s not to say that the retail sector doesn’t have its challenges; they are significant and ongoing. Customer expectations continue to surge in line with advancements in technology. Retailers have to constantly evolve to meet these challenges and remain relevant to their audience.

What I found is that there are three types of retailers that are most likely to survive (and thrive) during even the most difficult of circumstances:

1. #1- #3 Category Kings & Marketplaces

The ‘Category Kings’ are retailers that define their category. In the same way that Google is intrinsically linked to the search engine category, Amazon is almost the synonym of online retail and e-commerce.

The Category King generally takes the majority of the profits in any given market, and by a long way, Amazon is a prime example in retail. It has achieved this status by being the first and currently the best at understanding a consumer’s wants and needs to consistently take friction out of the customer experience. And they’re constantly innovating.

Retailers, who are not Category Kings, have a steep hill to climb. The ‘Double Jeopardy’ law can weigh heavy. It’s an empirical law in marketing, that describes how brands with a lower market share have to deal not only with far fewer buyers they can attract but also with lower brand loyalty.

Most of them will always find it difficult to compete with the Category Kings (like Amazon, Lidl, and MSC Industrial) as they are generally at front of mind for customers due to their size and reputation.

They have to look for other ways to compete and differentiate.

This brings me to the second types of retailers.

2. Retailers with strong or exclusive own brands

What do customers associate with your company? Is it a particular color, shape, celebrity, language, technology or sound?

If they don’t associate anything, then your company is not distinctive enough and will likely be drowned out in a competitive retail market. There are so many retailers to choose from, you have no choice but to stand out.

To improve operating margins and stand out in the mass market, retailers are finding success by steadily increasing their private label activities. Just take the “passion brands” Sephora and Decathlon.

These retailers share the same passion for the products they sell as their shoppers and captured this emotion by launching their own private label brands.

Sephora’s private label, “Made in Sephora” is the beauty retailer’s top-selling brand with 1 product sold every 2 minutes and 1,400 products listed. And Decathlon, the world’s biggest retailer of sporting goods, increased its private label share from 33% to 50% in a few years. They have essentially become a brand in their own right.

Consumers look to brands for quality assurance and an emotional satisfaction. It’s becoming more apparent that these brands do not have to be manufacturer brands.

3. Mid-sized to large niche retailers with expertise

When consumers are choosing which retailers they want to deal with, trust and expertise are becoming more important. Retailers that truly understand their audience and actively support shoppers as they are trying to make purchase decisions have an important advantage that manifests in higher sales and loyalty.

Becoming the customer’s trusted source of advice has become a vital USP for retailers. And some are fulfilling that role with great effect.

Examples of retailers using Digital Advice to ease a shopper’s path to the right product

19 of the Most Compelling Digital Advisors of 2017

Best Buy’s incredible comeback is an excellent example of a struggling retailer going back to basics and winning customers around by giving them what they really want – help and advice. The company looked like it was going down the same path as many of its big-box counterparts, but started to place an emphasis on store assistant knowledge and online customer support through its Geek Squad. A 21% surge in stock price and increased revenues was the reward for this new strategy.

Specialist boating retailer West Marine can also be found in the bracket ‘trusted advisor’ because of the extensive support it offers customers shopping online. The company uses intelligent digital advisors such as an interactive Kayak Finder, to help customers sort through a number of products, getting to the perfect item without having to undertake extensive research.

Examples of retailers doing well may be all well and good, but it’s important to understand the practical steps needed for your business to succeed in the industry.

Here are some important takeaways from NRF 2018:

Read the full article on Guided Selling