Retail Observer

RETAILOBSERVER.COM JANUARY 2018 46 A s Paul Revere once said, "Amazon is coming!! Amazon is coming!!" Oh wait, that wasn't what he said, but I think you get my point. .From their recent acquisition of Whole Foods to their partner- ship with Sears Holdings on the Kenmore Appliance Brand, you can be sure of one thing, Amazon is in fact, coming. I say this from personal experience as earlier in my career, I called on Amazon.com when they were first considering entering the CE business. We all know how that turned out, right? For those who don't, let me recap. Amazon gently entered the business using distribution, as none of the manufacturers would set them up direct due to their, at the time, less than strong financials. The general consensus from most dealers and manufacturers at the time was, "No one will ever buy a TV online without seeing the picture first." Fast forward in the story to the point where Amazon and its marketplace sellers nearly killed the profitability of the TV business, driving scores of retailers out of electronics and into more profitable categories like appliances and bedding. Thankfully, but sadly almost too late, the manufacturers stepped in and instituted policies like MAP, UMAP and SRP to restore sanity to the category. That said, my main point here is that people really don't have a problem buying TV's online after all. See where I'm going? So, what should you do? Find another category? Shut down the store? Absolutely not, but know your foe, don't ignore the potential for change in the market and get ready for the battle. Here are some things you need to know: • Amazon's deal with Kenmore isn't really about Kenmore, it's about entering the Appliance business. As of this writing, Amazon sells less than 1% in dollars of the total U.S. Appliance Market, a number that is not acceptable to Jeff Bezos. His vision is that Amazon should own the customer and own the home, and appliances are a big, very expensive part of that home. • Amazon is a logistics powerhouse. While it's a closely guarded secret, over the last 15 years Amazon has set about opening more than 100 distribution centers in the U.S. alone. They've done this to lower their freight costs and more importantly, to put them in position to offer same day services called Prime Now to all of the major population centers in the U.S. • Amazon is big with millennials and higher end consumers because of services like Amazon Prime. More than 80 million U.S. consumers are members of Amazon Prime and that number shows no sign of slowing down. Amazon customers are hooked on the free two-day shipping and the ever expanding benefits that come with being a Prime member. (Music and Video Streaming, Prime Day, etc.) Facing them is no easy task, here's hot list of things you need to start working on now. • Make sure your voice is heard with your manufacturer partners. Now is not the time to be quiet; speak up and let them know your feelings on Amazon entering the appliance business. While this will likely not stop Amazon, it will certainly make the manufacturers aware of where you stand. Support the manufacturers that support the independent channel. • Join all Shop Local groups in your market. This works, the numbers and the research show that millennials like shopping local. Google it and get involved. • Own the customer by entering new categories that will attract new customers. Nest and their family of Connected Home products are provide many dealers success and traffic. Millennials and consumers of all ages are interested in the Connected Home and the projected growth over the next five years is astronomical. There's a reason Lowe's, Home Depot and every other major retailer has entered the space, don't miss the opportunity to be the expert in your market. • Focus on Service. Amazon simply can't match the service Independent dealers provide. Everything you do that's public facing needs to talk about your high level of service. • Focus more of your investment and efforts on your website, your social presence, your online reputation and digital marketing. The facts are that over 80% of major purchases start with research being done online. If your website isn't up to the growing expectations that consumers have, you run the very real risk of being passed over when they decide to make the purchase. Online merchandising should be done in concert with in store merchandising, and leverage digital and social marketing to make sure your name is out in the marketplace. Amazon may be coming, but with preparation your company can be ready when they arrive, just as the successful and thriving CE retailers who weathered the Amazon storm can attest. Dean Sotille Consumer Electronic Trends Dean Sotille, SVP of Distribution and Logistics, Nationwide Buying Group RO THE AMAZON CHALLENGE– Lessons learned along the CE highway

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