Why brick and mortar stores are key to world domination

Why brick and mortor store are key to world domination
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You may have noticed we’ve been talking a lot about the ‘customer algorithm’ recently. It’s a term that we have coined off the back of Alibaba’s ‘new retail’ strategy – one that aims to merge the online and offline worlds of data capture.

It’s all about combining data from multiple sources, to really get to know your customers so that you can in turn deliver an enhanced experience aimed at driving customer retention and revenue.

Well, there have been some recent developments, highlighting the importance of the ‘customer algorithm’ and the part it plays in pulling together data from brick and mortar stores.

Amazon have recently announced another collaboration with Best Buy to sell their new Amazon Fire TV after acknowledging, ‘you sometimes need to touch things to buy them’.

Best Buy and Amazon have a long history that goes back to the Kindle reader and “today, about 700 Best Buy stores feature an Alexa showcase table where shoppers can see how Alexa works,” said Best Buy CEO, Hubert Joly in a recent interview about the collaboration.

Best Buy will now exclusively sell Amazon Fire-edition smart televisions in Best Buy stores and on BestBuy.com.

The TVs will have Amazon Fire TV built in, allowing users to search for and watch broadcast TV, or choose from a catalog of streaming TV episodes and movies from Netflix, Prime Video, HBO, PlayStation Vue, Hulu and other streaming sites. The TVs will also include a voice-activated remote with Alexa, Amazon’s voice-enabled assistant, and are set up to pair with any Echo device, allowing users to issue commands to their television via their Echo.

Amazon CEO, Jeff Bezos, said he was excited by the possibilities because a Fire TV-enabled television gives consumers the convenience and simplicity they want in the increasingly important smart TV segment.

Now, call me skeptic, but this move suggests that Amazon can no longer achieve the scale they want without access to more brick and mortar?

A thought shared by Carol Spieckerman, a retail analyst at Spieckerman Retail, who commented: “True scale is no longer achieved in a single channel.”

The deal “is an incremental move, a stitch in the tapestry that’s going to be necessary if Amazon is to realize its ambition of creating this massive, interconnected system for services, content and products,” said Spieckerman.

Amazon has built its brand as leader in the digital marketplace, but it’s increasingly clear that it also needs a big physical presence to sell the devices that will further knit customers into the Amazon ecosystem.

Stephen Baker, a vice president of consumer electronics at the NPD Group said: “Nobody can be successful at the scale Amazon wants to be at just selling their own stuff, you have to go to other partners.

“A physical store is more important for new or complex technology that requires an explanation for consumers to really “get” it enough to buy,” said Baker.

Amazon’s embrace of brick and mortar is nothing new. The retailer has been building out its presence in the physical world for some years now. It’s opened 15 Amazon bookstores, and last year it bought Whole Foods, which gave it 479 grocery stores.

Offline still makes up a huge proportion of a business’ customer base, and the importance of expanding in the physical world and capturing this kind of customer data should not be underestimated.

If businesses fail to recognize this, they risk being left behind.

Want to read more about the customer algorithm? Click here.

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