H 1 Bricks-and-Mortar Retailers fight back Winning Strategies to Compete with Online-Only Players

The Economist


The retail sector has felt the disruptive impact of the internet more than most industries.
Ever since the launch of Amazon in 1994, online retailers have relentlessly challenged traditional retailers on price, product selection, and the shopping experience they provide to customers.
So far, however, predictions of the death of “bricks-and-mortar” retail have been unfounded.
Instead, the rise of online-only commerce has challenged conventional retailers to adapt their offering. Many have failed to live up to that challenge, including some high-profile brands, but others have risen to the occasion. Some have reacted to online competition by closing physical stores, but others are attempting to reinvent them for the digital age.
To find out how, The Economist Intelligence Unit surveyed 256 retail executives based in
the United States, the United Kingdom, France, Germany, and Japan. This report reveals which strategies they have adopted in response to online-only competition and what tactics they plan to adopt in the near future.
The survey shows that retailers are acutely aware of the competitive threat from e-commerce sites. A little under half of respondents (47%) say they face “significant” competition from online-only rivals, with a further 37% facing “moderate” competition. Amazon is the dominant source of such competition, as identified by 42% of respondents, followed by eBay with 14%. Pricing, delivery speed and cost, and
marketing and brand recognition are the chief competitive strengths of such companies, they say.
This competition has taken its toll on retailers’ physical stores.
Six in ten respondents have closed stores in response to online competition in the past three years. Of those who have closed stores, fewer than one-third have been able to recoup more than 25% of their lost in-store sales through online channels.
But as this report reveals, retailers are not taking the threat lying down. Respondents are modifying various dimensions of the in-store experience to meet it head-on.

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