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“They remain doubting Thomases, and as a
result, they could eventually be replaced by
others more eager to figure out how to move
product by adopting new ideas,” he added.
According to Stephens, too many retailers are
still caught in the mindset that they are there
to distribute products, “and any value-added
experience is simply sprinkled in
like garnish.
“They don’t energize consumers to make
the trip to the market enticing. But to
survive, they’ve got to figure out ways to
deal with the threat of online sellers who
rely on convenience.”
According to Stephens there have always
been competitive pressures on the industry,
but “Amazon doesn’t care if it makes money
or not, and as it continues to grow, it will
operate at a loss to put other players out of
business.” Most operators still think more
laterally, he said.
“Even if a retail company increases its
selection by 10 percent, that will still be only
a small facet of what Amazon is able to offer,”
Stephens said. “And even if a retailer can
improve service by 20 percent, that still pales
versus Amazon’s ability to deliver when the
consumer wants when he wants it.”
E-commerce is continuing to grow in all
businesses, posting sales of $1.6 trillion in
2015, with expectations for long-term, high-
volume growth, Stephens told conference
attendees, “We’re probably just reaching the
end of page 1 and turning to page 2.”
Supermarkets stand to lose as much as
30 percent of their business to online sellers
by 2025, particularly on high replenishment
items like diapers, pet food, baby food,
detergent and light bulbs, for example,
Stephens said.
“It will be a matter of ‘say it and get it.’ When
someone wants an item, they will click on
a technological device and have it delivered.
The question for retailers, then, is how
will your store, your chain and your brand
be heard?”
The answer is enhancing the in-store
experience, Stephens said.
“As good as Amazon and the others are,
they are still just digital catalogues. As
connectivity becomes more important, the
future of retail will be more experiential
and immersive,” he said. “But the time for
retailers to act is soon because there’s a
diminishing window of time.”
Figuring out ways to make the shopping
experience more appealing to prevent
shoppers from opting out is not the way
most operators think about their businesses
today, Stephens said in the interview. But
in an industry with profit margins often at
or below 1 percent, the challenge of how
to generate revenue over and above selling
groceries is daunting, he noted.
The future may revolve around reassigning
floor space, he said.
“Developing a grocery store that will appeal
to future consumers starts with the question,
how much space does an operator need
to create the kind of experience that’s so
compelling and remarkable that people are
motivated to return again and again to buy
food there?
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