Retail Roundup: Asking the Right Question, Retail ‘Nightmares’

Retail Roundup: Asking the Right Question, Retail ‘Nightmares’

Excerpts from the article by Teresa Rivas on

Last year, retail stocks were walloped as investors worried that e-commerce was taking over the world; this year the sector has climbed on evidence that brick-and-mortar stores aren't going extinct. But stores--and investors--still aren't asking the right questions.

"Retailers are mistakenly see the issue as e-commerce versus brick and mortar, but that's not the problem," says Tien Tzuo, chief executive of enterprise-software firm Zuora. "Online, in-store, it shouldn't matter, it should all be blended: Consumers can shop wherever they want--it's the retailers that build one-on-one relationship customers that will win."

Tzuo tells Barron's that the subscription model, like's (AMZN) Amazon Prime, has already reshaped retail, and traditional stores simply haven't realized it yet--to their own detriment. "Amazon isn't successful just because it's an e-commerce site, but because it knows how to think like its customers," he says, noting that he can search his Amazon purchase history going back more than 20 years, while a retailer such as Walmart (WMT) has no data about the roughly 100 million customers that walk through its doors every week. This is a huge lost opportunity, he says. Instead of framing the state of the industry as an e-commerce versus physical-store issue, and spending big sums of money to acquire and a stake in FlipKart, Walmart should instead create a universal Walmart ID, so it can collect data on its customers--the first step to establishing an omnichannel relationship.

Of course, this isn't a radical concept--grocery stores have been tracking purchases with loyalty clubs for ages. But Tzuo says that while this was a great first step, many haven't taken the next one--making the club ID usable on a grocer's website, sending tailored coupons to a user's email.

That said, Walmart and supermarkets aren't alone as they struggle to connect with consumers: He's hard pressed to name a large retailer that is getting it right. "There's no Macy's (M) Prime, there's no Walmart Prime." Best Buy (BBY) is close, he says, as it's trying to redefine the in-store experience and tracking consumers' purchases, "probably because they were threatened the most by Amazon" early on. He also notes that Starbucks (SBUX) has worked to make its omnichannel experience seamless--encouraging consumers to order via an app--and connect all purchases back to a user's ID. But the company's also removed the ability to buy coffee beans from the Starbucks website, because it wants to drive store traffic, for the brand experience. "That's the role of physical stores; not as shelf space, but as a place for retailers to build relationships with consumers over time," says Tzuo.

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