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The Top 5 Disruptors in Retail

Brought to you by PDI.

The retail landscape has shifted, and for convenience-store operators, beating the competition can seem like an ever-moving target. New players have recently entered the retail scene and are constantly disrupting it with different strategies.

Here are what five of them are up to and how c-stores can fight back.

Amazon

Amazon, says Michael Sansolo, a retail specialist and president of Sansolo Solutions in Washington, D.C., “is becoming an omni company, with a strong online and offline presence.” Amazon’s so powerful because from time to time it fails, such as with its phone. “But their willingness to experiment shows everything is possible,” Sansolo says.

Amazon’s also disrupting the landscape through its Prime membership, says Neil Stern, senior partner with McMillan Doolittle consulting firm in Chicago, which is garnering uber-loyal customers. No one is immune to the threat of Amazon, he says, especially given its recent Whole Foods acquisition, and we may see more acquisitions, Stern says.

What can c-stores do?

  • Implement a loyalty program.
  • Consider partnerships with Amazon, or local retailers, to leverage convenience and be a pickup point.
  • Ensure you are properly staffed to deliver faster checkout, somewhat akin to the Amazon Go store, which has no checkout.
  • Review customer demographics for each store, and work with suppliers to stock stores with the convenience items your customers want.

Wal-Mart

Wal-Mart is also becoming an omnichannel retailer, but is doing it differently. “They’re buying companies and buying expertise,” says John Torella, senior advisor with J.C. Williams Group, a retail consulting firm in Toronto. “That gives them an opportunity to leapfrog in learning in almost every category.”

Having brick-and-mortar stores differentiates the chain, says Stern. “Wal-Mart’s big bet is driven towards click-and-collect, leveraging the 3,000-plus stores to their advantage. They are trying to offer a seamless omnichannel experience leveraging their footprint.”

What can c-stores do?

  • Don’t lose sight of convenience. The consumer experience must be fast and efficient.
  • Offer relevant items consumers seek out at convenience stores.

Zara

Zara radically changed the way the clothing industry operates, and it’s been drawing in American consumers since 1989.

“They’re a technology company and have made a commitment to technology and big data. They’ve disrupted the distribution and supply channel by getting goods to stores in two weeks whereas it used to be two or three months,” Torella says.

“Artificial intelligence, augmented reality and virtual reality, voice-activated search, the internet of things, robots—these are all the technology disruptors and are being integrated into Zara.”

What can c-stores do?

  • Collect and analyze consumer purchase data from your stores. 
  • Evaluate market-basket data, leverage that data with promotions and new products, evaluate again, and repeat. 
  • Look for opportunities to compress the order cycle and implement agile inventory-management models.
  • Use technology to get fresh foods to stores faster.

Kroger

Like Zara, Kroger relies on technology. The company “is dominating the traditional grocery space with a data driven, customer-first approach,” Stern says.

This will stand Kroger in excellent stead. “The customer-first approach and deep analytics driven by 84.51º (formerly Dunnhumby) can be adapted to meet the changing needs of business. Kroger applies data for customer marketing, pricing, assortment analytics as well as the nuts and bolts of operating good stores,” says Stern.

What can c-stores do?

  • Start actively using consumer purchase data and loyalty programs to drive promotions and customer decision-making.
  • Evaluate customer-service trends, speed and efficiency of checkout

Aldi and Lidl

Aldi and Lidl operate small stores with low prices (thanks to private labels) and no frills.

Lidl offers “very low prices in nice looking stores, and it’s an easy store to run with a low number of SKUs,” Sansolo says. “Wherever they’ve gone in Europe, they’ve caused huge disruption and huge loss of market share. And the company has the ability to open a lot of stores.”

Aldi, says Stern, is focused on “creating a low cost, simpler shopping trip.” Aldi is rapidly growing its store base and is up 2,500 units so far, which makes it the third-largest grocery player in the U.S.

What can c-stores do?

  • Consider loss-leader or low-margin pricing on high-demand items, but be wary of potential out-of-stocks. Optimize inventories and watch them closely.
  • Embrace private label—specifically a differentiated program, such as 7-Eleven’s, Stern says.
  • Look for key products to put on special to blunt the impact of the deep-discount players.

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