Amazon Effect? The real reason traditional retail is dying
Bottom Line: Amazon’s success and its Prime Day invention being a now two-day phenomenon have brought about the discussions and at times debate about the death of traditional retail. It’s true that retailers are closing thousands of stores per year. Its true traditional malls are commonly in trouble across the country. But what’s often missed is the dynamic that’s shifted in retailing, not specifically a company like Amazon that’s simply consuming all other retailers. The key is direct to consumer shopping.
- 81% shop direct at least occasionally
Once upon a time, aside from buying a store brand product, the concept of direct to consumer didn’t really exist. Anymore it’s common. And it’s about a third of all retail. That’s yesterday’s news though. Business Insider just published new research that demonstrates the direct to consumer connection is powerful. And that’s what’s really driving shopping trends.
About a third of people who buy products directly from companies actively post and promote those brands as part of their lifestyle. People that engaged in brands will remain loyal to them unless they provide a reason for them to reconsider. There are numerous examples, none larger than Apple or Amazon. Amazon’s secret sauce hasn’t just been selling other companies' products. How many companies do that online? It’s been creating brands and products that people identify with on a personal level. Like Alexa. And “Prime” membership that comes with Amazon stuff and shipping. What is it that really separates, Amazon and Wal-Mart for example? Why is there a perceived brand difference? It comes down to the handful of products and services Amazon has packaged around the big box online retail concept that’s done it. And that’s how brand loyalty is created and refined in 2019 and beyond. Products we identify with and the companies that provide the experiences we like with those products. It’s hard to feel loyalty to the lowest price seller of stuff.