![]() Walmart, for instance, has a forward price-to-earnings (p/e) ratio of 13, while Amazon’s is 94. But even if profits drop, brick-and-mortar retailers may still win. For clarity, these apps provide additional reasons to shop at Wal-Mart, but don’t offer reward incentives specifically designed to convert in-store shoppers to devotees of its web operation.įor traditional retailers, the goal of implementing loyalty programs should be to increase profits by boosting e-commerce sales. ![]() Both programs have been described as loyalty programs. The first automatically price matches purchased products the second provides discounts and/or expedited checkout. Wal-Mart has in place both a “Savings Catcher” app as well as a “Scan & Go” app. Although Sears has struggled, it’s telling that 74% of eligible sales were made to Shop Your Way members. Its Shop Your Way members earn reward points based on the dollars they spend. Sears Holdings, it should be noted, does have a loyalty program in place. Making loyalty programs a key differentiator leverages a unique competitive advantage – physical stores – of brick-and-mortar chains. More locations provide more opportunities for customers to accumulate points. ![]() The beauty of loyalty programs is they are enhanced by a network of store locations. Borrowing from the credit card industry, all programs should also allow customers to redeem points on a variety of products, services, and experiences – this enhances the value of collecting points. ![]() And there’s room for creativity – similar to airlines, retailers should offer bronze, silver, and gold status (each level providing enhanced benefits) to provide additional incentives to concentrate purchases at one retailer. Bed Bath & Beyond, for instance, can do what small airlines do: ally itself with other larger reward programs. Smaller chains, not just large ones such as Walmart, can benefit from loyalty programs. A rewards program is the long overlooked incentive that can convince in-store shoppers to remain true on the web. Analogously, an ambitious loyalty program can convince shoppers who regularly frequent Walmart, for instance, to shop on. Frequent flyer programs have differentiated a commodity product in a manner that engenders loyalty. (I’m more of an “only take the nonstop” guy.) They take less convenient flights or pay more – all to gain reward points. I’m amazed at how loyal my friends who travel frequently are to their preferred airlines. A website redesign, promises of better service, or even matching Amazon’s prices won’t be game-changers for .įrequent flyer programs transformed once-homogeneous airlines into differentiated entities – and similar loyalty programs can do the same for web retail. Similarly, today there’s nothing overly compelling to sway where customers shop online, except for convenience, selection, and price. In those days, airline travel was a commodity – passengers selected flights primarily on convenience and price. (They were popularized by American Airlines in 1982). When you think about it, internet retail today is similar to the airline market before frequent flyer programs were introduced. The top goal should be to persuade in-store shoppers to also purchase from the retailer’s web site. The top priority for all brick-and-mortar chains should be to capitalize on their biggest asset – customers who visit their stores and connect with their brand. Success on the web is achievable, but it requires adopting strategies from other industries such as airlines and credit cards, which also operate in a more cut-throat, price-focused environment. In 2013, Target even told the Securities and Exchange Commission that “digital sales represented an immaterial amount…of total sales.” With Amazon having such a big head start – claiming a customer base of 244 million in 2014, it’s hard to see how brick-and-mortar retailers can catch up.Īll brick-and-mortar chains, not just Walmart, have struggled because they haven’t sufficiently adapted to the fact that retail on the web is a harsher environment compared to what they face on land. Walmart isn’t the only retailer struggling with selling on the web - most brick and mortar stores are, too. Walmart recently lost $20 billion in market cap in one day, in part because its leadership admitted it needs to invest more into its e-commerce operations.
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