All retailers should take note of Amazon’s symbolic eclipse of Walmart to become the world’s biggest retailer by market capitalisation.
The retail world span as the etailer’s value rose to $246.5bn (£157.8bn), lifted by a pleasant profitability surprise last week, to pass Walmart’s $230.5bn (£147.6bn).
Investors, it seemed, had seen the future – and it wasn’t big boxes.
On one level the disparity seems ludicrous. Walmart’s sales and profits dwarf those of Amazon.
The Bentonville giant is far from being a dinosaur, but to avoid becoming Walmartosaurus Rex it will certainly need to adapt.
“Relentless innovator as it is, the Amazon way of doing things is increasingly seen as conventional wisdom”
As Amazon grows apace perhaps Walmart, and other retailers, would benefit from going back to the source to take inspiration from founder Sam Walton.
The legendary entrepreneur once said: “Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction.”
Relentless innovator as it is, the Amazon way of doing things is increasingly seen as conventional wisdom in a retail environment where algorithms and speed of fulfilment increasingly dominate the agenda.
Examples of greatness
No retailer can afford to be out of step with shopper habits, but you don’t need to look far to see great examples of success as a result of zigging when others zag.
At Waitrose for instance, which Kantar grocery data shows to have been growing pretty consistently despite food retail turmoil, boss Mark Price maintained its success is driven by “being everything the discounters aren’t”.
The discounters themselves, Aldi and Lidl, benefited from austerity consumption habits but they too ploughed their own distinct furrows.
Rather than replicate the plethora of product offered by the big four, they turned their limited assortments into a cornerstone of their appeal.
And while others built up multichannel operations the pair stuck to a model based on very functional stores.
Or take Primark. It’s not only doing well in the UK but has rapidly and successfully expanded abroad. Does it sell online? You already know the answer.
Claim a niche
But if any retailer aims to claim a niche – and a niche can actually be pretty big – it must be done well.
If exclusive product is core to appeal, it had better be worth having. If it is service, standards cannot be second best. If the in-store experience is key, it must deliver wow.
Apart from being a great retail success in its own right, Amazon deserves credit for prompting others to hone their propositions and up their game.
So perhaps the last word should go to its founder Jeff Bezos who, by the way, became $4bn (£2.6bn) better off on the back of last week’s share price rise.
In the last annual report he wrote: “A dreamy business offering has at least four characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time – with the potential to endure for decades.
“When you find one of these, don’t just swipe right, get married.”
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