Wharton@Work

August 2018 | 

The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption

The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption

Disruption is happening in almost every industry. But it could be argued that it’s most deeply felt in one: retail. And it can be summed up in one word: Amazon. But that doesn’t mean retailers are doomed. In fact, says Wharton marketing professor Barbara Kahn, there are ways to compete successfully against the retail Goliath — and you don’t need to beat them to do it.

In her new book The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption (Wharton Digital Press), she analyzes the forces retailers are up against. It’s more than just the dominance of Amazon (whose remarkable strategy is also clearly dissected). First, there’s the growth of online and omni-channel shopping. Then, there’s the ability to collect massive amounts of customer data that can be used to personalize shopping experiences and market more effectively. New technologies and models of retailing are changing the shopping experience. And consumers have changed, too: they’re digitally savvy shoppers and more price sensitive.

Kahn says applying classic retail strategy in this new era doesn’t work because it fails to consider the customer perspective. “Today, more than ever, customers have lots of choices and they gravitate to the retailers who offer them the best value on the dimensions they care about. In other words, retailers have to provide some kind of superior competitive advantage beyond what is being offered by the competition. This superior value can be delivered either by providing more pleasure and benefits for their customers or by removing pain and inconvenience from the retail experience.”

She reveals her Kahn Retailing Success Matrix, a strategic framework that explains both how successful companies are surviving and thriving in today’s retail environment and where opportunities exist for retailers that need a more competitive strategy, as well as startups looking for a way in. It offers four leadership strategies, with clear roadmaps for and examples of each.

“Winning retailers have to be completely customer-centric,” she writes, meaning they need to offer products customers want in the most convenient way possible — removing the pain of shopping — and do so in a way that is even better than the competition. This requires not only massive amounts of customer data, but also keeping track of competitive actions, anticipating future innovation and response, and keeping pace with ever-changing technologies.

As scary as the Amazon threat appears, there are still a number of retailers who are doing quite well in this new world. Learning how they do it is the aim of The Shopping Revolution. Kahn acknowledges that competing in this ever-changing marketplace isn’t easy, but it can be done by applying her framework and plotting and executing one of her proven strategies.