August 2019 - 18

POHMER ON
A Sense of Balance ...
While total retail sales are growing at 2-3% per
By Stan
Pohmer
C
onventional wisdom says that with age comes
knowledge and experience, and one should then
be able to ferret out the answers and solutions
to those deep, consequential questions and challenges
that have eluded us.
The reality, however, is that with the rapidity of change
we are all experiencing in today's world, even with age,
one ends up with more questions than answers.
Keeping Pace
This reality extends into the business realm, where
companies are continually rolling out new tactics
and programs to upstage their competitors with a
" new shiny object " that may give them a temporary
market advantage but doesn't make sense when
viewed strategically and in context of their bottom
line performance.
The following is an example of what I'm talking about.
In past issues of Lawn & Garden Retailer, I've said
that the consumer is driving retail, and that retailers
must come up with products, programs and operations
that can satisfy the consumer needs. And the internet
is setting the level of consumer expectations that brick
and mortar retailers must compete against.
Historically, we have viewed " value " as an equation
that included product assortment and quality, service,
marketing and price. In today's world, it's all that plus
experience, and what the retailer can do to save the
consumer time and make the buying process more
convenient (we suffer hangover from the consumer's
on-line purchasing interactions with Amazon).
18 | LAWN & GARDEN RETAILER | AUGUST 2019
year, on-line sales are growing at a rate of 15-20%
annually. E-commerce sales now account for about
15% of total retail!
It's important to remember that the growth in
e-commerce is coming at the expense of brick-andmortar
sales; e-commerce is cannibalizing physical
store sales, not generating significant incremental
sales. Amazon alone currently accounts for 49% of
all e-commerce sales and 5% of all retail sales ... this
is the 800-pound gorilla that is disrupting consumer
behaviors and expectations!
The Consumer's Changing Mindset
Yes, Amazon has a broad assortment offering and
very attractive pricing, but their real competitive
advantage has been their fast direct-to-consumer
delivery options that appeal to the consumer's desire
for time saving and convenience. This has resulted
in the rise of the consumer's instant gratification
expectation mindset.
With the launch of the Prime subscription-based free
shipping option, Amazon set the competitive bar high
and, as they started to siphon off sales from traditional
brick and mortar retailers, the traditional retailers felt
the pressure to respond. And so began the retailers'
game of one-upmanship in an effort to both compete
against Amazon and to leapfrog their competitors to
stake a claim (albeit sometimes short-lived) as being
most convenient and timesaving.
Led by Walmart, and now joined by Target and
many of the major supermarkets, traditional retailers
have ramped up their on-line web- and mobilebased
platforms, and their fulfillment and delivery
capabilities. Almost every major retailer now offers
Buy-Online, Pick Up Instore (BOPIS) or curbside pickup,
whereby the consumer orders on-line and then drives
to the store where their order is carried out to their car
for them.
For those customers who don't want to go to the
store at all, traditional retailers have put together
combinations and permutations of annual subscription
services for free home delivery, monthly fees and single
order fees, some with and some without minimum
order requirements.
Retailer Response
As the competition heats up, the consumer's
expectations rise, leading retailers to get more creative.
In May, Walmart offered free next day delivery on
minimum orders of $35 on anything offered on their
website. In response, Target announced same-day fee
based free delivery on 65,000 select items available on
its website and mobile app.
On the grocery side, in addition to BOPIS, the
retailers are offering increasingly shorter home delivery
options. For example, Amazon's Prime Now offers
grocery delivery in one and two hours. Kroger just
announced a pilot program of 30-minute home delivery
for customers within three miles of the test stores.
And Walmart, where 52% of their total domestic
sales comes from grocery products, and where they
hold a 23% share of the total grocery industry sales,
is testing in-home delivery, where employees wearing
body cameras (with the video linked real-time to
the customer's smartphone or computer) enter a
customer's home using a special lock/code and actually
place the order in the customer's refrigerator and
pantry (naturally for a fee!)!
Just think of where delivery options will go with
the advent of drone, autonomous vehicle and robot
deliveries!
At What Cost?
I appreciate the need for retailers to be sensitive
to the expectations of consumers, in this case time
saving and convenience. But I also see the actions and
August 2019

Table of Contents for the Digital Edition of August 2019
