Amazon: Forcing Innovation to Survive

By Anjanie Sudhai

December 17, 2019

Amazon has become an all-encompassing competitor against retailers, changing the retail landscape and forcing companies, from small to large, to re-think their market approach. The e-commerce giant has increasingly been gaining market share from conventional retailers, creating an era that is known as the “retail apocalypse.”

Competition with Amazon is fierce. While some competitors, such as big box stores (like Walmart and Target) compete on price, they are not able to win on all products. For smaller competitors, a price competition may not be a viable option considering Amazons infrastructure. Amazon’s infrastructure creates an economy of scale and it allows for vertical integration and is more cost efficient. Companies are now forced to get innovative in their approach to compete with Amazon.


Partnerships with Top Brands

Companies are partnering up with top brands to drive business. JC Penny has collaborated with beauty giant Sephora. GlobalData analyst Anthony Riva believes that the cosmetic hubs likely help attract shoppers to their retail partners, who then stay and buy clothing, accessories and other products.

Kohl’s did not fight but rather embraced Amazon by partnering with them to sell Amazon devices and accept Amazon returns. Customers who return an Amazon package at a Kohl’s store receive a coupon to shop at Kohl’s. This is an easy way to get customers into Kohl’s stores and entices them to stay and shop at the store they’re already in. Kohl’s will reduce the square footage of its stores over time, but they show no signs of store closings in the near future.

Walmart has announced a personal shopping service that lets customers order items via a text message. This service also offers speedy delivery. Additionally, Walmart began offering its online customers discounts on selected products if they pick up their items in-store. Walmart and Microsoft have teamed up to fight against Amazon. Microsoft will offer Walmart access to technology that could reduce energy consumptions in its stores and machine learning expertise that would improve delivery. Walmart also teamed with Google to offer their products on Google express.

Other stores such as Target and Home Goods have also followed the trend. Target has teamed up with several new brands such as brands such as A New Day, Goodfellow & Co., JoyLab and Who What Wear, while Home Goods teamed up with HGTV stars Chip and Joanna Gaines to collaborate on interior decorating.

Speed & Convenience

Customers are looking for convenience. Cowen and Company predicts that by 2020 some 25% of customers overall will opt for curbside’s time-saving accessibility.

Target has launched faster same-day delivery, helping them stay competitive in the marketplace. They also launched a “drive up” service that allows customers to pre-order from the store and then have Target employees deliver and load the items into their cars when they arrive. There’s no need to get out of the car.

To embrace speed and convenience, Walmart has launched three new ways to easily get items. First, if there is no Walmart nearby customers can pick up an online item at any FedEx office. Second, Walmart offers hundreds/thousands of products that can be picked up at a Walmart the same day. Finally, Walmart has curbside pickup where all customers need to do is drive to the store, and their order will be packed up and delivered to their car. It’s fast, easy and free!

Other major stores such as Giant Eagle, HEB Grocers, Kroger, Meijer, Nordstrom, Publix and Sears have jumped on the bandwagon and introduced free curbside pickup. There are also several retailers that offer free in store pick up including Apple, Bed Bath & Beyond, Best Buy, Home Depot, Kohl’s, Old Navy and Macy’s.


Companies are ramping up customer service to gain more foot traffic. Best Buy has managed to stay in the game by training employee to be more available and knowledgeable. They also offer for salespeople to go out and do in-home consultations where they’ll recommend everything from routers to refrigerators to customers. According to Best Buy CEO Hubert Joly, the organization recognizes that offering advice from its salespeople is an opportunity and that making it easy for customers to understand technology is a priority. Other retailers like Walmart and Target have increased wages and improve training in order to deliver better customer service.

Checkout is often one of the most frustrating part of the in-store shopping experience. Retailers such as Macy’s, Walmart and Target introduced self-checkout to try to make checkouts quicker and easier.

Malls and stores across the country are offering entertainment and attractive in-store experiences to draw in more customers. For example, American Eagle debuted AE Studio, an on-site garment and jean personalization service, and also offer free laundry machines for consumers to use while shopping. Ulta Beauty’s CEO, Mary Dillion, wants customers to have an “emotional experience “when interacting with one of their associates, so the organization now offers in-store services such as hair, skin and brow treatments. Ulta is trying to create a spa-like environment for customers. The new American Dream mall in New Jersey is now the largest mall in the U.S. and has several entertainment venues such as Nickelodeon Universe, DreamWorks Water Park, Big Snow American Dream, Legoland Discovery Center, Sea Life Aquarium and several other activities, restaurants and stores to keep customer entertained.

With fierce competition afoot, it has become clear only innovative retailers will survive. Finding ways to appeal to consumers despite the desire for convenience and instant gratification has been a challenge some have found ways to navigate. In thinking outside of the box by forming strategic partnerships and offering new ways to do business, retailers small and large alike can find a way forward in this environment dominated by the Amazon Effect.


Disclaimer of Liability

The information provided here is for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.

Mazars USA LLP is an independent member firm of Mazars Group.

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