Numbers Don’t Lie


The Philippine Retailers Association (PRA) successfully held its online retail conference last month. The event was staged not via Zoom, as is common nowadays, but through a platform called EchoHub. It gave attendees the choice to listen to speakers or participate in break-out discussion groups, simultaneously. A virtual exposition hall was also accessible where a number of retailers showed off their latest offerings. Multi-dimensional virtual conferences like this are the future and we congratulate the PRA for being on the cutting edge.

Save for the young hosts whose tonality was inappropriate for a such a high-level event (their tone was more appropriate for a television game show), PRA’s event, entitled “Retail Reboot,” was a success in terms of the quality of speakers, content, and number of attendees.

Among the speakers whose message truly resonated was Doug Stephens. Doug is a Canadian retail futurist, author, and consultant to such companies as Google, BMW, Target, and eBay (I highly recommend a visit to his website, Doug painted a clear picture of how retail will evolve in the not-too-distant future.

Doug says that it is not true that COVID-19 accelerated the future of retail — it has, in fact, changed it completely. According to the European Journal of Social Psychology, it takes 66 days for behaviors to become a habit. COVID and its many life-changing outcomes have been with us for 18 months. Thus, it is safe to say that the habits we have developed through this debacle are now ingrained in us and have become our default behavior.

Working from home is here to stay. Mega-cities (or economic hubs) will become less relevant as people work remotely. People will leave cities and move to the countryside where they can enjoy a better quality of life for less cost. Thus, concentration of wealth will be re-distributed. Another habit that now persists is buying and consuming goods from home. This has pushed e-commerce to the mainstream. Any retailer who wishes to compete locally or globally must have a digital store.

E-commerce is now a $22-trillion industry. In China, sales via e-commerce are already 150% more than the sales of brick-and-mortar stores. The trajectory of e-commerce is quantumly upwards.

But there is a problem, Doug contends. In our midst are e-commerce giants, otherwise known as “Apex Sellers.” They are the Amazons, eBays, Alibabas, Shopees, and Lazadas of this world. Due to their expansive reach and well-organized logistics network, Apex Sellers are able to dominate an increasing number of retail categories. They are already in fashion, food, wellness, groceries, hardware, electronics, and many more. Apex Sellers will continue to expand their offerings to touch every aspect of our lives. In fact, they have already begun to offer such products as insurance policies, airline tickets, healthcare services, real estate, cars, and even banking services. The idea is that consumers “live” in one electronic marketplace controlled by an Apex Seller.

Apex Sellers are a threat to brick-and-mortar retailers making the transition to e-commerce. Why? Because Apex Sellers have commoditized nearly every product on the planet, from tennis shoes, to computers, to custom-made furniture from Italy. And because of their enormous scale, they are able to sell these products at razor-thin margins which even the manufacturers themselves cannot match.

So how can up-and-coming merchants carve their niche under the e-commerce sun?

It is all about differentiation, Doug proclaims. What makes a retailer stand out is its reason for being (its purpose).

A superb example is Nike. If Nike were to compete with an Apex Seller on the basis of design, quality, or price of its sportswear, it will always be out-designed, out-performed, and out-priced by hundreds of brands made in sweat shops around the world. To compete as a commodity is a race to the bottom.

Luckily, the folks at Nike are masters in consumer behavior and have recognized that what they are selling is not sportswear but stories. The stories that Nike tells, through its different media platforms, tells what their purpose is.

Nike tells the story of success by perseverance, struggle, and redemption and winning against the odds. Nike’s purpose is to inspire.

A well-defined purpose has the power to differentiate a brand from the rest of the pack and, in the process, attract customers and achieve brand loyalty.

Other examples of brands with strong purposes are The North Face and Patagonia, both of whose purpose is to be activists for environmental protection. The purpose of French premium brand Hermés is to be the world’s tastemaker and the pinnacle of quality and prestige. Appliance maker Dyson’s purpose is to be the cutting edge of engineering and design. The list goes on.

Brands that succeed in e-commerce are those whose purposes are well defined and those that evoke strong emotions. Without this, a brand is simply considered a commodity.

Defining a brand’s purpose requires the deliberate curation of its media outlets. This includes its advertisements, above and below the line, as well as its presence in social media channels. The story that the brand tells must be consistent throughout all forms of media.

One advantage that brick-and-mortar brands have over Apex Sellers is their physical stores themselves. Yes, physical stores will remain relevant even as e-commerce dominates most purchases.

A “retail experience” is the most effective way to convey as message and physical stores allows customers to experience a brand’s purpose first hand. Physical stores serve as the brand’s “stage” where it can create experiences whilst also generating the content needed for social media accounts. They are a venue for livestream events — something becoming increasingly important as a marketing tool. They also provide a source for immediate customer feedback.

In summary, there is no denying that COVID has permanently changed consumer behavior around the world. It has pushed e-commerce to the mainstream where up-and-coming e-commerce merchants must compete with Apex Sellers. The way to compete with Apex Sellers is to have a strong brand purpose.

E-commerce should not be seen as threat to brick-and-mortar retailers. Rather, it must be viewed as a great equalizer that presents opportunities for quantum growth, if done correctly. It is a new paradigm where those who are focused and those who persevere wins.


Andrew J. Masigan is an economist

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