A key distinction between brick-and-mortar and online retailers is the access that the latter have to vast amounts of consumer data. For example, Amazon knows what shoppers search for, when they shop, and how they move through its site. But omnichannel retailers such as Walmart are realizing that they actually have access to more diverse forms of data, suggesting the potential for creating a new source of revenue, based on sophisticated market analytics. Notably, approximately 300 million shoppers visit Walmart stores monthly, and millions more click onto its website. That’s more than online companies such as Amazon or Google can claim. Accordingly, for advertisers, Walmart has a valuable, attractive resource: in-depth information about a vast pool of active buyers. It currently is working to find ways to make that resource available, mainly by developing more appropriate analytics capabilities. Walmart is not alone in this effort; Ahold, Target, and Kroger all have similar initiatives in place. These retailers seek out the brands that place products in their stores and promise improved targeting and advertising capabilities, based on shopper data. For example, Coca-Cola relies on Ahold (which owns the Stop & Shop grocery chain, among others) to provide data that show whether a particular targeted customer actually purchased its products in response to an in-store promotion. By working within the “retailers’ ecosystem,” consumer product companies gain greater proximity to consumers, without needing to rely on third-party analysts that might be conducting their research at a broader level, beyond the specific store setting. Such efforts confront the existing power of Amazon, of course. The online retailer more than doubled its advertising business last year, and a whopping 97 percent of the companies that advertise there indicate that they find their investments valuable. Therefore, getting them to shift some of their budgets to other retailers might prove difficult. However, those retailers likely have little choice but to pursue those advertising dollars because, as one consultant put it, “In an Amazon world, retailers have to make money beyond just selling products.” Furthermore, the retailers can establish deals with product companies that cover multiple elements of an advertising campaign. Many consumer goods companies already pay retailers slotting fees to get their products on store shelves, for example. If the retailers can add analytics capabilities to their offerings, they might establish long-term contracts that combine both shelf commitments and analytical results, for a set price that appeals to the brand manufacturer. Such multipronged marketing efforts ultimately may prove more valuable and efficient, suggesting a means by which omnichannel retailers can overcome the Amazon advantage.
- What data do omnichannel retailers possess that solely online or solely brick-and-mortar retailers do not?
Source: “Walmart Takes Cues from Amazon Advertising,” Bloomberg, February 17, 2019