By its very definition, the phrase “paradigm shift” implies disruption. In business, consumer paradigm shifts are particularly disruptive, as they force the companies affected to alter (sometimes dramatically) existing models in favor of new ones. Faced with choice of exchanging the certain for the uncertain, it’s no wonder most companies opt for a wait-and-see approach to change, tacitly hoping that time will prove any shift unnecessary. Unfortunately, the growing influence of technology in business is exponentially increasing the speed, prevalence, and magnitude of paradigm shift disruption, allowing brands little time to adjust or evolve. In such a chaotic business environment, acceptance of change is often a lagging indicator; by the time it’s been fully realized, the opportunity has passed.
Just ask bricks-and-mortar tech retailer Best Buy. Once a Wall Street darling, the company is now fighting to stay in business. The consumer shift to a social, local, mobile (SoLoMo) paradigm, aided by Internet-enabled mobile devices, represents an existential threat to bricks and mortar retailers such as Best Buy worldwide. Led by Amazon.com, online eTailers are sucking the life out of retailers one click at a time, reducing them to little more than showrooms for would-be consumers to check out products firsthand before going online and buying them via the likes of Amazon.
THE SHOWROOM FLOOR
In a dramatic move to attenuate the negative effect of this practice (aptly known as “showrooming”), last month Best Buy announced a permanent price matching policy, agreeing to honor the prices of local retail competitors as well as 19 online eTailers, including Amazon. Only time will tell whether the move proves inspired or merely desperate. In war as in business, mimicking the tactical approach of an enemy soundly defeating you is seldom a recipe for success, mostly because they're likely better at it than you.
As if to underscore this point, Walmart, the greatest retailer of them all, has opted for a wholly different approach to combating the threat of the emerging eTailer: instead of mimicking, it is assimilating what works for companies like Amazon into what works for Walmart. Put another way, Walmart is merging offline, online, and mobile commerce together to create what has been termed a “clicks-and-mortar” approach to retail. As President and CEO Joel Anderson noted in a recent interview with Wired, “You’ve got to go where the customer wants you to go. We live in the age of the customer…”
Hard to argue that one.
To execute its novel strategy, Walmart has embraced SoLoMo technologies, utilizing in-store geo-fencing to automatically detect its location-aware mobile app as customers enter any Walmart retail chain. Inside, customers can easily switch the app from online to store mode, allowing them to enjoy interactive in-store experiences like scanning bar codes for pricing, accessing Walmart’s interactive in-store circular, and keeping a tally of everything they've bought to track overall spending.The ability to switch from online to store mode also gives Walmart app users a chance to buy out-of-stock items online or even compare prices with Walmart’s own eTail site.
This last bit is reminiscent of an old salesroom tactic, whereby a salesperson offers a prospect multiple product options in order to get him or her so focused on deciding which version to buy the prospect forgets that he or she doesn't actually have to buy from the salesperson in the first place. With its nifty mobile app, Walmart is hoping consumers get so wrapped up in comparing in-store to online Walmart pricing that they forget to check other eTailer options.
THE BOTTOM LINE
So far, it looks like Walmart’s innovative approach to SoLoMo is working. In October of 2012, Walmart said the company expects to meet its $9 billion online sales projection for the fiscal year ending January 2014; while not close to Amazon’s 62 billion in net sales, it is nearly double Walmart's 2011 online sales of $4.9 billion.¹
In the face of disruption, Walmart has embraced change, relying on fundamental SoLoMo technologies to provide customers a simple, integrated user experience across multiple channels, making it easy for them to get what they want when, and where, they want it.