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NetSuite retailers address Amazon competition

Years on from Amazon's rise to prominence, retail technology conferences are still not complete without at least one discussion centred on the threat of the e-tailer's growing power in the retail space. This week's NetSuite SuiteWorld in San Jose, California, was no different.

Three North American retail CEOs, representing Wingtip, Prospect Brands and Hammitt which all run their businesses on NetSuite software, sat down to debate the Amazon conundrum and how they build their strategies to ensure they offer a point of differentiation from the eCommerce powerhouse.

Although it has been a key topic for retail events for a number of years now, this week he discussion took on extra pertinence in the wake of the Wall Street Journal's report that Amazon is to launch its own private label food and grocery products, alongside the news that it is set to open further bookstores. Amazon already operates a bookstore in Seattle and it is in the process of developing one in San Diego.

Tony Drockton, CEO of Hammitt, a purveyor of luxury handbags, admitted Amazon "definitely hurts our brand". Some recent reports suggest that as many as three-quarters of shoppers in some US demographics start their shopping journey on Amazon before anywhere else and that Google now views Amazon as one of most – if not the most – competitive threat to its business.

"At this point we've chosen not to list on Amazon," Drockton added.

"We do that because we still don't feel it presents a luxury brand in the right setting or in the right way."

Hammitt items are stocked in boutique retail locations across the US, and running multiple physical stores is still viewed as a key differentiator to Amazon despite the e-tailer starting its journey into bricks and mortar operations.

Steve Wuebker, CEO of Prospect Brands which owns Duck Head Apparel, and wearable technology company, Gyde, views stores as an important part of his strategy.

He said: "Amazon has a lot of loyalty but it's loyalty around speed and low price. If you own the brand you can build great loyalty with customers via great customer service in a bricks and mortar environment.

"You can in some ways be more nimble than Amazon with the service you provide the because you can tailor a response to the customer whereas Amazon is doing everything it has to be very cookie cutter. We use brick and mortar to try and connect with a customer in a different way and once we make the connection we keep trying to play it forward whether that's online or whatever."

Wingtip founder and CEO, Ami Arad, who set up a retail business/member club model based on products and activities that he loves to buy, talk about or indulge in, believes that Amazon gets the customer service part of retailing right, partly because of its technical capability.

"Unfortunately it sets everybody's expectations super high," he noted, adding that the e-tailer is "really focused on customer service".

Arad said retailers continually have to keep up with Amazon in terms of its functionality, but also warned of the "race to the bottom" on price which has been a common concern in retailing circles in the wake of Amazon's rising prominence.

"For brands carried on Amazon, in most cases we're not going to carry it [within our retail offering]," he added.

Arad also suggested that competition to his business comes from his own suppliers, because despite seeing his business as more digitally advanced than them when he established Wingtip in 2004 they have now caught up. This factor, he said, has influenced his decision to delve deeper into developing private-label items.

"Now I basically compete with all of my vendors online as well as other stores, so private label just shields us a little bit from that – assuming we're developing good products."

It is clear retailers still monitor Amazon's movements closely, often with an element of fear, and this is a theme that looks set to continue. For the wider retail sector, it is increasingly becoming about innovation and reinvention to find those points of differentiation customers will appreciate.

New-style retailers with unique operating models, like Wingtip, will continue to enter the landscape and, as its CEO Arad acknowledges, there is a real opportunity for long-running retail chains and new players alike to meet society's need for community and engagement.

"Stores lend your brand legitimacy that online-only doesn't," he argued.

"As life gets more technological and screen based there is a longing for interaction. We have smart educated salespeople who know about the product and sometimes people want to hear about the product from a human. As good as the reviews are on Amazon, sometimes you just want to go and see or touch [a product], or talk to a human being. "

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