How Can Retailers Beat Amazon?

From Best Buy to boutiques, stores are thinking beyond clicks.

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Like a farmhouse dropped in the middle of New York City, Fishs Eddy is a maverick of a shop, best known for vintage-style dinnerware and politically charged mugs. Its outspokenness comes cloaked in folksiness, which puts Fishs Eddy in a unique position to get away with asserting what many brick-and-mortar retailers must be thinking today: “F*ck Amazon!” That declaration, printed on a box in Amazon’s signature font, punctuated a front window display at Fishs Eddy’s Union Square store over the summer—with a cheeky asterisk underneath that said: “Fishs Eddy is Prime (as in awesome).”

New slogan for the “shop local” movement? It probably wouldn’t fly at 50th & France. (Northeast Minneapolis, maybe?) But that New York air of defiance—and confidence—rings true at home, too. From Target to neighborhood boutiques, retailers aren’t surrendering to the portended retail apocalypse. Or, more specifically, to Amazon, despite its astonishing dominance: Sales have climbed 25 percent this year over last, and that’s before Amazon’s purchase of Whole Foods. Nonetheless, optimism is the prevailing attitude voiced by executives from Target, Best Buy, and several small- to mid-size retailers.

Were they caught off-guard when customers started ordering everything from groceries to eyeglasses on their phones? Yep. Are they concerned about zombie malls and hard-to-reach shoppers? You bet.

But in frank conversations, retailers are no longer whining (at least for now) that online shopping will destroy all stores. They no longer fear “showrooming”—the already antiquated concern that consumers use stores to look and the internet, especially amazon.com, to buy. Today, it’s not physical vs. digital, says Best Buy’s president of multichannel retail Shari Ballard—it’s how to best serve the shopper. And that approach is leading local retailers to improve what they do in both spaces. It’s not the old store that will survive Amazon, but the new one they’re right now inventing.

“Guests aren’t choosing online or in-store. They’re choosing a brand that gives them something that enriches their life.”— Mark Schindele, Target

Case in point: the shift to a channel-agnostic selling strategy for Evereve, the Edina-based women’s apparel chain with 85 stores nationwide. Online sales have grown from 4 percent to 20 percent of Evereve’s total revenue in the past four years, reports co-chief executive officer Mike Tamte. The company looks at its Trendsend virtual styling service, which competes with industry heavyweights Stitch Fix and Nordstrom-owned Trunk Club, and predicts it will outpace Evereve’s in-store and online sales within five years. Still, Evereve opened 18 physical stores around the country this year. Another six are slated to open in 2018.

“Ten years ago, we justified our website as an advertising channel for the stores,” Tamte says. “Four years ago, we began to think about stores as advertising to the website. Increasingly, we’re acknowledging that our evereve.com customer is primarily a store customer who is buying online. We’re trying to make it work well together.”

When Evereve opens its first New Jersey store in the spring, Tamte knows from experience that the website will receive an influx of new shoppers from the New Jersey area. Some might be pre-shopping to see if the store they’ve driven past is worth a visit. Others will have scoped it out in person but then go online to place an order. Either way, the physical store brings brand awareness. Whether they buy online or in-store doesn’t matter to Tamte, as long as they do it.

But while an increasing number of shoppers order online, Tamte says Evereve stores remain profitable. It’s the same story for Minneapolis-based men’s retailer Hammer Made, which opened three new stores this year in Boston and Atlanta. “Web orders are gaining daily,” says CEO/founder Jason Hammerberg. “But our 10 stores are still the main attraction.”

Retailers may have finally figured out that the ease of online shopping isn’t eliminating the usefulness of physical stores. It’s just changing why we spend time in the aisles, explains Best Buy’s Ballard.

“The vast majority of our customers, over the course of interactions, use our online channel and our stores,” Ballard says. “The reasons they use each channel, and the mindset, can be very different.”

The more certain a customer is about a specific purchase, the more likely she is to order it online. Undecided shoppers tend to visit a store. “What that means for us,” Ballard says, “is the role of the store is really critical in the shopping experience.”

There it is. Experience. Retail’s biggest buzzword today echoes the oldest idea in commerce: entice customers to come in and give them reasons to stick around.

“When I think back 10 years ago to traditional retail, it was about the assortment of product, the ease of experience, and pricing. That’s still very true, for sure. But that’s not enough,” Ballard says. “When customers go to a store today, they’re expecting something more. There has to be a value in it.”

“We’re trying to deliver value to the customer that you can’t get online.”—Shari Ballard, Best Buy

Best Buy is betting on education—helping customers figure out which devices will serve their needs and then how best to use that technology. To that end, Ballard says, Best Buy has increased existing employee training by 25 percent. And the company is working on retention, both by raising wages and keeping sales associates and managers in the same stores. The strategy seems to be working: Best Buy sales are up 5.4 percent this year.

Target, still fighting to get ahead, is intent on adding fun and personality throughout its stores. That includes piping in upbeat background music and adding murals designed by local artists. Shoppers can see the first of these murals, featuring Twin Cities icons, at the newly remodeled Nicollet Mall store adjacent to Target headquarters. That downtown Minneapolis store also features an updated look with warm wood finishes (and less red paint) and polished concrete (in place of white vinyl floors). More than 600 Target stores will get similar makeovers in the next three years—the biggest redesign project in company history.

The upgrades are about more than looking pretty. Mark Schindele, senior vice president of properties for Target, explains the objective of the improvements, from brighter lighting to home furnishings vignettes that let customers see the products in a room setting rather than stacked on shelves. “We’re trying to create seasonal moments and style moments,” Schindele says.

Moments. They’re something Minneapolis-based authors Aaron Keller, Dan Wallace, and Renee Marino write about in their book, The Physics of Brand. They explain how brands become more meaningful and memorable to consumers when we interact with them. Which is why creating “moments”—anything from art on the walls to music in the aisles—is so important.

“Guests aren’t choosing online or in-store. They’re choosing a brand that gives them something that enriches their life,” says Target’s Schindele. “I think there’s something that will never replace human interaction.”

That doesn’t mean customers will tolerate a long line at the checkout counter. So Target recently added an app to its employees’ handheld devices that makes it possible to complete a purchase for a customer on the spot, anywhere in the store, and have it shipped to them at home. This checkout approach is being tested in 100 stores, with a goal of making it available nationwide before Christmas.

In October, Target introduced Drive Up, a pilot program in the Twin Cities that allows shoppers to place an order through the Target app and have their purchases brought out to the car. Perishable foods aren’t included in the service just yet, and the pilot is available for iPhones only. (Rival Wal-Mart also offers curbside pickup at hundreds of its stores nationwide, including groceries.)

“We’re experimenting with creating really easy experiences,” Schindele says.

So is Best Buy: The fulfillment process for nearly half of online orders runs through a store, with shipping off the shelf or front-door pickup by the customer. “It’s getting more and more blended,” Best Buy’s Ballard says. “We’re trying to deliver value to the customer that you can’t get online.”

Sometimes that’s as basic as making customers feel at home with a sofa to relax on and drinks to enjoy, says Ashley Kilcher, owner of Galleria boutique Roe Wolfe. “I get women who will spend a couple hours here, just hanging out,” Kilcher says. “It’s an experience economy in so many ways, whether you’re looking at restaurants or retail. Customers want to have a conversation; they want styling help.”

Those experiences are often easier for a small boutique to achieve. As Evereve stores multiply, they’ve become cookie-cutter—identical from Bloomington to Boulder. Now Evereve, which started out with a single store at 50th & France, is looking to come full circle and re-embrace its boutique roots, explains Tamte. “Our movement in 2018 and 2019 is to add more style and soul into the stores.”

For now, at least, Amazon isn’t in the soul business.