That Amazon is a widely lionized yet simultaneously imitated force in retail is not surprising. Ever since Amazon introduced a one-click checkout, a loyalty program that people willingly paid for, two-day shipping that has compressed to same-day delivery, attempts at reinventing retail by everyone in it have been never ending.
The problem, ShopFulfill Founder and CEO Shlomo Chopp explained to Karen Webster, is that Amazon’s business model is hard to replicate given what’s required to be a competitive digital retailer and the investments they needed to make to create an efficient logistics network and customer trust in buying things that consumers only saw once the products were delivered.
It also helped, Chopp said, to have patient investors — it would be the better part of a decade before Amazon would turn a profit, something, he said, that few firms have the balance sheet or investor appetite to sustain.
Unfortunately, Chopp said, the result for many retail hopefuls is that they get caught up in the horns of a false choice: They either try to copy Amazon and do what it does, but better; or keep doing the same things they’ve done “forever,” hoping that consumers fall back in love with old retail tactics.
Neither, Chopp said, are very good plans. Retailers instead, he said, need to come up with something new and out of the box. Instead of trying to be Amazon, they need to think about how to outmaneuver it.
If that sounds easier said then done, it is, Chopp said, but something that his new retail concept, Anchor Shops, is attempting to do.
Like the name implies, Anchor Shops try to preserve the bit of the department store experience that is still working — a physical place that consumers go to discover new brands and to examine products before they are purchased — while minimizing the parts of the old model that drag department store profits down such as the wholesale inventory model.
Redefining The Anchor Store
Once upon a time in retail, the term anchor store referred to the big, national department chains that anchored the various corners of shopping malls and drew consumers into it to shop. They were strategically located on opposite ends of the mall so that consumers had to walk by smaller and hopefully stop and shop those retailers, too. That model sustained malls and the stores within it for decades.
The problem, Chopp noted, is that the model isn’t working quite as well as it once did. The merchandise consumers see in the stores doesn’t change much. That’s because the department store model is to buy merchandise from brands at wholesale prices to sell at retail prices, limiting profits as department stores mark down prices to move old inventory off the shelves to make room for what’s coming in for the next season.
Anchor Shops has a different model for the brands that are in its stores. Instead of buying merchandise to resell, brands rent shelf space and offer infrastructure/logistics support to those direct-to-consumer brands that want distribution, but lack the logistics expertise to do so strictly online.
“Our offering to brands is we are giving you a space and key infrastructure for a few thousand dollars instead of the few hundred thousand it would take to set up your own store,” he said.
Embracing All The Channels
Chopp said that a key tenant of Anchor Shop is to give these direct-to-consumer brands a full omnichannel experience — more ways to meet the consumer and make a sale.
“We estimate that we will still see 70 percent of the purchases we deal with happening online. The value for us is how we can lock the digital and the physical experience together. We want the customer to start the shop in-store and move online later when they want to, or buy in the store but the order is shipped to their house the next day, or start the discovery journey on our mobile app and then come into the store to get a real feel for the product.”
From Anchor Shops’ point of view, Chopp said, the goal is to put the tools in the hands of consumers and brands so that they can find each other and do business. eCommerce, he noted, does a good job today of making it possible for consumers to shop whenever they want. Anchor Shops, he said, adds another level of optionality — so that customers can also buy from their favorite Direct To Consumer brands wherever they want and manage the transaction flow in a way that best fits their needs.
Anchor Shop is new, with a retail store Philadelphia and a fulfillment center housed in former New Jersey mall space set to in the second quarter of 2020. From there, he noted, they hope to build an additional 12 stores in the Philadelphia and New Jersey region. Regionalization, he said, is key to their vision because it is what allows them to manage their delivery logistics with greater efficiency.
And from there, the goal is simple. Reinvent retail, now for the omnichannel customer instead of the simple digital customer.
Chopp said that he’s not ready to concede that the department store is dead, just the model that underpins so many of them today. Giving consumers a choice across a wide variety of brands in one place has real value, he emphasized, as does making those brands accessible with a different economic proposition for the brands.
“What we want is to make it very easy for any shopper to buy from any brand. It’s not that department stores are totally dead, I’m not going to opine on that. But we think we can do it better — both for consumers and the brands that serve them.”