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Study: Retailers cutting prices to compete with online players

BY Deena M. Amato-McCoy

Online-only retailers may be taking a toll on omnichannel companies, but traditional companies are finding ways to fight back.

This was according to “Brick-and-Mortar Retailers Fight Back: Winning Strategies to Compete with Online-Only Players,” a report from Applied Predictive Technologies (APT).

In response to price pressure from online-only rivals, 44% of respondents have cut prices, and 12% plan to do so in the coming years. Among the retailers who have closed stores but successfully recouped revenue, almost three-quarters (72%) implemented price cuts.

Ready to face online competition head-on, three-quarters of respondents (75%) have increased their investment in online channels. The majority of retailers (68%) have responded to the infinite inventory of the Internet by expanding their product selection.

Meanwhile, 70% are training employees to be more knowledgeable, and more customer service-focused (58%). And 54% have introduced loyalty programs, and 24% plan to do so in the future

“In such a competitive environment, it is critical that brick-and-mortar retailers not just adapt, but adapt smartly,” said Jonathan Marek, senior VP, APT.

“With so many initiatives to try across so many different areas of the business, those that can most quickly and effectively implement winning ideas will be the victors in the age of e-commerce,” he added. “While there are many methods retailers can use to inform decision-making, in particular, findings show that among the respondents that leverage scientific testing to evaluate new ideas, 60% have either not closed stores as a result of online competition, or have recouped more than half of sales lost from store closures.”

To stay competitive in an increasingly digital marketplace, APT suggests retailers adopt the following four key strategies:

&bull Make your store associates core to the in-store experience

&bull Use customer insights to drive incremental profits, not just offer promotions

&bull Take A surgical approach to store closures and remodels

&bull Focus on measuring everything across channels

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Target launches drive-up pilot

BY Marianne Wilson

Target Corp. is testing curbside pickup in its home base.

The discounter has launched the service, called Drive Up, at its stores in the Minneapolis-St. Paul area. The retailer described the program as the latest example of how Target is using its stores as hubs to help customers shop “on their own terms.”

Here’s how it works: After placing an order in the Target app and selecting “Drive Up,” Target notifies customers when the order is ready to be picked up. Customers hit the “I’m on My Way” button en route to their store, park in a designated spot, and then a Target employee brings the order out to their car.

“Drive Up is our latest effort to make it easier and faster for busy guests to conveniently get what they need, and simply get back to their day,” said Dawn Block, Target senior VP of digital.

More than 200,000 items, including home furnishings, toys, electronics, household essentials, non-perishable food, and baby-care, are eligible for the service. Produce and refrigerated or frozen items are not eligible, the StarTribune reported, and no minimum order is required for the free service.

The Drive Up program was built in house by Target.

“It’s a test-and-learn program, so we’ll continue to fine-tune and enhance the experience, and will look to expand to more guests in the future,” Target stated.

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Walmart ups same-day delivery capabilities with Big Apple acquisition

BY Marianne Wilson

Walmart is determined not to be bested by Amazon when it comes to same-day delivery.

The discounter announced on Tuesday that it has acquired Parcel, a last-mile delivery startup that specializes in delivery of perishable items and general merchandise to customers in New York City. Operating out of a warehouse in Brooklyn, Parcel delivers goods the same-day, overnight and in scheduled two-hour windows, providing customers with live updates via text messages throughout the delivery process.

The financial terms of the deal were not disclosed. The acquisition comes as Walmart’s Jet.com has been testing free same-day delivery of certain orders to customers in New York City.

“We can build upon that, and plan to leverage Parcel for last-mile delivery to customers in New York City – including same-day delivery – for both general merchandise as well as fresh and frozen groceries from Walmart and Jet,” Nate Faust, senior VP, Walmart U.S. eCommerce supply chain, wrote on the company’s website.

The extreme density of the New York City area makes it a complicated market for delivery. Walmart will now be able tap into Parcel’s home grown familiarity with the market. (According to Recode, Parcel, which was founded in 2013, has compiled a database of every New York City building it has delivered to, including photos and detailed information on service entrances.)

“Born and bred in New York City, Parcel has developed unique expertise delivering to customers in a distinctly challenging and essential market,” Faust said. “This acquisition allows us to continue testing ways to offer fast delivery while lowering our operating costs.”

Parcel will also continue to service and grow its current clients, Walmart said. The company has partnerships with several meal kit, grocery and e-commerce companies.

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