• by Tariq Kahn , Op-Ed Contributor, January 15, 2018

Home furnishings is the business sector it will take Amazon longest to "materially disrupt," thanks to the efforts already taken by IKEA, John Lewis and made.com to guard against it, according to Morgan Stanley research conducted at its Amazon Disruption Symposium. Even so, all physical retailers must further up their game -- and fast -- if they are to Amazon-proof their future business.

An important first step is for home furnishers to move away from seeing their stores simply as warehouses for stock and instead think of their physical spaces as a powerful platform for people to experience products, as well as to make click-and-collect and the delivery and return process as easy as possible so people are not hesitant to buy bulky goods online.

As Debenhams Chairman Sir Ian Cheshire told World Retail Congress in Dubai in April 2017: “It's not enough simply to have the stuff. You've got to wrap it in a set of experiences.”

Two trends make this an important consideration.

First, there is already much evidence that consumers are spending a greater proportion of their money on recreation, travel and eating out and a smaller proportion on durable goods.  Second, there is also evidence that despite the rise of online shopping, a significant proportion of shoppers "prefer" -- even Generation Z -- physical stores to online. 

For proof of how seriously these shifts are being taken, consider the extent to which Amazon has recently been investing in physical spaces -- including a partnership in the U.S. with Kohl’s, its acquisition of Whole Foods, its launch of its own grocery pick-up spots and over 40 miniature pop-up stores located in the middle of shopping malls across the US.

Or indeed, the rise in China of what has been called "new retail" following e-commerce giant Alibaba's recent move offline with the development of its own futuristic grocery store, Hema.

Also important, however, is for home furnishers to consider carefully what added value they can offer in the physical retail world.

The desire to add value through better service drove Ikea to buy Task Rabbit and John Lewis to trial Home Solutions, which allows customers to hire tradespeople approved by the store group. Both enable the retailer to "own" the experience right up to the point where the product they have sold is in the consumer’s home. Having an item that is yet to be put together still sitting in its box gives customers time for second thoughts. Ensuring that item is built and in use more quickly reduces that thinking time and also builds stickiness.

Transformation will be easier for some retailers than others. Those best-positioned will be retailers that have already begun work in this respect. IKEA, for one, was an early trailblazer of the experience store, and continues to push ahead with initiatives such as its AR app.

Made.com, meanwhile, is a digital native that then branched into physical stores, but which has adopted a novel approach to stocking -- rotating items on physical display in order to engage, inspire and keep things fresh with actual purchases still expected to be made online from a customer’s home. 

Another disruptor is US furniture brand Wayfair, which has a constantly evolving sophisticated shopping app, and unlike its rivals, has delivered large items for significantly less with the promise if once in situ the item is damaged or the customer doesn’t like it it will take the item back. 

In contrast, traditional department stores such as Debenhams and Next seem to be finding it hardest to Amazon-proof what they do due to limitations on the variety of products they sell.

Although there are some obvious leaders, few if any retailers have nailed the wider service-and-experience inclusive proposition so far, however. The good news, though, is that this means there is plenty of room still left in which retailers can manoeuvre.

In the UK, for example, perceptions of customer experience have fallen as brands fail to meet consumers’ expectations or adapt to new ways of buying, KPMG Nunwood’s annual Customer Experience Excellence Study recently showed.

Perhaps those still struggling could learn lessons from China where, apart from e-commerce specialists moving into physical retail,"‘new retail" also means a shift to selling “beautifully-designed, quickly manufactured and frequently iterated products at the lowest prices possible, making customers pleasantly surprised.”

This is also a retail approach that has served well traditional retailers such as Takashimaya, Isetan and Hankyu in Japan, thanks to a relentless focus on customer experience and extreme attention to details.

Another brand that exemplifies new retail is Xiaomi, which has established popular offline stores called Xiaomi's Homes. At a Xiaomi's Home you can browse, touch, and try everything from laptops to umbrellas, from air purifiers to Segways -- all at extremely attractable prices. But above all, the experience is fun. The brand has over 16 million followers on Weibo.

The gauntlet has been thrown, then, and the next move is for physical retailers -- to act, and act fast, to gain competitive advantage through physicality over Amazon. Which is why every physical retailer -- whatever their specialty or size -- should now be asking themselves, in the words of Dixons Carphone Chief Executive Seb James: “How can we end up making Amazon redundant?”