Let's go deeper down and really understand what the successful retailers did and what we can learn from them. So in this section we're going to focus on winning retailing strategies and we'll focus on the leaders Amazon Walmart, Target, Costco, TJ Maxx, Home Depot. Then we'll look a little bit about how luxuries had to change. Now luxury has was hurt and has been hurt during COVID, but I predict luxury will come back but it will come back differently. And then I want to talk about if you buy this premise, which you're crazy not to, but if you buy this premise on omni channel strategies, what does that mean in terms of understanding automation technology? And what kind of data are we looking at, and how can we use data to help us calibrate these strategies? So the framework is only as good as you measure towards it. And I want you to think when I described the framework in the last section, I built it as a graph, and I built it as a graph for a reason. So that you can plot progress, you can plot yourself on it, your company, you can plot your competition, and you can plot changing customer expectations and whether or not you're meeting those. And if you really use that grid as a graph for you to think about your data and see how you're doing, it will be way more effective. And furthermore, you can use that graph to set incentives for your employees. So in other words, you can give bonuses based on where they fit on plotting on that graph. So that graph that I showed you that framework retailing success matrix, it should be your guideline throughout everything. And I'm going to rely on this to show you the winning strategies and how these different retailers plotted their success on that matrix. So I'm going to continue to use that Matrix and you should think about it for your business as your guide guide posts as well. So let's start now with focusing on the Leaders, and obviously any conversation about successful retail and he's going to start with Amazon. So let's start with Amazon, now what I said about amazon was amazon is the best at frictionless. They build on frictionless to deliver low price and they just keep up with brand and experiential. Okay, so that's how their strategy worked using my guidelines and my Matrix. So what does Amazon mean? Well Amazon has literally themselves ratcheted up what good enough means in the frictionless domain. So it's because of Amazon, you've got to get things delivered so quickly right now. Amazon started in 1997 and I would argue they invented the notion of frictionless right from the beginning with this idea of one click shopping. Now, one click shopping means that it's super easy to buy on Amazon, you just do one click and you bought the product. And some of my undergrads when I talk to them about this, they say sometimes that's a little dangerous, I get a little scared about one click on the next thing. I know I've got a million things, it's just that easy to buy, so there's maybe that handicap to it. But the idea of one click shopping, making shopping so easy, in 1997 when Amazon invented it was a new idea, and so new that they patented it. This is shocking to me. It was such a big idea making shopping that easy online that they patent it. And the patent did not expire until 2017, which means for 20 years, anytime you bought anything online with just one click, it was on Amazon or if other retailers figured out how to do it, Amazon suit. Barnes and Noble figured out how to do one click shopping, not really that hard to figure out how to do it. And Amazon sued them and Barnes and Noble how to add more clicks. Now why was this idea of one click shopping so new that they could have a patent for 20 years? And it's because before Amazon came on the scene, this idea of customer focused marketing was really not the way retailers were thinking. Remember about all these old books I have in my office about these old ways of product focus selling. The old idea on online when it started was actually to maximize dwell time. It was the idea the longer you kept people on your website, the deeper you got people to go into your website, the more likely they were to purchase and the more they would purchase, time on the website time in the store means more purchasing. That's what it was, so the idea of a one click shopping that you'd be in and out that quickly was not what retailers thought with the right way to do it. It's the same idea of putting milk in the back of the store because you want people to walk through the store to buy the milk, and they'll buy more as they go. That idea while it might make people buy more is not a customer focused idea. It's a product focused idea, and as you know, if you've ever heard Jeff Bezos speak Amazon is ferociously customer centric, the customer does not want to spend any more time. And so this idea of one click shopping was so new in 1997, they could patent it. But that idea of being customer focused and give you the most convenient, frictionless customer experience has always been Amazon's focus. Now Amazon then after that, came out with Amazon Prime, which is their loyalty program. Before Amazon did Amazon prime, the loyalty programs from retailers were kind of lame in my opinion. It would be things like if I buy, I'm a Starbucks loyalty person, if I buy 10 cups of coffee, I get the 11th one or something like that. I'm not saying against Starbucks in particular, but just in general, these loyalty programs did not maximize what was really good about the loyalty programs, but Amazon Prime, they got it. What's really key about Amazon Prime is that you're getting that customer data and you can make sure that you're delivering value to the customer all the time. You're taking away the friction, giving them what they want, understanding their needs. And Amazon Prime makes people loyal and sticky to Amazon, the retention rate on Amazon prime is very high. If once you're an Amazon Prime you stay in Amazon Prime, if your Amazon prime, you buy more on Amazon Jeff Bezos has talked about prime as the flywheel, very much Amazon is focused on customer needs and they get customer data and give the customers exactly what they want. So Amazon Prime, the Amazon loyalty program is the flywheel for their strategy. Big takeaway for other people, loyalty programs are important because loyalty is the key to profitability, and you want to get your data from your end users. So you know how you can deliver value to that end user and then in December 2018 I think, or 2019, I forget now time passes so quickly when you're in COVID. But at any rate, they started cheapening the price of Alexa for Chris in time for Christmas and everybody starts having an Alexa in the home. And now Alexa or whether you've got google or Siri or Alexa, voice technology is really the future, so you're not only collecting data from what people are doing online and through the loyalty on amazon prime and everything people do online, but now you're getting data from, from voice. So when people are talking to Amazon, they're telling Amazon or telling Alexa everything about their life. My Alexa has conversation with me every single day, how are you doing Barbara, what's going on? Like she just totally talks to me now. And I asked her what the weather is and she knows where I'm going to be, because I asked you the weather in the city I'm going to be in, or I time certain things, she knows what I'm cooking, she knows when I'm not cooking, she knows when I'm exercising She knows everything about me now and when I order products it makes it very easy to order those products by just telling Alexa, I need toothpaste Alexa, put it on my shopping list. So you now get more and more data and the more customer data you get, the more you can deliver incredible value to the end user. And that is absolutely the core of Amazon strategy be customer focused. Now and they then make that shopping experience as simple as convenient fit into your life as easily as possible and that makes you very, very sticky to prime. They leverage that to also offer you low price, now Amazon is not necessarily the lowest price, but they have enough data from their amazon prime from their marketplace data from other sources. So they know when you're going to shop or go to a competitor if the price isn't right and they can adjust their price in real time to make sure they have the lowest price they need to have to get you to buy. So right now they're going to build their cost structure out and they're focusing on that now. But when they started, they did not have the lowest cost Walmart has the lowest cost, Amazon is not operationally excellent. And if you think about it, when they would deliver like one product to your door, that last mile is very expensive. So that kind of delivery that Amazon guaranteed through prime was not low cost, the reason they could compete on low prices, is they don't make their profit on their retailing. The retailing is the biggest source of revenue for amazon, their online e-commerce retailing is the biggest source of top line revenue. So they make their most money, they make the most dollars from retail, but it is not the most profitable. They make their profit not on retail transaction, but on other aspects of Amazon. So Amazon makes their money primarily the most profitable section of amazon is AWS. So they make their money on Cloud computing, so they make money, I think 60% of their operating profit comes from AWS. They also make money on Prime, Prime minister subscription so they make money on Prime. They make money on marketplace so they have other sellers sell on their platform and they get charged a fee and Amazon gives them services AWS is one kind of service. But they also give them fulfillment services and they make money on the services they charge other merchants and they make money more recently on digital advertising. So they have up a profitability model that gets profit from other aspects of their business, not from the transaction. If you're not making money on your transaction, you can cut your price very low, right down to cost. You can just basically charge a cost based price that gives them an incredible advantage against any other retailer that's making their profitability on their margin on the transaction. So by leveraging their frictionless strategy and delivering customer value through providing value through these other methods and these other revenue sources, they can offer price without having to necessarily reduce the cost of the particular transaction. So that is their strategy, now, what do they do in the top two boxes where my matrix says, just be good enough. One of Jeff Bezos, most famous quote was your margin is my opportunity. What does that mean? Well that means if you have an expectation and you love brands, what Bezos, is going to try to do when you buy on Amazon is to say, look, you think that brand is worth that higher price? Really, it's just a commodity why would you buy that fancy brand at a higher price when you can buy Amazon basics at a lower price and the product is basically the same. That is where Amazon is in brand they are trying to deliver product to you that meets your need. They don't necessarily have the fanciest brands Luxury does not want to sell on Amazon digitally. Native vertical brands do not want to sell on Amazon, anybody that has a strong brand does not want to sell on Amazon. Because what Amazon tries to do is make it a product as a commodity and to take your margin away. So what Amazon is doing is this is the definition of table stakes giving you the product you need just good enough. I'm not giving you a branded product, I'm giving you a product that meets your needs. But the reason you're buying from me is because the price is lower or it's easier to buy from me. That's the idea of table stakes and what he does is try to lower your expectations on the value of a brand. He's trying to kill brands, but he's not succeeding he also on the stores now, ironically, Gerin Koven, when everybody else is getting up to speed on digital, what's amazon doing? Opening stores, so Amazon recognizes that the world of shopping his omnichannel and they are opening stores. Now their stores are not like wonderful, fantastic experiential experiences their stores are convenient, they're easy, they make shopping in the physical world as easy as it is in the, in the digital world. But they recognize Amazon recognizes that really to compete and frictionless you've got to be in physical stores as well as online. And so they opened up a lot of Amazon Go's now Amazon goes a really interesting technology. You have to log into the app, now, logging into the app is important because that gives you customer centric omnichannel behavior. When you log into the app, when you go into an Amazon Go store, Amazon knows who you are and they can link together your in store data with your online data with anything else you do on the web at any other tracking that they do of your behavior. So they can deliver customer centric omnichannel so in an Amazon Go, you log in with your app you walk around, you buy whatever you want to buy. And their sensors and cameras on the ceiling that's measuring every single thing you do and you can take something on the shelf, put it back on the shelf and the cameras know, they know where you walk, they know what you look at. They know everything you're doing in the store so again remember they're getting more data and then you just walk out it's as easy as it could possibly be. If you're going into an Amazon Go and you're in a rush on your rush hour you can buy lunch in an Amazon Go within five minutes, you walk around, get what you want, just walk out. No line no nothing easy as possible and along the way Amazon's collecting amazing amounts of data about you brilliant kind of store. They also in September 2020 during COVID they opened up their 1st Amazon fresh store. Now you know that Amazon also bought Whole Foods a while ago so they were buying other stores. That Whole Foods was a store that linked together with them pretty well as a physical space. And if they need more physical space, they made by other stores, I don't know. But Whole Foods made a lot of sense because the average Amazon consumer is more upscale, like Whole Foods is. And Whole Foods was a physical store in the right neighborhoods for Amazon and Amazon could put their lockers in the Whole Foods and also get in on the trend of more natural food and more organic food, which was a trend that a lot of their consumers wanted. So the merging with Whole Foods was a very smart move with Amazon and that was a few years ago. But during COVID, Amazon opened their own grocery store called Amazon Fresh. They opened it in a KOHL'S in aKOHL'S space so they partnered with KHOL'S and they partnered with KOHL'S on other things. They partnered with KOHL'S on Returns, so if you had Amazon Returns and you wanted to return it to a physical store, you could return it in KOHL'S. And they opened up their first store, Amazon Fresh, and Kohl's. Amazon Fresh is a state of the art grocery store. They have the fresh product you want, they have what you want in a physical store, in a physical grocery store. The kind of product that you want to touch and feel. But they also have technology, so they have Alexa enabled information. So you can ask Alexa what's going on there. They have micro-fulfillment within their stores, so they can deliver very easily. They can offer frictionless payment and all sorts of things. Everything that you want with tech is available on Amazon Fresh, as well as fresh produce and the kinds of things you want in a top notch grocery store. And so Amazon is opening up new stores that are delivering to their customer value, which is customer convenience. And by the way, they've also now used their technology in airports. Hudson's Bay is a retailer in many airports. And so when you think about where else do you need to get something very fast? Like during a lunch hour, you only have limited amount of time so you want to move in and out of the store very quickly. Same thing is true in airports, when you're rushing to make a plane, what you want to do is right before you get on the plane is buy your water, buy whatever you're going to eat on board, etc. And you want to be able to just walk out, buy what you're buying and just walk out and run to your plane. That is the technology, Amazon's technology, that they're installing in the Hudson's Bays or in the airport retailers so that you can shop physical stores as conveniently as you possibly want to. Which is really good in the airport, and you can imagine other situations where that's really good. Now, what's interesting about that is when you use Amazon technology, Amazon is getting the data. So Amazon has all this data from their Prime program. They have all this data from any merchant that sells on their platforms. So they have data about their competitors, they have data from Alexa, they have data from their advertising, from the digital advertising that they're selling and the content they're selling. They have data there, and now they're getting data from other physical retailers that are using their technology. So Amazon pretty much knows everything about you, 24/7. Now, there may be privacy issues, there may be regulation issues on that. I'm not going to discuss that, other people will discuss what should and should not be done with that. And I'm sure people are looking at that as we speak, but from a marketing point of view and a customer point of view, the best way to deliver excellent customer value is to know as much as you possibly can about the customer and deliver value to those customer needs. And that is bottom line what Amazon's strategy is. And the strategy, by the way, has been here since 1997. This thing that I'm showing you on screen is Amazon's virtuous cycle, and what it basically shows is the growth in the center comes from delivering to customer experience. So Amazon recognized in 1997, with 1-Click shopping that it wasn't about what you bought, it was about how easy it was to buy it. If we maximize the customer experience, that will drive traffic to the site. The traffic will attract other sellers to the site, and when other sellers come on the Amazon Marketplace, then you have that broad selection and product variety, which, as I told you earlier on, is what customers are looking for. They want product, they want variety. So the way Amazon does it is to build customer experience, and by customer experience they mean frictionless convenience that drives customers to their site. That also attracts other merchants, and that gives you that product variety and assortment. And now what Amazon's doing is lowering their cost structure so that they can continue to lower their prices by lowering their cost structure. That in a nutshell is Amazon's strategy and it has been the same strategy for 20 plus years. Very simple strategy, deliver customer experience and then people will come to your site and then you can lower costs.