Can Retailers Act Like Tech Companies — And Should They?
Walmart turned heads at SXSW earlier in March by billing itself as a tech company for the first time. The retail giant hasn’t been shy about investing in newer technologies such as VR, robotics and NLP-powered voice technology, making the case that tech will be a major part of its business going forward. The investments come as chief competitor Amazon continues to redefine its own customer experience (and everyone else’s) with technology, while Kroger continues to center its new store experiences on innovative technologies.
The RTP edit team discusses the pros and cons of retailers identifying themselves as tech companies, and which aspects of tech company culture align with what retailers need to achieve success.
Adam Blair, Editor: It’s a bit of a mystery to me why retailers want to brand themselves as tech companies, at a time when Silicon Valley’s mystique is wearing thin. Presidential candidate Elizabeth Warren is asking whether big tech companies should be broken up; Facebook appears to be playing fast and loose with people’s personal data; and Twitter is the megaphone for the ugliest, most extreme viewpoints across the political spectrum. Perhaps this is just a case of Amazon envy; the elephant in the room famously acts more like a tech company than a retailer. I get that merchants want to let customers, competitors and investors know that they are forward-thinking and agile — not stuck in the past like Sears or Toys ‘R’ Us was. But if I were running a retail company, I would play up my relationships with customers, along with the trust they (hopefully) have in my stores and products. In fact, maybe tech companies should start talking about how they resemble the world’s best retailers.
Glenn Taylor, Senior Editor: What Amazon and Alibaba have accomplished, outside of getting people to buy products, suggests that they in fact have earned the “tech company” label. Amazon has ridden the cloud craze to consistent profitability, while Alibaba is showing its ambition to take a similar role across China. This works if you’re the powerhouses, and other big names in retail that want to bring tech into their own ecosystem are making an intelligent decision — if they hire the right people. With that said, I really hope this doesn’t become a situation like the “lifestyle brands” movement today, where you have everyone and anyone labeling themselves as such. It’s one thing to try to keep yourself within the consumer’s consciousness outside the shopper experience, but it’s another to deny what you truly are at heart by trying to gain popularity off the buzzword of the day. Yes, retail is changing to the point where technology is a necessity. But let’s not get carried away here — a retailer’s job is to be there for a consumer’s shopping needs. Ditching the retail narrative doesn’t do these companies any favors, especially in the cases of Walmart and Kroger, the two biggest sellers in the U.S.
Bryan Wassel, Associate Editor: I doubt any retailer that calls itself a “tech company” means it literally, and from a marketing perspective the term is all but useless — no shopper is going to switch a purchase from Amazon to Walmart because of that proclamation. The real target is investors: executives who claim technology as one of their primary enterprises are also signaling that they are taking the current AI, personalization and AR/VR arms races seriously. This primes shareholders and investors to accept acquisitions that better fit a tech company than a major retailer, which can be an important consideration when making deals that don’t produce a direct ROI — they may pay off in the long term, after the retailer launches a new friction-reducing POS solution or sees a drop in late shipments, but investors eager for the next quarter’s dividends need a reason why they should tolerate what are often large expenditures. The tech company moniker can help well-positioned retailers carry their current success to the future, by giving them an excuse to invest in tools that will help them stay ahead of the game.