FEATURE ARTICLE: Are You Ready For the Retailer-as-Service Revolution?
Services and solutions have quickly become retailers’ growth engine of choice. Major retailers like Walmart, Kroger, Target, and Amazon have branched out into health services, ad marketing, financial services, and more. Media coverage has largely portrayed these efforts as a defensive scramble among retailers, but recent quotes from Walmart CEO Doug McMillon paint a different picture.
Addressing Walmart’s acceleration into services, Mr. McMillon stated, “We feel emboldened and are now moving with even more speed and aggressiveness.” He continues, “For an increasing number of customers, Walmart will be seen more like a service.” His comments illustrate a new approach and identity, retailer-as-service, that differs from past service expansion efforts in three main ways.
Employees are Included
When you think of a retailer positioning itself as a service, you assume that it is serving consumers. Increasingly, however, retailers are viewing their own employees both as beneficiaries and as prospects for growth. Walmart’s press release on its formation of a FinTech upstart in partnership with Ribbit Capital stated that the venture will “deliver tech-driven financial experiences tailored to Walmart’s customers and associates.” Focusing on employee health, whether financial or physical, reduces risk, cuts costs, and plumps up profitability.
Suppliers are Customers
Suppliers have also emerged as powerful prospects. A webpage outlining the “key advantages” of Kroger’s in-house Precision Marketing arm boldly states, “We know your customers better than anyone” and promises to “grow your brand equity alongside Kroger, the third largest retailer.” Here, deep-pocketed brand marketers can hedge against the volatility and limits of consumer spending.
Platforms are Parlayed
After years of monetizing its supplier relationships, Amazon is now bringing employees into the fold through its Amazon Care service, which provides tele-health and in-home healthcare to employees. The company is offering the Amazon Care model to all Washington employees as well as other in-state employers who want to add its capabilities to their benefits packages. Employees are a great beta test to ensure smooth sailing for scaling.
The retailer-as-service model illuminates retailers’ commitment to expand beyond purveying products, tap into captive customers, and monetize platform-building moves.
