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Target and Amazon: Scarcity, Innovation and Execution

By Robert Hetu | April 20, 2015 | 0 Comments

Retail Trends

Reading all the very interesting articles and comments about the Amazon Dash button and the Target Lilly Pulitzer collection certainly sparked my interest. The debate around the longevity of the Dash button is very interesting.  Target’s promotion of Lilly Pulitzer and the discussion around scarcity are also intriguing.

Will the DASH button revolutionize retailing? Once again we experience attention grabbing innovation from a company that has set the pace for the market for decades. This innovation in particular has highlighted the potential of the internet of things in a very practical way.  I don’t think this step on the path has staying power but certainly has moved “things” forward.  I don’t really see a future where a consumer will have dozens or a hundred buttons around the house. Of course the buttons are completely unnecessary as the customer can easily order online or on an app.  Its highly likely that Amazon planned this as a short term marketing push,  likely funded by the branded manufacturers.  It does reinforce the convenience aspect that is appealing to many customers.  But just how large is that segment?  Many in the media and analyst business may overestimate the size of the convenience market.  No surprise as we all are consumers, we assume that we understand the retail landscape.  The truth is that the vast majority of consumers are very price sensitive, and carefully manage living paycheck to paycheck.

Was the Target Lilly Pulitzer collection a success?  By all accounts the products were a huge hit.  Scarcity was well in play here as reports of the products selling out online and in store are all over social media.  There was of course a problem with capacity on the website but if the purpose was reinforcing Target’s fashion cachet it seemingly worked.  I think this brings an interesting question concerning customer loyalty and execution versus the scarcity model.  While the hunt was exciting many of these products turned up almost immediately on ebay.com.   So did Target’s loyal customers benefit from this opportunity or was it the opportunists that planed to resell the items?  Consumers know that a company as large as Target could have obtained larger quantities of these items.  Certainly over production would devalue the desired cachet of owning these items and ultimately Target will need to build the right balance.  Transference of its inventory to ebay.com is not really a customer friendly result.

The proof will come from longer term results.  Will Lilly Pulitzer lead to Target increasing sales of its regular assortment?  Will Amazon Dash increase loyalty and drive revenues?  It’s all in the execution.

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