What Does Formula 1 Racing Have to Do With Retail? 

Amazon.com has created significant turbulence in the retail industry over the past 10 years. Most scoffed at the business case of buying books a better way, but no one is laughing now that Amazon has created a better way to buy just about everything. How can retailers win with so much disruption and uncertainty? The answer, strangely enough, can be found in Formula 1 racing.

The Scuderia Ferrari championship racing team has amassed an impressive résumé of wins across Formula 1 circuits. The key to winning is understanding external conditions, and tuning the engine and air foils to maximize performance. Drivers understand that attempting to pass another car on the straightaway is very difficult because of the extra wind resistance generated by leading cars. However, when a driver is able to slipstream, he or she can slingshot past competitors and take the lead. Slipstreaming reduces the air resistance and drag on the second vehicle in a tandem — team drivers often use this technique to advance the desired leader.

So how can retailers take advantage of slipstreaming? Amazon has paved the way by proving that every category of merchandise can be sold through all channels of retail. There was a time when many thought consumers would never buy shoes online. Zappos, and now Amazon, have proved that assertion false. Fashion apparel — another industry many thought safe from the threats of digital commerce — is proving to be a fruitful online venture. Instead of trying to pass Amazon where the turbulence and air resistance are the greatest, retailers should be considering where the air pressure is lowest.

What can retailers do that Amazon cannot or will not do? How can they cater to their customers in ways that are more relevant, more endearing and more valuable than the competition? What exclusive merchandise can they offer the market that will draw attention to their brands and services? How can retailers encourage consumers to shop their brand even though shoppers aren’t walking past their physical stores as often, and are shopping completely differently than they have in the past?

Retailers that find ways to localize merchandising decisions based on consumer demand preferences are realizing double-digit sales increases. Those that are pricing based on consumer demand — and not a margin expectation set on historical or traditional bases — are realizing high single-digit sales and margin increases. Retailers that are examining the attributes customers love (and the ones they don’t) are able to deliver new, exclusive products to the market. There are many examples of retailers finding the slipstream and leaping ahead of Amazon, along with the rest of the pack. This can only be accomplished by looking at retail differently than your competitors do.

The data, technology and advanced analytics with which you empower your employees matter. However, if your decision-makers have the same tools their competitive counterparts have, how can you expect different results?

Finding the slipstream is difficult; leveraging it is equally challenging. Going head-to-head with the same tools yields the nearly impossible task of progressing beyond your competitors. Equip your decision-makers with elegant, insightful and intuitive technologies that identify opportunities and recommend the best approaches to connect with your customers, and you'll win the retail race. Do it consistently, and you’ll change the race — and take your place in the winner's circle.

Kevin Sterneckert is an executive with Infor Retail, a provider of business applications specialized by industry and built for the cloud.