(Photo by RJ Sangosti/The Denver Post via Getty Images)

Costco’s recent earnings report showed solid growth. Online sales were up 36.8% in the last quarter. Their net sales were up 12% year over year and memberships rose 14%. Although Costco might be considered a direct competitor to Amazon (and Costco is even headquartered in the same region), it is doing fine.


In my new book The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption (published June 12 by Wharton Digital Press), I have developed the Kahn Retailing Success Matrix. It’s a 2×2 matrix, and the columns represent the customer perspective. What do customers want when they go shopping? Simply, they want to buy something they value (product benefits) from someone they trust (customer experience). The rows of the matrix represent the differential advantage offered: customers will choose the retailers who offer a superior competitive advantage to what is offered by the competition. This can either be delivered by providing more pleasure and benefits or by removing more pain and inconvenience.

The four resulting quadrants of the matrix can then be described as follows: Product benefits that increase pleasure are delivered through branded product superiority. Product benefits that eliminate pain points are delivered through low prices. On the customer experience side, pleasurable customer experience is conveyed through delightful physical store experience, or in other words though physical stores that customers want to visit because they are fun, entertaining, worth the drive. Removing the pain points in customer experience requires frictionless shopping experience, making shopping easy.

In order for retailers to…