Amazon’s purchase of Whole Foods has changed the grocery retail climate in ways no one can deny. As the industry tries to figure out Jeff Bezos’ long game, the impact can already be seen. Traditional retailers are adding delivery, offering meal kits, getting aggressive with pricing strategies, and making commitments to be more transparent in their products and sourcing. Following are four areas retailers should be considering as they plan for the future.
Life Beyond our Phones: Move over Siri, Alexa is coming for you. In addition to ordering from the Amazon store (and getting exclusive deals for Prime members), you can get a pizza delivered, play music, get a weather report, organize your life, and even make calls. How long will it be until we can place our grocery order from Whole Foods? As the Echo slowly pulls us away from our phones it aims to provide us with one of the scarcest resources, time. The idea of the weekly shopping trip is fading. In 2015, hand baskets surpassed push cart usage in supermarkets. Is this the result of more frequent trips, or more varied channels? According to Nielsen, while online purchase occasions are growing, size of purchase is shrinking. We are using ecommerce more regularly for on-demand needs. It is driven by convenience and lackluster in-store experience. Anyone that isn’t offering click and collect services is likely to be shedding customers and visits (even if only curbside).
Perishable Supply Chains: When listening to a founder of Plated speak, I was struck by a comment that they did not set out to build a meal kit company, but a perishable supply chain that reached the home. The grocery industry has mass supply chain movement down to a science, but an individual one is not easy. Just look at the 10 years AmazonFresh has been trying to get it right, and just recently announced the service would be pulling out of multiple markets. This isn’t a result of the Whole Foods deal, and still something Amazon will continue to improve. Albertson’s acquisition of Plated may be just the first meal kit company bought by a major grocery retailer.
Curated vs. Omni: I don’t mean omnichannel, but rather offering everything. Supercenters popped up across the country as the last century ended, but nothing can compare to Amazon. The alternative is to develop highly curated product offerings that your customers want and consume. Costco and Thrive Market have succeeded in this model, though approaching it in vastly different ways. Both provide discounts to members, but Thrive takes a purposeful approach to sourcing and selecting its product mix that connects with their community. Incidentally, Thrive has plans to expand to perishables in 2018.
Path to Purpose: With all the channels through which we connect today it feels like the consumer decision tree has been chopped down to a pile of crisscrossed branches. With so many options in so many places, meaningful connections with consumers will be needed for brands and retailers to gain loyalty. For brick and mortar retailers, a look at restaurants might offer insight. While the ownership models typically differ between corporate and franchise, empowering individual stores to engage their communities is a must. I recall growing up receiving vouchers for pizzas regularly for accomplishments at school. Why not one for a kids’ shopping spree to select a healthy meal to prepare for the family?meaningful connections with consumers will be needed for brands and retailers to gain loyalty
Will brick and mortar grocery stores still be relevant in the future? Does the future hold a landscape of abandoned Supercenters as our purchases become smaller and more frequent through an expanding option of channels? Perhaps only Jeff Bezos knows.