COMMENTARY

Kagan: How Amazon is transforming retail

Aug. 1, 2017 | by Jeff KAGAN

Photo: iStock.com

Amazon.com wanting to buy Whole Foods creates many new questions. If they are successful in the acquisition, and successful in operating the business, they could transform the entire grocery industry. Plus, if we pull the camera back, we can see how success in the grocery side may also mean Amazon will impact every other part of the retail environment as they have been doing over the last two decades. It all started in the book business with Borders and Barnes & Noble.

However, as successful as Amazon is in many different businesses, they are not successful in everything they try. Remember the Amazon Fire Phone from a few years ago? It was a big flop. They pulled themselves out of the wireless handset business so fast it made our heads spin.

Not that Amazon was the only failure in wireless. So were Comcast, Time Warner Cable, Facebook and others. So, just because a company is a leader in their field, does not mean they can be successful in other sectors. They must prove themselves in each new sector.

With that said, the grocery business is a retail world. And Amazon has been very successful to date turning the retail world on its head. It started with the book store business two decades ago and the grocery business is a new slice of the retail pie.

Amazon Go in a Whole Foods grocery industry

Amazon's entry into the grocery business threatens current industry leadership like Kroger, Publix, Walmart and Target. Amazon has been starting to play in this segment for a while with a store called Amazon Go.

Amazon Go is a different kind of grocery store. Customers walk in, grab what they want and walk out. Their smartphone app automatically rings up their purchases. Is that the model Amazon will roll out in Whole Foods? Perhaps. If so, many customers will like it, but many others will not.

As long as Amazon lets users continue to shop, as they are used to, and adds a new way of thinking to the mix, I think this Whole Foods experiment could be successful. Remember, this is the very early stages in the reinvention of the food shopping experience. One way or another, Amazon is poking the beast and it will cause a marketplace reaction.

Warning shot in grocery industry

Any way you slice it, Amazon is raising the bar on the grocery industry with Amazon Go and Whole Foods. This is the warning shot heard by the entire industry. This means every grocer has to up their game.

Grocery stores have gotten better in recent years, but there is still plenty of problems they need to fix. They have self-service aisles which let users buy without dealing with a cashier. In these cases, there is a vast difference between best and worst performers.

Companies like Whole Foods, Trader Joes and Sprouts let users charge to their smartphones quickly and easily. Companies like Kroger and Publix do not. Not yet anyway. That will change as Amazon moves into and quickly transforms the entire experience.

Grocers need to pick up the pace to compete with Amazon

This is an area where today's grocers need to pick up the pace. Example, there is a difference between a Publix and Kroger experience in the self-checkout lines. Kroger is much easier. Publix is more difficult. If you don't do things in the exact right order, the transaction won't proceed. This aggravates customers. Something every retailer wants to avoid. Yet Publix has put their customers through this mess for years with no sign of relief in sight.

That may change now with the Amazon threat looming over them. There are many different areas where we can expect Amazon will raise the bar with regards to the retail shopping experience. This will no doubt cause some retailers to struggle, even fail. Others, who can make the adjustment, will continue to compete in this new space.

Bottom line, we will all be watching how Amazon.com transforms the retail grocery business, as well as the enter retail industry, sector by sector. It's been going on for two decades already with no sign of slowdown. Stay tuned.


Topics: Consumer Behavior, Customer Experience, Customer Service, Supermarkets & Grocery Stores

Companies: Amazon, Whole Foods



Jeff KAGAN
Jeff Kagan is a Wireless Analyst, Telecom Analyst, speaker, author and consultant. Over 30 years he has followed the Customer Experience through technology like wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, AI, Mobile Pay, FinTech and more. Email him at jeff@jeffKAGAN.com. www

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