What Amazon and Whole Foods wish they knew about in-store fulfillment

MINDS WERE BLOWN last week when Amazon.com announced its intention to acquire Whole Foods Markets 461 locations in a $13.7B cash buyout. A media and analyst frenzy followed that has kept the world of retail business on edge for many days.

As it happens, your intrepid storyteller was already deeply involved in a project focused on the in-store fulfillment of online orders. Click & Collect has been coming on strong for many months, and it seems like Amazon’s serial adventures with AmazonFresh Pickup, AmazonGo, Prime Now and Prime Pantry have been a primary catalyst. Obtaining a portfolio of physical stores is its most audacious experiment to date. Now the competition gets interesting.

Read more

Flying or Dying: Whose View of Stores Rings True for The Future?

FOR THE 3,100 retail, tech and finance movers and shakers who gathered here in Las Vegas at the inaugural Shoptalk conference this week, an existential question still remains unresolved: Are stores poised to soar in the digital stratosphere or are they circling the digital drain?

“Stores are incredibly challenged,” said Ron Johnson, CEO of Enjoy, the online services startup he founded this year following his stunning success with the Apple Stores and his shocking disappointment at JCPenney.

“Over the past 20 years stores have been in a relative decline” he added, referencing the faster growth posted by Amazon.com and other pure-plays and the recent reports of soft quarterly earnings and closings from brick & mortar giants like Kohl’s and Macy’s.

But Jerry Storch, CEO of Canada’s Hudson’s Bay Company, which operates Saks 5th Avenue, Lord & Taylor, the Gilt online boutique site, and Germany’s Galeria Kaufof as well as its eponymous stores north of the border, would beg to differ.

“That narrative is all wrong,” he told a packed audience. “90.2% of sales are still in stores. Amazon still only controls 1.5% of U.S. retail sales.”

Read more

The Store is Dead! Long Live the Store!

Margo Georgiadis, GoogleTHE DISTINCTION between online and off-line retail sales grows blurrier by the minute, as shoppers meld their consideration and purchasing behaviors into an “all-line” shopping continuum that spans brick, web and mobile.

“The war for store traffic will be won or lost on digital,” said Margo Georgiades, President of Americas, Google, who spoke in Tucson, AZ last week at the 19th Global Retailing Conference sponsored by the Terry J. Lundgren Center for retailing at the University of Arizona.

In 2010, U.S. retail stores recorded 39 billion “footsteps” in November-December, she reported. By the same period in 2014 that number had declined to 18 billion. Despite that huge drop-off in store traffic, store revenues grew for the same periods from $641B in 2010 to $737B in 2014.

“Those footsteps didn’t go away,” she said. They just went online.”

Read more

Do CPG Companies Get Online’s Potential?

shopping-cart-buttonCONSUMER SURVEYS FROM Deloitte and others consistently report strong intentions by households to purchase more of their grocery and packaged goods online. This has been true for many years. I suspect there’s some response bias in play.

A recent Retailwire.com discussion raised this issue in the context of a gap between measured shopper interest in online CPG purchases and the less-than-dynamic efforts by most CPG companies to take full advantage of the opportunity. Are they missing the boat? Or are they just taking a prudent approach in the face of greater complexity?

Here’s my take:

Until the perspective shifts from, “How will we sell our products online?” to “How will we help households better manage their pantries?”, I believe this business will continue to be “just around the corner” for CPG, as it was in 1997.

Certainly, splintering the grocery shop into dozens of weekly decisions, transactions and deliveries is no way to help shoppers streamline their consumption routines. This was then and remains now the fallacy of the “consumer direct” concept. Disintermediation is bunk.

A re-consideration of the grocery basket and how it arrives to the home is another story. That requires a solution orientation on the part of the service provider (the retailer). Never-run-out tools, bulk shipments of high-consumption items, and secure unattended delivery have all been well-received in the past. Rapid delivery mechanisms from Amazon.com and others may add traction in areas with urban density, but the relevance will vary widely by location and purchase occasion.

Unfortunately for brands, these emerging concepts will not simplify the in-store shopper marketing imperative in any way. They do add, however, a whole new set of required practices for brand promotion and interfacing with online channels and shopper marketing outside the store. Set against the hard reality of somewhat inelastic total demand, that’s a very tough formula.

© Copyright 2013 James Tenser
%d bloggers like this: