As the World Cries Out ‘Retail is Dead,’ Amazon Says ‘Long Live Retail’

Amazon is getting into the food retail market

If you believe all the predictions, then brick and mortar retail is on its way out. The shop-anytime convenience of 110,000 ecommerce websites, risk-free shipping guarantees, and of course – Amazon, are all to blame.

Retail is not dead, it is just being reinvented.

As we all watch department stores and specialty storefronts close en masse, we do not doubt that we are living in a time of transformation for retail. In the article, ‘A Historic Tipping Point’ published on April 17, 2017, the New York Times dubbed 2016 the ‘year of Amazon.’ They went on to report ‘E-commerce average annual growth has increased to over 40 billion.’

So if it is true retail is dying, why did Amazon just lay down $13.7 Billion to buy Whole Foods Market and its 460 stores?

It’s simple. Retail is not dead, it is just being reinvented. Amazon knows it.

What does Amazon know that most do not? Consumers want it all.

Over the last few years, CQL has spent a considerable amount of time with Brick and Mortar retailers who have only been dipping their toes into the online shopping world. Treating ecommerce as the ‘other’ channel and making incremental investments. These companies (who spend tens-of-millions in promotions and advertising dollars each year) bristle at the thought of spending a fraction of that on an ecommerce experience.

The results of this approach? It is an either/or experience. Customers can shop in their store, or on their website – but not seamlessly between the two.

What if their customer finds a product they want on the website and want to pick it up in store today? Nope – gotta use the phone. Redeem in-store loyalty points on their website? Nadda – different systems.

If their customer can’t find the right size – good luck, their clerk has no access to what is in the online distribution center or what is available in other stores. Solution? The customer must search the store’s website. (Or most likely be driven to Amazon’s site.)

We believe a retailer who thinks this only impacts a few of their consumers will find themselves obsolete because their competition is already re-tooling in anticipation of what is next.

It’s not about ecommerce as a  channel, it’s about looking at commerce as a unified system.

The New York Times even sees it in their own city, In ‘A Historic Tipping Point’ published on April 17, 2017, they said ‘The profound reordering of New York’s shopping scene reflects a broad restructuring in the American retail industry.’

Yet juggernauts like Amazon, Walmart and boutique brands like Vineyard Vines are doubling down. Why? Because they view ecommerce and in-store shopping as a single experience, built on a unified approach to technology and data.

Side Note: It’s always been about the data – and while Amazon is the darling in the ecommerce world for its use of data and logistics, it was Walmart who pioneered the use of unified data to disrupt the traditional retail market. As early as the 1990s, Walmart could see that a product was not selling in its Peoria store, so they would satellite link this insight to its distribution center who would re-route that product to its stores where that product was selling. And its merchandisers could hear of a summer heatwave in the Great Lakes region and temporarily re-route air conditioners from the southern states. How? They had the data.

So, what might be in the thoughts of Bezos’ team at Amazon as they buy into the grocery industry? Reinvention.

‘Although Amazon remained tight-lipped Friday about its plans for the natural and organic food giant, a prototype grocery store the company opened this year, in Seattle, provides clues to its vision for the future: cashier-less shops where purchases are tallied automatically on an app instead of at a checkout counter.’ – Washington Post, June 16th 2017

It is clear to Amazon that retail is not dead. It just needs a re-invention. Assuming they can couple their understanding of logistics and consumer data with Whole Foods’ mastery of consumer experience, they will drive unified retail innovation.