A big deal that changes the world
Retailer makes bid for medium-sized retailer with 466 stores. Retail world quakes with fear. Shares in retail stocks tumble.
How can that be? Well, when the retailer bidding $13.7 billion is Amazon and the medium-sized retailer is Whole Foods then it is perhaps easier to explain. But it does still make you question why there has been such an incredible reaction around the world to this potential acquisition in the US.
Is this a very long term punt by cash-rich Amazon or is this a clever, game-changing move that could give it a massive boost in its aim to tackle grocery, the biggest retail sector of all? The consensus view is that it is the latter rather than the former.
Which leads on to the next big question: how should retailers react to this development?
This was the impetus for a webinar organised by WPP which I was invited to join. Bringing together experts from Europe and the US across WPP’s network of communications, research, branding and eCommerce agencies, the discussion sought to draw out an action plan for retailers from Amazon’s audacious move. However, the clear message from all of the assembled experts was that the retail industry should be in no doubt that this is a very significant deal. Amazon has been targeting food for a while now with Amazon Fresh and its high-tech, self-service store format Amazon Go. Having a portfolio of premium food stores that with keener prices and wider availability would suddenly have massive appeal to the all-important Amazon Prime customers. It also provides a real-life opportunity for Amazon to learn and learn fast about the grocery sector, customer demand, logistics and speed of delivery.
For Naji El-Arifi, Head of Innovation at digital commerce consultancy, Salmon, this is a “real wake-up call for brands and retailers”. Michael Ross, Co-founder and Chief Scientist at data analytics and eCommerce agency DynamicAction put it more bluntly in saying “retailers should have had a wake-up call a few years ago but I fear they pushed the snooze button instead”.
They stated that a pretty good place for retailers to start if they are to compete with Amazon is to focus on their customers. Sounds an obvious point. But Michael Ross again made a powerful point in reiterating that Amazon founder, Jeff Bezos, is “obsessed by customers” and not the technology. Getting it right for the customer helps drive sales which generates cash – which is the other obsession of Amazon.
Retailers have to get more efficient. They have to embrace the waves of new technology including Artificial Intelligence in all its applications. Retailers should not be afraid to work with Amazon either and many retailers continue to form partnerships. Naji El-Arifi said that retailers and brands have to learn how to “leverage the whole Amazon ecosystem”. And retailers should be unafraid to create wider partnerships that help them access new technologies, markets or expertise in order to compete with Amazon.
Ethan Sinick, Director of Insights at data management company, Shirland Ventures said that retailers need to think and act more like Amazon in imagining future scenarios. And related to that, retailers have to sweep away the organisational silos that continue to exist between the on and offline worlds within retail companies. We are entering a world of “frictionless shopping experiences” where there should be no barriers.
Retailers need to also get bolder and be prepared to take equally big game-changing steps to realign the industry. As Robin Lewis in a typically robust and challenging open letter to Doug McMillan the CEO of Walmart says in a recent Robin Report, perhaps Walmart should step in and counter-bid for Whole Foods. It really is that important!
The World Retail Congress is pleased to be able to provide the link to the full WPP webinar on the implications of Amazon’s proposed acquisition of Whole Foods. It provides plenty of food for thought and actionable suggestions for retailers. Because hitting the “snooze button” is no longer an option.