Monthly Archives: June 2017

Amazon moves into the Kombucha aisle in a big way

One day we might look back at June 16, 2017, as the day the retail and grocery business changed forever. It was, after all, the day Amazon decided to stop dipping its toes in brick and mortar retail and instead dive in head-first with the announced $13.7 billion acquisition of Whole Foods Market. While the news itself made a big splash with the public, the overall ripple effect could send waves of change across the industry for years to come.

Just take out the Citizens Banks!

The deal gives Amazon a network of 450 Whole Foods stores in the U.S., Canada, and United Kingdom, many of which are located in affluent neighborhoods and come with a loyal customer base willing to pay a premium for high-quality groceries. It also potentially extends the online retailer’s existing grocery service, Amazon Fresh into new markets while also broadening the assortment of products sold. And almost overnight, Amazon goes from a niche player to a national powerhouse in the $1.4 trillion grocery industry. Combined with Amazon’s well-established expertise in logistics, customer data, and pricing, Whole Foods could become a transformational force in brick-and-mortar as we know it.

So what does it all mean everyone else? Retailers and grocers continue to feel the pressure from shifting consumer habits, with many struggling just to stay relevant. Amazon’s new push into the physical world will likely add to the pressure. Here are five things to watch for as Amazon and Whole Foods move forward:

Flexible distribution

Your local Whole Foods likely won’t change into a massive Amazon warehouse and fulfillment center overnight. But there’s a good chance Amazon’s already thinking about how to leverage these strategically located stores (as well as Whole Foods’ existing network of distribution centers) to get products to customers faster and more efficiently than ever. Especially as the company looks to develop its Amazon Fresh service into a leader in the small, but growing online grocery space. Somewhere between Whole Foods’ in-store experience and Amazon Fresh’s online convenience lies the potential for great synergy – especially when it comes to giving more customers access to the whatever delivery method they prefer.

Experience matters

People don’t just buy products; they choose experiences. And the most successful retailers today understand that experience matters. Whole Foods is a long-time leader in bringing experiences to its stores. Whether it’s through in-store cafes, bakeries, cheese tastings, or coffee roasting, Whole Foods customers have come to expect an opportunity to see, taste, touch, and learn about many products before they buy them. That type of experience remains a tough solve for online-only food retailers. Whole Foods is an opportunity for Amazon to double-down on the ability for customers to experience new products and how to use them. Will it extend these experiences beyond just food products?

Fulfillment-plus

Jeff Bezos was one of the first to propose the idea of delivering orders to a physical location other than a customer’s home or office. Today Amazon Lockers are commonplace, giving customers a secure place to receive orders whenever and wherever it’s most convenient for them. Having an additional 450 Amazon-owned locations could extend the service even further, providing new real estate for deliveries, returns or other shipping services that can’t simply be provided in the back of a 7-Eleven. While there’s no public plans for Amazon shipping centers, it’s certainly within the realm of possibility.

An industry wake-up call

Amazon’s big jump into the grocery business splashes water on the faces of just about everyone else in the industry. Now it’s up to grocers to innovate and refresh their business models in order to stay afloat. Will it lead to traditional grocers adopting more online shopping and deliveries? Will they be able to compete on more than just price? Clearly, customers will choose the experience that suits them best. They ultimately vote with their wallets. It’s up to grocers to gain a better understanding of all the data behind customer interactions, to be able to match pricing and promotions to a customer’s preferences, and to create experiences that delight and reward shoppers for their loyalty.

The landscape is changing fast – don’t get left behind

It used to be that Amazon was the leader in online shopping and services and Walmart was the king of physical retail. But now Amazon is building bookstores and could soon have its own massive grocery chain, while Walmart gets more aggressive online. Somewhat lost in all the news about Amazon and Whole Foods was Walmart’s announced acquisition of online fashion brand, Bonobos – not to mention its recent purchase of Amazon competitor Jet.com. In their quest to be the primary destination for consumers of all walks of life, both Amazon and Walmart have begun aggressively stepping on each other’s turf.

It’s further evidence the lines have blurred between physical and online retail and there’s no single path to success. It’s no longer just about stores or about prices, delivery speed or convenience. Those who succeed will do so by finding the right mix of products, prices, and technology to surround the customer with consistent, seamless, personalized experiences.

Will drone-delivered, organic kombucha come next? Maybe not tomorrow. But all signs point to the dawning of a new age of retail. And it’s only just begun to get interesting.

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Filed under Current Events, Supply Chain, Retail, eCommerce

Take me out to the ballgame, take me out to the store – Flexible fulfillment is a homerun for retail’s biggest fans

Unlike most other sporting arenas, baseball stadiums truly have a soul of their own. Each ballpark has different dimensions. The fans, the surroundings, and the amenities make the experience unique to each and every team. And while no two games or stadiums are alike, watching America’s pastime in-person lends itself to a different, more universal kind of sport: retail.

With each new stadium visit, I like to come away with a little memento for myself or for my friends. Souvenirs are as much a part of the game as hot dogs, Cracker Jacks, and the seventh-inning stretch. And my recent visit to Atlanta’s SunTrust Park was no exception – especially since it just opened this year. Indeed, I had high expectations for the new home of the Braves.

 

The Braves new ballpark…what was wrong with the old one?

 

Like a good consumer, I made sure to visit the Braves Clubhouse Store, the stadium’s featured concession for all things Atlanta baseball. And while I left with a bag full of merchandise, the experience was no home run. My path to purchase within the store was a microcosm of the challenges created at the intersection of consumer demands and retailer capabilities.

My experience isn’t that unusual. We entered the store in search of two Bartolo Colon t-shirts for friends – one male, one female. Simple enough. Colon is a popular pitcher who’s achieved something of a cult following among baseball fans, in part because of his size (big), age (old), velocity (slow), hitting ability (poor), and the unrestrained joy he brings each time he takes the mound. He neither looks nor acts the part of a player who’s won 235 games across more than 20 baseball seasons. And that’s a big reason why fans love Bartolo so much; he’s one of us.

The team store is usually the best place to find authentic merchandise on game day. And I quickly spotted the women’s version of the shirt as soon as I entered the store. Surely I’d find one sized medium. But it wasn’t meant to be. All the shirts on the rack were at least one size too large. I asked for help and a friendly store employee went to search for the elusive medium shirt in the storage room. She came back empty handed. The week’s deliveries had not yet arrived, but if we came back in a few days the shirt should be back in stock.  We moved on to the men’s section, where there were two different shirts to choose from. So I dug in, determined to find an extra-large for my friend and make the shopping trip at least partly successful. But it wasn’t meant to be. Once again it felt like I unfolded the entire stack of shirts, only to find the right size was out of stock.  A store associate reminded us the shipment hadn’t arrived and that we should check again later. I ended up buying a shirt in large along with some other gear, but didn’t leave fully satisfied with the experience. It was a reminder of the ongoing issues retail must address in order to compete in today’s world of ambient commerce.

Let’s break it down.

  • Lack of inventory mix: There were clear issues with getting the right size mix for a popular shirt. Neither the men’s nor the women’s version of the Bartolo Colon shirt had much in the way of size availability. Though it seems simple, having the right mix of product sizes and colors is one of the biggest challenges in fashion and retail. It leads to lost sales. Retail operations such as the Braves’ Clubhouse, where sales are based around finite and well-defined experiences, could benefit from postponement. Rather than stocking a set number of finished products, they could turn to in-store screen printing as a means of applying any name onto one of several standard blank shirts during the game. The retailer would still want to have a mix of standard products on the shelves, but the added ability to print on-demand would help buffer against stock outs and give customers the product they truly want. It would also help ensure the store’s ready the next time another folk hero like Bartolo Colon captures the hearts of fans.
  • Limited inventory visibility: Knowing what’s on the shelf and what’s still in storage still gives most retailers a headache. It’s time consuming and inefficient for staff to sift through boxes while a customer waits in the store. Technologies like RFID and the Internet of Things help retailers bring greater visibility to the store Imagine how much more productive staff would be if they could easily tell what items are in stock and where they’re located – down to the exact spot on a shelf or box in the back room. Now imagine if this visibility extended to all the stores within the stadium (or any given region). If you could see across all that inventory, if your staff was empowered to find it, make the sale, and have it delivered to the customer, how much happier would that customer be?
  • Rigid fulfillment: The act of fulfilling a customer order remains the moment of truth for retailers. In my example, the Braves’ retail had an opportunity to meet our needs at the ballpark, but lost out on a bigger sale because the inventory wasn’t there. But it’s not as though the store is the only way to deliver goods. If the lack of available inventory was strike one, strike two happened the moment the associate asked me to come back at a later date. But the Braves hadn’t struck out just yet. Say the team could locate the shirt at another in-stadium store? That would have been a base hit. Or if they had sold me the shirt in-store and had it delivered to my home address? Run-scoring double. But the lack of alternative fulfillment methods was a big swing and a miss. Batter out!

Now, I know one experience at a ballpark hardly represents the entire world of brick-and-mortar retail. The Atlanta Braves are in the business of playing baseball. Selling products and merchandise isn’t quite the same priority as winning a World Series. But if you can’t win on the field, the least you could do is service your fans, and provide the kind of novel retail experiences that might help you win a few more.  Whether it’s at the ballpark, the mall, or on a mobile app, retailers need to understand that it’s a big playing field. If the fans aren’t happy, there isn’t much stopping them from choosing another team.

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Filed under Retail