Change in business is inevitable, regardless of the industry or products and services you sell. And it’s particularly apparent in the retail food sector, which has seen significant changes in shopping behavior and channels over the past few years. Without question, the news of Amazon’s take- over of Whole Foods sent shockwaves through- out the industry. The e-commerce giant has disrupted the $781.5 billion U. S. grocery market, but to what
degree is still uncertain. The news seems to be changing
faster than Amazon Prime shipping.
And we’re seeing quick responses from competitors.
GROWING YOUR BIZ
Upon hearing about the merger, Walmart announced
plans to partner with Google to offer its products on Google Express. I suspect we’ll see more of these partnerships—as well as company-specific innovations—in the
months and years to come.
So how will this all play out? Time will tell, but here are
some initial observations.
Lower pricing creates more competition.
For price-conscious consumers, Whole Foods wasn’t
always an option. But it could be now, since Amazon has
lowered prices on a variety of products as much as 43%.
This move will undoubtedly create a whole segment of
new customers who previously did not shop the retailer
due to prices. In fact, according to Bloomberg, Whole
Foods’ store traffic jumped 25% in the first two days after
Amazon took ownership, motivated by the chain’s new
discounts. At the same time, discounts could create greater
competition for retailers known for their cost savings.
Stronger focus on in-store experiences.
To stand out from the competition, brick-and-mortar
retailers must look beyond just the products they sell.
Decreased prices may not be the only way to keep a
customer interested. In the so-called “experience economy,” consumers seek out experiences just as much as
goods. Retailers can create these experiences in a variety of ways, from tastings and meal kits to in-store dining options and cooking classes. While digital can offer a
quick search-and-find method, consumers’ taste buds still
like to explore firsthand. This approach is a focal point of
the International Dairy Deli Bakery Association’s Show
and Sell Center, an interactive marketplace featured at
its annual trade show.
And don’t forgot the importance of “fresh” in stores.
While consumers may be comfortable purchasing cen-ter-store dry goods online, most want to see, smell and
feel products in stores’ fresh departments. This gives
brick-and-mortar stores a competitive advantage over
Greater emphasis on omnichannel.
The move to omnichannel requires retailers to shift their
focus from products—features, price and inventory—to
the outcome of the shopper’s experience that results
from buying or using the product. Tell the product story
before the shopper comes to the store, then suggest other
products the customer might be interested in. The world
today likes instant satisfaction. Digital can be a portal for
ordering so that products are prepared, sliced or packaged—or even rung up—before the shopper arrives. And
digital channels are a way for customers to provide feedback to the store.
Expert views on retail strategy, talent management and leadership development
Mike Eardley is president
and CEO of the Madison,
Dairy Deli Bakery
Clues to help brick-and-mortar stores steer into
uncharted waters. By Mike Eardley
Waves of Change