Supply Chain Dive — Amazon’s purchase of Whole Foods earlier this year was hailed as transformational for grocery supply chains. At last, the retail sector would transition to the digital age, and consumer habits would finally shift.
See, a number of companies have been trying to break into the grocery space with e-commerce for over a decade — with mixed success — as people seem to prefer in-store shopping in the U.S. But when the e-commerce giant bought Whole Foods, analyses revealed it also acquired a new strength in its supply chain and data analytics, which could lead to better service and success. At least, it should — but the problem with mixed-success initiatives is that it is hard to figure out why they are not catching on as easily. Perhaps, e-commerce and groceries are just a pipe dream. Or is that just wishful thinking for brick-and-mortar grocers?
Jon Slangerup, President and CEO, American Global Logistics, weighs in: “Although I really don’t like others picking my bananas, I realize that from all the delivery trucks in my neighborhood constantly delivering everything from food, prescriptions, restaurant meals and all other manner of consumer goods, I am probably in the minority.
In my view, anything that can be ordered online and quickly fulfilled, will be. At the same time, those like me who still prefer the store experience will continue to happily do so, while many others will continue to evolve into a hybrid model where they shop in stores to touch and feel before finding the best deal online for same-day or next-day delivery.
This hybrid approach to consumer buying is already in high gear, and it’s clearly disruptive to everyone in retail, including grocers, which may be the slowest to adapt. But clearly, those big, branded chain stores that are determined to survive are rapidly morphing into online retail experts, successfully selling the benefits of in-store customer experiences with the choice and efficiencies of online shopping.
For example, stores like RH (aka Restoration Hardware) have done an extraordinary job of making this transition, as has Home Depot, Lowe’s and many other big box retailers, all of which have both strong foot traffic and growing online sales. Likewise, traditional department stores are making big strides in appealing to their hybrid shoppers, like Saks, Bloomingdale’s, and Neiman Marcus, the later just announcing its first profitable quarter in two years on the strength of its online turnaround. And of course, many of the mega shopping malls have effectively evolved into expansive commercial and entertainment complexes, which continue to thrive through their high-touch, customer experience focus.
It’s quite clear that the threat of Amazon’s online juggernaut is driving a disruptive and rapid, but an ultimately healthy, transition to the new consumer economy, albeit with a share of notable retail store failures. But this is Darwinian theory doing its thing, continually driving change.
Hopefully, the smaller boutique shops with strong back-room e-commerce engines will thrive, so shoppers like me still have someplace to go and smell the flowers.”