retail news in context, analysis with attitude

by Kevin Coupe

Fortune has an interesting piece about how Amazon - facing off against an aggressive and ambitious Walmart that just expanded its $98 annual subscription fee for grocery delivery to 1,400 markets, trying to undercut Amazon's $119 Prime membership fee - is expanding the availability of its service that offers free two-hour delivery from its Whole Foods stores.

"As it has done before," Fortune writes, "Amazon wants to change shopping habits—in this case getting consumers more comfortable buying perishable products like bananas and yogurt online. That’s crucial if Amazon is to take on Walmart in the $840 billion U.S. grocery market.

"Encouraged by what it calls 'very positive' customer feedback, the company has quickly extended the service to almost 30 cities, including Los Angeles, Houston, and Detroit."

But, the story points out, "Persuading shoppers to buy fresh food online isn’t Amazon’s sole challenge. Getting groceries to customers quickly is another. Offering two-hour delivery requires Amazon to show shoppers only products that are close to them, which isn’t easy because the 25-year-old website was designed to let anyone with an internet connection buy a product anywhere in the world."

And, Fortune provides the following context, noting that the entire industry "is grappling with how best to mesh physical and online grocery stores … Despite trying to upend the grocery market for more than a decade, Amazon remains a tiny player. Walmart and its Sam’s Club capture 25% of all grocery spending in the U.S., according to Morgan Stanley, compared with 2% for Amazon and Whole Foods. Walmart has more than 4,500 U.S. stores, about 10 times the number of Whole Foods locations.

"Meanwhile, competition is intensifying. Walmart and Target are both investing in delivery options as well as in-store pickup of online orders, all geared toward time-strapped customers looking to simplify their errands."

As often happens in these cases, I am reminded of something from "Star Trek" … an original series episode, "Let That Be Your Last Battlefield," in which a pair of aliens engage in an endless battle, each one convinced that he is superior - one because he is white on the right side of his body and black on the left, and the other because he is black on the right side of his body and white on the left. It was, as it happens, a fairly obvious - and even clumsy - way to address the kind of racial tensions that were evident in the US back in the late sixties … but also serves as a metaphor for the e-commerce battle being described by Fortune.

As I read this story, I could help but think of retailers not named Walmart or Amazon (or Kroger or Target or Albertsons or any of the other giants). What must they be thinking as they consider the various strategies and tactics being embraced by companies of considerable resources?

There is no room for indecision, and no time to be complacent. The war is ranging all around us, and every retailer - pretty much regardless of size - has to be engaged, Eyes Open, with defining their strategies and tactics so survival is at least possible.

This isn't to say that traditional retailing is dying … just that retailers not figuring out where they are in this continuum are, at the very least, flirting with obsolescence.
KC's View: