With Amazon eyeing its entry into the bricks and mortar retail market in the US, Craig Summers, UK managing director, Manhattan Associates examines what this will mean for established players in this sector.
In a development that few retail analysts would have predicted twelve months ago, Amazon is planning to open several large bricks and mortar retail sites akin to department stores across North America.
If this ‘pilot’ proves a success, this could herald the start of a global land-grab that would likely see Amazon disrupt the physical retail space, in much the same way as it did in the e-commerce space nearly a decade ago.
Physical Retail
While many industry commentators have derided and long-predicted the eventual death of high streets and physical, in-store shopping, this news flies in the face of popular opinion and will give many retailers (big and small) hope for the future. If the king of e-commerce, Jeff Bezos, clearly sees value and a future in physical retail stores, there must be something in it right?
While the news may be welcomed as a boost for traditional high-street business models, it also raises a number of pressing questions for retailers, many of which have literally just weathered the challenges of the pandemic, only to find themselves confronted by a new, no less (potentially) transformational storm on the horizon.
Until now, established bricks and mortar retailers ' primary defence against the e-commerce leviathan that is Amazon – has been their local store presence. With this latest aggressive move from Amazon however, once that ‘moat’ starts to be breached, defending the ‘castle’ becomes much more challenging.
New Tactics
Let’s be clear, Amazon is very good at what it does and by bringing a digital first approach to bricks and mortar retailing we can expect the digital behemoth will certainly bring new, creative and technology-centric options for the consumer.
In addition to the purchase of Whole Foods and its partnership with Kohls, this latest move into physical retail space validates what we’ve been saying all along, that physical stores are a vital element of a consumer-centric omnichannel shopping experience, and even Amazon seems to have recognised this now.
The foremost defence retailers had is about to be penetrated. To survive this next phase in Amazon’s evolution they should prepare their systems and processes for a new marketplace that will be dominated by those brands that are able to deliver seamless, personalised shopping experiences simultaneously across physical and digital channels.
The sheer weight of technological experience and its willingness to innovate and disrupt makes Amazon a force to be reckoned with in every sense, but in every challenge lies opportunity and the way we see it, the Amazon announcement is an opportunity for all retailers (big and small) to double-down and go ‘all in’ on omnichannel.
To survive and thrive, stores will need the technology to ensure that the right products are available (regardless of where in the store network they are) to give consumers the complete unified commerce experience.
For example, if a consumer walks into a store, they need to know that they are getting the best price possible (regardless of the channel they started their journey on) and that a product is available to either purchase on the shelf, or that it can be paid for in the store and delivered to their front door.
Building The Infrastructure
Establishing the right technology infrastructure, including everything from omnichannel and Point of Sale systems, to order management and warehouse solutions, will give brands the flexibility, agility and scalability they need to face-off against this new disruption heading their way.
Sticking to traditional models has already led to the demise of many high streets, retail stalwarts over the last two decades, so it’s very much a case of needing to adapt and prioritise to customer expectations, now.
While Amazon’s entrance to the physical market may serve as a shot in the arm for physical retail and confidence in the high-street overall, it also underlines the pressing urgency to reinforce omnichannel strategies and the need to deliver true omnichannel capabilities right now.
If retailers miss this window of opportunity to act, then they risk the daunting task of head-to-head with Amazon on a one-on-one basis and there are few brands, regardless of reputation or size that will relish that challenge.
© 2021 European Supermarket Magazine. Article by Craig Summers, UK managing director, Manhattan Associates. For more Technology news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
