Only a few weeks ago, our Marketing Manager, Justin Cohen wrote an article published on Inside Retail titled ‘Containing the Amazon Offensive’. The piece revealed the true nature of Amazon and outlined the strategy local retailers can use to fortify their businesses against the e-commerce powerhouse.
Justin’s message was three-fold:
Justin’s advice to retailers was to stop viewing their store portfolio as a liability and use it as an important asset in an omni-channel, customer-centric enterprise. He received a great deal of positive feedback, despite his message challenging the prevalent opinion in the media that the days of brick and mortar retailers are numbered.
This week, I noticed that every media outlet was lamenting the news that Amazon has made the bold move to acquire Whole Foods in the US for A$18 billion.
A range of doom and gloom predictions have been offered, failing to recognise that Amazon’s move fully endorses the important fact highlighted by Justin – that without a brick and mortar presence, pure-play retailers are unable to truly compete in the retail space.
Media and industry commentators (practically all print media and online channels) have then made a material mistake by projecting that Amazon will bulldoze the brick and mortar space as well. In reality, just as seasoned retailers find the physical game challenging, so will Amazon.
Dear Amazon, I welcome you to the world of exorbitant and ever-growing rents, needs-based (rather than productivity-related) wage increases, unreasonable penalty rates, one-sided industrial relations laws and regulations, shrinkage and other forms of theft, the need to effectively work with thousands of employees in remote locations, and so on…
This significant foray by Amazon into the brick and mortar world, if sustained, can lead to a much more level field for the retail industry. Amazon’s market capitalisation, their massive, anti-competitive weapon, will start to decline as they become a more traditional business, with a more traditional valuation.
The relentless evolution of technology, customer expectations, and the financial power of market disruptors reinforce Retail Directions’ message to the retail industry, which was so well put by Justin:
Established retailers live in very interesting times, but Amazon’s arrival in Australia is not the end of days. Sure, Amazon is revolutionary in the e-commerce space and they will make a dent in this area, affecting the existing Australian operators.
At the same time, while cashed-up, Amazon is a retailer that has limited capability in the real retail game. Every retailer that has solid omni-channel systems, a great merchandising offer, and bulletproof customer engagement, will do well despite Amazon’s presence.