Why Amazon is good for the grocery industry


During a recent panel study, I listened to shoppers discuss their changing grocery habits. Adults from mid twenties to mid sixties discussed topics like loyalty, convenience, value. And it was hard to get them to stop talking about Amazon. 

As we have been seeing in research for years, shoppers generalize their expectations from one retail service to another.  If a person has a transformative experience with say a new, better way to order tickets, or pick their airline seats, or check into a hotel from their mobile phone, they begin to judge other kinds of retail experiences through this new lens. 

Think about how much banking has changed in the last ten years. How many times have you actually had to go into a physical branch? What about buying a car? Making reservations for dinner in a new city? Booking a European vacation? Checking to see what's playing at a local theater?

All of these experiences are radically different. And radically better. We are faster, more informed, better shoppers because of digital technology. And we could never go back. Remember looking in the newspaper for movie start times? Having to get your airline tickets mailed to your home? Or even stumbling through record stores, trying to find albums you might like based on just the recommendations of the kid at the counter? 

Now reflect on your grocery shopping habits. Certainly things have changed. Shoppers might be including a dollar store in their weekly routine, or expanding beyond just their grocer. And recently , we've seen direct to home meal services emerge, which certainly does impact shopping.

But for the vast majority of transactions, and the vast majority of shoppers, the grocery experience is remarkably unchanged from that of our parents. Same busy parking lot, same cart with a wobbly wheel, same hand written end cap signs, and even the same college football beer promotion sweepstakes. 

As industry insiders, we might bristle at that paragraph. We've invested billions in logistics improvements, self check out, electronic label printers, payment terminals and POS upgrades. 

But almost all of our capital has gone to inward-facing technology. To the shopper, these improvements are either invisible or marginal. To them, our industry seems amazingly stagnant.

To the shoppers in this recent panel, the innovator in our industry appeared to Amazon. They were amazed at same and next day; they loved the idea that they could find almost any product they wanted with just a few clicks; they appreciated that Amazon prompts them with items that other shoppers have bought; and they loved previous purchasers reviews. 

As a brick and mortar retailer by heritage, I admit that I cringe inwardly when shoppers praise a company that gets held to tech start up financial standards (they aren't expected to hit the same earnings goals as mature businesses) to a traditional retail brand. After all, physical retailers have to to increase market share year over year and do it *profitably*. The game doesn't really seem fair.

But then I reflect on what the consumers are saying. And the things they like about Amazon aren't really new at all. Product recommendations and "you might also like" suggestions - couldn't we figure out a way to do that in store, on shelf? What about previous purchaser reviews - would it really be that difficult to bring ratings to a tag, package or a shopper's phone when they tap an item? 

And even home delivery: We know it can be done. Retailer's core skill sets include merchandising and logistics... we are the people who know how to move products from one place to another fast, efficiently, safely. 

So yes, I think Amazon and its push into grocery is good for bricks and mortar retailers. It is a call to action, but it isn't Amazon that's calling; instead it's our owns shoppers saying, "serve me better, ramp up your game, service my needs in new, more creative ways."

Great retailers have always been great listeners. Like never before, it is time to seek out our shoppers, and tune into to what they are seeking.