Amazon, backed by its customer experience knowhow, breakthrough technology, and competitive pricing strategies has the potential to disrupt the current retail landscape and bring about massive changes in grocery retail, ultimately transforming the customer experience and shifting the expectations of consumers. All above will have significant implications for competitors.
Delivering the goods
Amazon had already been dipping its toes into grocery even before the acquisition of Wholefoods with Amazon Fresh and Amazon Pantry propositions for Prime subscribers. Chattermill findings from analysis of 12 UK grocery retailers revealed dissatisfaction with existing delivery services, as consumers complained about substitutions and long delivery slots.
In the UK its partnership with Morrisons offers two-hour Prime Now delivery to an expanding number of postcodes. Its seamless mobile phone application, faster delivery and precise order tracking beat the incumbent grocery delivery giants at customer experience.
Amazon's logistics expertise also means it can offer customers a better idea of product availability and manage expectations to reduce negative sentiment from substitutions.
The introduction of Amazon Go stores is another way Amazon could disrupt the sector. While other retailers have invested in improving the checkout experience for customers, these stores take things one step further - they are checkout free. Customers can pick up items and leave without lining up at checkout to pay.
Checkout lines and staff are the source of frustration for customers - they were a key driver of negative sentiment in Chattermill’s analysis of the industry. These cloud-based payment stores are designed to eliminate the hassle of checkout queues and frustrating self-checkouts - bound to increase customer satisfaction.
Soon, we shall see an integration of Amazon Go’s checkout-less technology implemented into Whole Foods - or even introduced in new city centre convenience stores leveraging Amazon and Wholefoods' combined distribution network.
Amazon has a plethora of devices and gadgets which simplify its customer’s daily routines and could change customer journeys entirely within retail. Amazon Echo is a prime example of this process: featuring the voice assistant Alexa, it allows customers to order groceries just by speaking to their device. Ordering groceries and having them arrive at your door has never been easier for consumers.
The global retail industry has received Amazon's takeover of Whole Foods as a turning point, and a threat to existing retail practises. To keep up with Amazon, other retailers will need to deliver a similarly competitive, high-tech personalised experience for their customers. Retailers not only need to invest in similar technology but also find innovative ideas of their own to withstand the competition with Amazon. The technology decisions made now by all retailers are sure to pave the way for a new customer experience in the grocery and retail industry of the future.