For supermarket chains it’s time to embrace Amazon ’s mantra. Why? Because it is easy for them to be complacent about the chances of Web clicks, analysts say.
THE 2 ADVANTAGES OF BRICK AND MORTAR – At least supermarket chains have two advantages that booksellers and electronics stores didn’t. First, they have a head start; they are well aware of Amazon’s category-killing threat by now, international analysts have said. Second, they have customer loyalty. Many of the stores annihilated by Amazon were national chains people visited occasionally, while grocers are embedded in neighborhoods and visited on a daily or weekly basis by people who need food to survive. Habits are already changing. But typically the migration from brick-and-mortar to Internet shopping happens slowly.
HOW TO BETTER IMPROVE ONLINE GROCERY – Traditional supermarkets have taken a few general approaches to meet the interest in online grocery shopping. Some outsource online sales entirely. Some let shoppers buy online and pick up in stores. Some run an online delivery service. And some have tried a mix of all three. The approach that comes closest to the Amazon approach, the delivery service, is hard and expensive. But it is becoming an essential tool for avoiding the Amazon threat. Other grocers have mixed-and-matched the benefits of physical stores and online delivery. For example, in one the largest supermarket chain worldwide, Walmart, the player has had some success letting customers order groceries online and pick them up in stores. Kroger launched a similar service, called ClickList. However, early reviews complain of some of the same problems shoppers find at brick-and-mortar stores such as coveted items being out of stock. While letting customers pick up Web-purchased goods in stores is a sensible approach, it’s not sufficient.
IT’S TIME TO GET GOOD AT DELIVERY – There is reason to hope such an expensive education will pay off in the long run. Customers who shop online are often higher-spending customers, according to Rich Tarrant, CEO of MyWebGrocer, “Amazon will never take the whole grocery market, but they’ll take the top 10% of the most profitable customers, and few retailers can afford to lose the top 10%,” Tarrant said in an interview. On the surface, putting a lot of money into something that’s expensive doesn’t make a lot of sense when the old model of shopping in stores works for most people. Many traditional food retailers so far haven’t been willing to imitate Amazon-sized profits. But these retailers have to look at how other categories have mostly migrated online and ask themselves whether absorbing costs now is worse than facing extinction later.