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Upheaval in Retail Changes the Scene for Suppliers

Posted by Harriete Lugue | July 25, 2017


Following Amazon’s announcement of buying Whole Foods, Amazon’s stock rose 3% while Whole Foods shares skyrocketed 28%. With this acquisition, the world's largest online retailer just proved one thing: Amazon not only wants to dominate the e-commerce industry, they have a clear ambition to get a real foothold in the traditional brick-and-mortar businesses as well. And with Whole Foods earning a good reputation in delivering quality food services, this vision might not be a far reality.

Amazon’s current success can be attributed to its bold decisions in jumping into one sector after another. The company, which is known for creating its own brands, also has an incredible ability to easily adapt into the emerging trends in the retail industry. They aren’t afraid to venture out to different fields and reorganize business structures so long as their strategy intelligently answers the demands of the market.

Some may still wonder how Amazon manages to strengthen its business and has the courage to challenge well-established supermarkets like Walmart and Target. The answer is simple: Amazon is not in equal footing with Walmart and Target in terms of omni-channel capabilities.

Unlike the two large retailers, Amazon has advanced beyond those capabilities. By investing heavily in improving web traffic and a strong delivery network while rationalizing supply chain, the company managed to outpace competition. Undeniably, technology plays an indispensable role in any business growth; Amazon just knows how to utilize this better while making other business moves that are likewise essential to its growth. 

The Amazon Effect

Walmart, the world's largest physical retailer, acquired menswear site Bonobos for US $310M in cash. Undoubtedly, this is part of Walmart’s strategy to compete against Amazon by expanding its e-commerce and retail businesses, following its recent acquisitions of Shoebuy (an online retailer of footwear, clothing and accessories) and Moosejaw (a Michigan-based retailer of outdoor related items.)

Walmart has been noticeably strategic in acquiring innovators that could potentially help shape its future. If the acquisition with Bonobos is successful, they could provide a better customer experience both online and offline as well as showcase a diverse product portfolio. Bonobos' digital marketing expertise could also give Walmart an advantage in facing the growing competition from digital retailers like Amazon, et al.

Although some may not be happy with this business move, the effects of Walmart’s acquisition of Bonobos and the Amazon-Whole Foods takeover deal, will be a game-changer both for retail and e-commerce industries. Recently, Walmart has been in the news for reportedly asking its technology suppliers to shun Amazon's cloud platform, Amazon Web Services (AWS).  

Target also has been severely effected by the recent changes in the retail landscape. Many have been curious as to how Target will turn these events on their side. It turns out that the Minneapolis retailer has been secretly reinventing itself by developing omni-channel capacities and adopting new brand strategy. The company plans to launch four new brands later this fall: A New Day, Goodfellow & Co., JoyLab, and Project 6. Furthermore, Target has started developing flexible format stores to penetrate into urban areas; the company aims to open 30 more small format stores in fiscal 2017 alone and around 40 stores a year by fiscal 2019.

With online brands moving towards brick-and-mortar stores, Target knows too well that in order to stay relevant, it has to invest more in perfecting their stores and maximizing their physical locations to outmatch the convenience of shopping online. The retailing company has to tailor its business to align to the specific style of how customers shop nowadays. As we can see, Target is not only working on advancing their omni-channel capabilities. By introducing these new brands and optimizing store layout, Target just emphasized the importance of understanding the consumer's demand by providing them a better in-store experience.

The gradual shift in the retail and e-commerce industries will surely open up a wide range of opportunities within the supply chain. To keep up with the increasing competition in the retail industry, companies like Amazon, Walmart and Target ought to know better that they can no longer survive by focusing on e-commerce or brick-and-mortar alone. Developing both aspects is a must. Correspondingly, retailers must not entertain the idea that traditional brick-and-mortar is dead. Instead, they should use it as another avenue to grow their business by maximizing its physical store location and treat it as a must-see attraction for buyers. E-commerce may have its advantage through offering speedy and hassle-free services but it's still indisputable that in-store shopping can extend a multi-sensory experience.

Ultimately, retailers have to work harder in building out groundbreaking technologies while experimenting their business capacity into one field to another with zero ambivalence in restructuring itself to conform with the emerging trends in the market.



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