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BizReport : Research archives : December 13, 2016

Expert: What Amazon Fresh means for brick-and-mortar

With Amazon's announcement that they would open brick-and-mortar grocery stores, many retailers are wondering what is coming next, how they compete, and what the move really means for retail - both online and offline.

by Kristina Knight

Kristina: What do you make of the recent Amazon Fresh announcement?

Kerry Liu, CEO, Rubikloud: Amazon's investment in in-store strategies is proof that the channel matters far less than the overall brand and shopping experience. They have been a leader in retail innovation for a long time, so this announcement shouldn't be a surprise to us. I expect the line to blur even more between online and offline, especially in categories where perishable foods are huge, like grocery. Instead of copying the traditional grocery selection and experience, this is an opportunity for Amazon to lead in the product selection and even pioneer product categories.

Kristina: When so many merchants are shoring up their online portals, why is Amazon now looking at going offline - at least for part of their business?

Kerry: There's no question that businesses need to have a digital presence in order to be successful in today's tech-saturated environment. However, the in-store experience isn't going away. It's still a valuable component of any businesses' success, as it provides access to expertise and experiences that aren't available online. For example, going into a Home Depot and working with a trained home improvement expert is a level of customer service that's not easily replicated online. Then there's grocery shopping, and food in general, where offline experiences provide consumers with the full sensory experience, making in-store transactions more appealing to many shoppers.

Amazon is new to the grocery game, in an industry where consumers are slower to adapt to online shopping in general. Through these initial 20 brick and mortar stores, Amazon will be able to gather data about what is effective in their grocery strategy, continuing to improve their current business model.

Kristina: What should grocers/merchants make of the Amazon announcement?

Kerry: I think that Amazon taking a further step forward in the grocery game will be seen as a major threat to current grocers. Retailers who once thought they were safe from the ecommerce giant will have to step up their game.

The cloud and machine intelligence power behind Amazon will spur traditional grocery retailers to either build out similar online/in-store functionalities, or risk falling behind. Therefore, I see the grocery industry becoming more technologically integrated in the future, whether that be with greater mobile-friendly experiences, in-store beacons, CRM or tailored in-person promotions, we're going to see an acceleration of tech adoption within the grocery industry as a result of this announcement.

Tags: Amazon Fresh, brick and mortar trends, retail trends, Rubikloud

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