Amazon is a retail disrupter. Many retailers still hold a fear of what the world’s largest retailer will do to their established business models. On the other hand, many other retailers, rather than let fear paralyse them, use Amazon as a sharp stick to remind them to keep adapting, to never be satisfied, to move with the customer.
What Amazon are good at, above all else, is their relentless observation of the customer. This enables them to spot trends and opportunities and make the experience better, and they are never satisfied that they have ticked all the boxes. Amazon Go is a perfect illustration of that, adapting to smaller basket sizes and time poor customers with technology.
Tesco, of all the UK grocers has taken this on board; the phrase “customer-centric” litters every Tesco press release and it’s not just lip service, sales are growing again. Sainsburys has acquired Argos and is now sniffing around Nisa, citing customer synergies and improved shopping missions and prices for more customers.
And then there is Morrisons. There isn’t that much to suggest Morrisons are moving with the customer at the same pace as its competitors and yet they have a relationship with Amazon and it could be argued are the more forward thinking of all the Big 4.
When the deal was first announced we thought, yes, that’s a good deal for Morrisons who at the time were faltering with little excitement on the agenda to entice customers into store. In hindsight, and with the new knowledge that Amazon have acquired Whole Foods, there is a more unnerving scenario forming in our minds.
Has Morrisons been astute enough to recognise that Amazon will not stall in their desire to penetrate further into the grocery market and that by entering into a relationship with them in the early stages of their market penetration gives them an advantage? Or has Morrisons positioned itself ready to be consumed by Amazon in one big bite?
Amazon Go, the grocery format with few staff and no checkouts, is a disrupter if it moves into scale. The benefit to the bottom line from reduced staff, where margins are recovered and inflation managed in a struggling economy, is a very attractive model. It is likely that Amazon have acquired Whole Foods as a vehicle to accelerate Amazon Go. There are trademark applications for Amazon Go in the UK already so it is only a matter of time. And Morrisons already have a relationship with Amazon, the biggest retailer on the planet. Smart or foolhardy?