By way of follow up to our analysis of last week’s UK launch of AmazonFresh, we’d like to hear from you – what do you think? Is this a milestone moment, the time when bell was tolled for the UK’s traditional supermarkets? Or is it nothing more than a new entrant in a market that still has plenty of growth in it? Whatever your views, we’d like to hear from you. To get you started, here are four points of view to consider.
Scott Underwood, head of solutions consulting at Niu Solutions, thinks the supermarket sector needs to shape up, and fast, otherwise customers will drift away looking for something that offers more convenience.
“Price does not necessarily equal brand loyalty these days. Instead, consumers want a service that delivers products quickly and fits into their busy day-to-day lives. Amazon has struck a chord with its latest hassle-free offering.
“The standard operational models that UK grocers have boasted for so long will no longer be enough to satisfy consumers. Companies who are embracing digital transformation in the retail sector, such as Deliveroo, will need to make sure their IT infrastructure and supply chain is robust enough to deliver the promise of speed, quality products and service straight to the consumer’s doorstep at the touch of a button.”
The modest start AmazonFresh is getting in the UK is, according to David Jinks MILT, head of consumer research at Fastlane, part of a strategy of further locking in customers.
“Amazon’s Prime members shop 50% more with Amazon than non-members. By tying-in the Prime and Fresh services Amazon is locking in more customers. It’s worth spending the significant sums involved in developing its logistics infrastructure if it means Amazon becomes the default online provider in yet another area of retail for many consumers.
“Walmart is conducting trials with Uber in the USA to deliver food products. It’s a logical next step for the taxi app, which is just as suited to deliver goods as people. Walmart will be able to offer near instant deliveries on its groceries; giving it a significant advantage over competitors. We believe the UberRush and UberEats services are on their way to the UK, and the power of crowdshare Apps in the grocery delivery market will be another blow to traditional retailers.”
Rupal Karia, managing director of retail and hospitality, UK and Ireland at Fujitsu, sees no reason to doubt AmazonFresh will do well.
“This move from Amazon is bold, but will undoubtedly be successful, especially in light of the recent collaboration with UK supermarket Morrisons.
“As the retail landscape continues to rapidly evolve, retailers need to create a balanced, efficient offering that caters for all customers. It’s imperative that retailers give customers choices from shopping in-store, online, click and collect. Amazon created a new savvy shopper, allowing them to shop how, when and where they wish. Retailers need to take note and ensure that they too are providing their customers with the relevant channels for their shopping needs and not run the risk of freezing out customers for failing to do so.”
Tim Reay, head of grocery, Salmon, thinks Amazon has learned from past experience, and this move could “potentially transform the market like never before.”
“One of the main challenges identified with the Amazon Pantry proposition was the lack of a credible fresh foods, however this rectifies that and widens Amazon’s scope in extending the range. This new offering will allow Amazon to compete on price across the board with ‘the big four’ supermarkets and so these staples of the UK grocery market will need to watch this development very closely.
“Supermarkets and grocers need to assure that their digital offering is not simply a part of their service but is absolutely core to it – making sure the shopping process is as smooth as Amazon. From back-end systems ensuring that warehouses and distribution centres are perfectly aligned to order processing, to a sleek front-end which aids the shopper on the way to purchase.
“If Amazon are going to take-on the grocery market, you can bet that there will very rarely be “out of stock items” or “replacements” delivered. This is the kind of service overall traditional grocers may need to look at if they are to compete. They also need to consider how they diversify – perhaps through automated ordering – to combat the threat of a Amazon Fresh whilst keeping their delivery operations profitable.”
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