Winning a Food Fight with Amazon

October 20, 2017

Amazon started by selling books online. Borders is no longer in business. Then it started selling electronics. Circuit City closed its doors.

What many have missed is the fact that Barnes & Noble is still operating at a profit. Best Buy just declared its most profitable quarter in years and its stock is at an 11-year high. Understanding how Amazon will change an industry and properly reacting to this shift is imperative to success and even survival.

Now Amazon has acquired Whole Foods, and declared that they will change the grocery business. The first thing they did was reduce prices at a brand that was commonly known as Whole Paycheck. They have made it clear that they are looking well beyond profits in their outlets, and will change how the average consumer will buy food.

So what does a grocer or mega grocery chain do to be more like Barnes & Noble and Best Buy and not suffer the fate of Borders and Circuit City?

There are three keys.

Adapt
Originally, Amazon won on price. But Best Buy was willing to match their price, and therefore price became a non-issue. Instead of waiting for next day delivery, you could have your package waiting for you. Now some Best Buys are offering same day delivery. They used the brick and mortar locations as an advantage.

Grocers need to be flexible to combat Amazon’s offer, and determine smart business strategies to best them.

Differentiate
What can your location offer that a delivery service does not? Barnes & Noble typically has a Starbucks and have converted their retail location to a point of destination. Making the grocery store more than just a place to get food is key. Building your physical size is an advantage and not a detriment.

Market
Clearly Amazon has a brand that is already well known. However, most grocery chains not only have a brand, but ties to the community. Strengthen those ties and make sure you are there when the community needs you. Strong ties to the community make for a tremendous way to combat price.

Why This Blog Is Important to Readers
Most readers of this blog are advertisers wondering, “How can this help me?” Be an advisor to the local advertising chain. This is an opportunity for radio to do what it does best to help the local grocery chain with solutions that are profitable to the broadcaster. This includes:

• Strong advertising campaigns to enforce the brand
• Promotions that use their physical location as an advantage
• Getting the local grocery store chains involved with community activities – who is better at helping and promoting a food drive than the local grocers?

Change Is Inevitable
Before the Amazon announcements, grocers were looking at Walmart and Target as their key threats. Clearly these mega-retailers are still a threat, and Amazon just adds to the competitive nature of this industry. Change is inevitable. Radio broadcasters can build a partnership with traditional grocers and help them succeed in this food fight.

-Charlie Sislen, Partner

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