Over the last decade, the convenience of online shopping and disruptive technologies has radically transformed the retail industry, shifting consumers away from physical bricks-and-mortar stores and towards more modern channels, like mobile applications and websites offering same day delivery, free shipping and subscription services. Grocery stores, however, have evolved much more slowly. While most grocery retailers do offer online ordering services and home delivery, consumers have been slow to adopt these options, with particular concerns over the quality and selection of food when ordering online.
So will Amazon’s recent acquisition of Whole Foods finally spark major changes in the grocery industry and accelerate supply chain innovation in this space?
Even before Amazon acquired Whole Foods, the online retailer had made several significant investments attempting to break into the grocery market. Amazon Fresh, a service allowing customers to order groceries online to be delivered or collected from a pickup location, and Amazon Go, an in-store experience that replaces a traditional bricks-and-mortar store with automated checkout stations, were both designed to provide customers with a convenient, seamless shopping experience. However, these services struggled to gain solid ground. Technical issues and a lack of distribution centres hindered these concepts from keeping up with demand. They gained little popularity among consumers, who didn’t find them valuable enough to disrupt their current grocery shopping routines.
Now, the acquisition of Whole Foods has the potential to solve many of these challenges for Amazon while fostering innovation throughout procurement. The difference here is that Amazon has access to a network of Whole Foods physical retail stores that can complement and support its retail technology. Being able to offer both online and physical retail experiences, bringing the best from both worlds, is different to anything else in the current marketplace. Competitors will be forced to reinvent themselves to remain relevant and financially competitive. This reinvention must start with procurement, and requires organisations to adopt many of the technological advancements that made Amazon such a competitor in the first place.
The changes about to hit grocery supply management and procurement teams all have one thing in common – they continue to extend the control of the supply chain to the end customer by allowing each consumer to completely customise their purchase, from the way they make the purchase, to the quantity, and the chosen method of delivery. A few examples of this technology that procurement teams will have to manage and keep up with in the future include:
If and when this technology takes off, organisations will be forced to follow suit and innovate to meet customers’ ever-changing expectations. Customers increasingly want a convenient, fast and inexpensive shopping experience and, with this acquisition, there is the potential to meet these demands.
Many sceptics have said in the past that grocery stores will never reach the level of innovation that is common among traditional retailers, but with Amazon now making an even bigger play in the market, it is likely that the grocery evolution will be here faster than anyone could have imagined.
Jim Wetekamp is the CEO of BravoSolution, an industry leading cloud procurement technology solution provider. BravoSolution supports over 650 companies and 130 thousand users in 87 countries in the digitalisation of the end-to-end procurement process
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.