How Traditional Grocers Can Remain Competitive as Amazon Encroaches Into Grocery
Amazon.com's encroachment into grocery has been rapidly increasing in recent months and presents another array of challenges to traditional grocers that have fought to survive in last year’s digital world. At the end of April, Amazon announced the expansion of its in-garage grocery delivery service to all markets where it currently offers grocery delivery. This service has become available to Prime members in more than 5,000 locations. Additionally, Morgan Stanley uncovered that Amazon’s local Fresh grocery stores are being positioned to resemble more of a conventional grocer than a discount store. Amazon’s recent developments signify a growing threat to traditional grocers that rely on hyperlocal customer loyalty to survive.
Amazon’s Fresh grocery stores are emerging in urban areas with high populations, targeting a, “squarely middle-income customer who may shop at both discounters and conventional grocers already.” By attempting to move into the conventional grocer space, Amazon’s Fresh stores become a central competitor to local brick-and-mortar grocers that rely on quick customer purchases.
In an era of relentless demand for convenience and delivery, traditional grocers must take immediate and swift action to maintain customer loyalty. This can be done through consistent branding and control, streamlined fulfillment operations, and scaled delivery. To combat Amazon’s power in the market, retailers must implement the same strategic tactics that the e-commerce giant used to gain its competitive edge — cost-effective operational agility through automated technology.
The quickly changing world of e-commerce has seen a new demand for a range of fulfillment models to meet varying customer needs. Traditional grocers have struggled to match Amazon’s widening range of convenient delivery offerings for a variety of reasons. One significant limitation facing today’s grocers is the challenge of managing a delivery process that presents consistent branding to the customer. Without the ability to build brand awareness through key moments of customer service, grocers are bound to lose valuable customer loyalty. For example, grocery retailers that utilize Instacart lose name recognition, as the consumer remembers Instacart instead of the brand they purchased from. It’s essential that grocers use technology that enables brand-facing customer communications, tracking and visibility.
Traditional grocers must also meet today’s increasingly high customer expectation for excellent service, and this cannot be accomplished without scaling infrastructure through delivery and fulfillment technology. In order to compete with Amazon’s fast delivery capabilities, grocers are tasked with streamlining their fulfillment operations to manage high order volumes and complex deliveries. Technology provides grocers real-time visibility over all resources to find areas for improvement and mitigate risk early on. Grocers are therefore able to efficiently manage delivery routes and resources to reduce time spent on the road and provide accurate delivery times based on capacity. Each of these functions supports the ability of traditional grocers to provide an excellent customer experience every time.
The grocery industry is ruthlessly competitive. Amazon’s latest steps to expand its in-garage delivery service and local Fresh grocery stores, in addition to its pre-existing brick-and-mortar grocery stores such as Whole Foods, demonstrates a strengthening dominance in the market. After an incredibly difficult year of shifting consumer demands and e-commerce reliance, traditional grocers must adapt their delivery and fulfillment methods to scale operations. Automated technology is the key to survival in today’s grocery industry.
Guy Bloch is the CEO of Bringg, a platform that helps companies scale up and optimize their customer experiences and logistics operations.