Amazon.com (AMZN) has announced they are planning to acquire Whole Foods (WFM). If they do, I believe they could transform the grocery business, the same way they did book buying and publishing. With that said, I predict lots of good and bad. The good will come from innovation, new thinking and new ideas like the Kindle eBook. The bad will come from shaking up the grocery industry, creating chaos and growth from new thinking and loss for many competitors.
The same things I have complained about many times in the past about the grocery business will come back to haunt them if they don’t quickly get up to speed. One example is the self-checkout aisle in many stores. Some are better than others. Kroger lets you swipe your card and leave. However, Publix forces you to do each step along the way in the exact order or it won’t work, leaving many customers angry. And the last thing any company wants is to leave their customers angry at doing business with them.
Amazon entering the grocery space means everyone must raise their game several notches just to remain a viable competitor.
We’ve seen it before. Amazon started in the 1990s, just two decades ago, transforming the book business. Since that time, they have continued to grow and impact industry after industry. They are now focused on the grocery business.
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Customers Love Amazon. Competitors Fear Amazon
We know Amazon. Customers love them. Competitors fear them. Any way you slice this, there will be massive change in the grocery industry going forward. And this is just another sign of how technologies like wireless and the Internet, and companies like Amazon, Google and Facebook will continue to transform industry after industry.
Whether you are an investor, customer, worker or executive in the grocery industry, Amazon is aiming to transform everything. This will create an enormous upheaval. It will simultaneously create many new opportunities and destroy many others in the existing industry.
It has already happened in industry after industry. Remember the book industry where the Amazon adventure began? Amazon leveled the entire playing field. It put smaller bookstores out of business. It also put larger booksellers like Borders out of business. Even survivors like Barnes & Noble (BKS) are severely impacted.
Since that time, Amazon has moved into many other industries. Who is Walmart’s (WMT) largest competitor? Amazon. That’s right. Amazon not only successfully competes in many different industries, but they also create the mail order side of every industry. A side that may not have existed before.
Now Amazon.com is aimed at the grocery business. This should have been expected. Today’s grocery industry is very old and very entrenched. Today’s leaders like Kroger (KR) and Publix need to update their thinking and the way they do business. Newcomers like Trader Joes and Sprouts (SFM) are smaller, yet they use technology much better than the old-time giants. They let you pay with your smartphone and not touch the screen.
Room for More Innovation in Grocery Industry
However, there is still plenty of room for innovation in the grocery industry. There is no reason for the customer to fill the cart, empty the cart at checkout, then pack the goods in bags and put them back in the cart before you can walk out the door. Imagine walking into a store, grabbing a cart full of bags, walking through the store filling the bags, then simply walking out. No checkout.
That’s the world we have to look forward to. We have the technology. Our smartphones will have an app. We shop and walk past a scanner as we exit. The scanner reads everything in the cart and charges our payment app. Quick and simple.
That’s the kind of thinking I have been calling for over the last decade in my columns and speeches. That’s the kind of innovation that will come to every industry, including retail. And that’s the kind of innovation Apple (AAPL) will bring to the table as the industry matures.
So, whether you are a worker, customer, investor or executive of a new or existing retail grocery operation, ready or not, Amazon.com is about to enter the grocery space and change everything. This is the wake-up call. Are you ready?
Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected] His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan