Battle Lines Drawn: Amazon Makes Its Move On Brick & Mortar Retailers

In a development that few retail analysts would have predicted twelve months ago, Amazon is planning to open several large bricks and mortar retail sites akin to department stores across North America. If the 'pilot' proves a success, this could herald the start of a global land-grab that would likely see Amazon disrupt the physical retail space,in much the same way as it did in the ecommerce space for nearly a decade ago.

While many industry commentators have derided and long-predicted the eventual death of high-streets and in-store shopping, this news flies in the face of popular opinion, giving many retailers (big and small) hope for the future. If the king of ecommerce, Jeff Bezos, clearly sees value a future physical retail stores, there must be something in it, right?

“With this latest aggressive move from Amazon, however, once that ‘moat’ starts to be breached, defending the ’castle’ becomes much more challenging.”

Eddie Capel, CEO, Manhattan Associates

In Every Challenge Lies Opportunity

While the news may be welcomed as a boost for traditional high-street business models,it also raises several pressing questions for retailers. Many of whom have just weathered the challenges of the pandemic, only to find themselves confronted by a new, no less (potentially) transformational storm on the horizon.

Until now, established bricks mortar retailers' primary defence against the ecommerce leviathan that is Amazon – has been their local store presence. With this latest aggressive move from Amazon, however, once that 'moat' starts to be breached, defending the 'castle' becomes much more challenging.

Let's be clear, Amazon is very good at what it does, and by bringing a digital-first approach to bricks mortar retailing, we can expect the digital behemoth will certainly bring new, creative and technology-centric options for the consumer.

In addition to the purchase of Whole Foods and its partnership with Kohls, this latest move into physical retail space validates what we've been saying all along, that physical stores are vital elements of a consumer-centric omnichannel shopping experience and even Amazon seems to have recognized this now.

Source: Amazon.com

The foremost defence retailers had is about to be penetrated. To survive this next phase in Amazon's evolution, they should prepare their systems processes for a new marketplace that will be dominated by those brands that are able to deliver seamless, personalized shopping experiences simultaneously across physical digital channels.

The sheer weight of technological experience and its willingness to innovate and disrupt makes Amazon a force to be reckoned with every sense.  But in every challenge lies opportunity, and the way we see it, the Amazon announcement is an opportunity for all retailers of all strips to double-down and go 'all in' on omnichannel.

Retailers Must Deliver The Complete Unified Commerce Experience

To survive and thrive, stores will need the technology to ensure that the right products are available (regardless of where in the store network they are) to give consumers the complete unified commerce experience.

For example, when consumers walk into a store, they need to know that they are getting the best price possible (regardless of the channel they started their shopping journey). And that the product is available to purchase off the shelf or paid for at the store and delivered to their front door

The right technology infrastructure, including everything from omnichannel and point of sale systems to order management and warehouse solutions, will give brands the flexibility, agility, and scalability they need to face-off against this new disruption heading their way.

Sticking to traditional models has already led to the demise of many high-street retail stalwarts over the last two decades, so it's very much a case of needing to adapt and prioritize to customer expectations now.

While Amazon's announcement may serve as a shot in the arm for physical retail and confidence in the high-street overall, it also underlines the pressing urgency to reinforce omnichannel strategies and the need to deliver true omnichannel capabilities right now.

“To survive and thrive, stores will need the technology to ensure that the right products are available (regardless of where in the store network they are) to give consumers the complete unified commerce experience.”

Eddie Capel, CEO, Manhattan Associates

If retailers miss this window of opportunity to act, they risk the daunting task of head-to-head with Amazon on a one-on-one basis and there are few brands, regardless of reputation or size, that will relish that challenge.