Amazon Purchases Whole Food: Can Brick and Mortar Grocers Compete?

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Rick Chavie, CEO of EnterWorks, Leading Provider of Master Data Management and Product Information Management, Explains Why the Digital Threat Should Inspire an Aggressive Response

EnterWorks-Grocers Need Digital and Physical to Succeed

Grocers Need Digital & Physical

Grocers should seize the digital store... before losing the physical store

Visionary and EnterWorks Chief Executive Officer, Rick Chavie shares his perspective on Amazon’s purchase of Whole Foods and how retail grocers can compete amidst twin threats from Amazon and Wal-mart. EnterWorks is a leading provider of Master Data Management (MDM) and Product Information Management (PIM) solutions that helps many retailers compete with content to win new customers and increase existing customer loyalty.

Chavie challenges the assertions of many others that Amazon has it all figured out in grocery; instead, that acquiring physical stores is their concession to the necessity of playing on the grocers turf. He also issued a reminder, “have we forgotten that Wal-Mart has had their lunch as the #1 grocer since the turn of the century?”, but suggests that there are opportunities even as market consolidation occurs.

His insight informs advice on how grocers, supermarkets and retailers with food offerings need a sense of urgency to compete in food and consumer products with their existing assets and those of their trading partners, suggesting that they “seize the digital store…before they lose the physical one.”

Following are excerpts from Chavie’s editorial on the topic. The full feature can be found in the EnterWorks Blog.

BATTLE OF THE TITANS
The growth of Wal-Mart in grocery occurred as an experiment with hypermarkets drawing from the European experience before they landed on the Supercenter model in the late ‘80’s. The higher shopper frequency that the food category brought them, their advanced hard goods merchandising technology, and their leading supply chain platform pushed them ahead of grocers.

The complex nature of food (frozen, refrigerated, perishable fresh, bulk) retailing put grocery at the bottom of the digital cart as a priority market. But along comes Amazon in urban markets where Wal-Mart isn’t, bringing their digital leadership in much the same way as Wal-Mart: frequency, technology, and supply chain. Wal-Mart saw the future and blinked, buying Jet.com in the hope of succeeding in ecommerce after repeated digital disappointments.

While Amazon’s tender for Whole Foods is indeed a pitched battle with Wal-Mart, the digital and physical squeeze play will grab share primarily from the rest of the grocery landscape, if history is a guide.

CREATING A SURVIVABLE FUTURE
Grocers need to take a hard look at their strategies and assets. Most have been content to play the local game, believing that the traditional convenience of their local stores would offset the buzz of urban and other digital food concepts.

Can these grocer’s assets be converted into advantages to reverse the erosion of their market share? Are they capable of changing strategies and executing their own digital transformation? If both are true, do they have the sense of urgency after decades of delay in seeing their fate?

Amazon’s goal is to become a Top 5 grocery retailer with $30 billion in the $800 billion grocery market by 2025.3 Before the Whole Foods play, Amazon has created many online concepts for grocery items: Amazon Fresh, Amazon Pantry, Prime Now, Dash Buttons, etc., hardly a “steamroller” as Amazon struggles to solve online grocery.

As grocers, you understand the challenge they face in mastering retail stores, so despite the news headlines and #AmazonWins commentary, it’s not over. There are a plethora of assets that grocers have, that their trading partners have, the software and data services industry and food associations can bring to bear to enable digital transformations – if there is the will to do so.

About Rick Chavie
Rick Chavie, CEO of EnterWorks®, Inc., a market leader in solutions for acquiring, managing and transforming a company’s product information to enable them to compete with content in Omni channel commerce. Rick Chavie came to EnterWorks from his role as Senior Vice President at SAP Hybris, having led hybris ecommerce solutions, while previously serving as SAP’s global leader for Retail and Wholesale. Rick speaks from his industry experience as a former retail executive at The Home Depot and C&A, as a technology leader in NCR’s retail and hospitality business, and his partner roles at Deloitte and Accenture focused on retail and brands. Rick is a Harvard MBA and a Fulbright Scholar in International Trade. He is a noted speaker and author on content and commerce topics, and is frequently quoted by industry publications.

About EnterWorks Holding Company
EnterWorks® Master Data Management (MDM) and Product Information Management (PIM) solution enables companies to acquire, manage and transform product information into persuasive content that drives higher sales and new competitive strengths through e-commerce Web, mobile, print and various electronic channels. Services offered include: Master Data Management, Product Information Management, Dynamic Data Modeling, Workflow & Collaboration, Syndication & Publishing, Digital Asset Management, Geographic Localization, Portal Content Exchange, and Digital Channel Accelerators.

EnterWorks is highly ranked by Gartner, Forrester and Ventana Research and used by industry leaders such as: EnterWorks customers include: Ariens, Big Rock Sports, CPO Commerce, Creative Converting, Darigold, Fender Musical Instruments, Guthy-Renker, Hearth & Home Technologies, HON Furniture, HP Hood, Interline Brands, Johnstone Supply, Mary Kay, Mercer, Orgill, Publishers Clearing House, Restoration Hardware, Strategic Market Alliance, US Foods, and W.B. Mason. Learn more at http://www.enterworks.com.

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Susan Magi
EnterWorks
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