Amazon – Page 2

Memo: Where Grocery Is Going (2053)

The future of the grocery industry is at a crossroads. Fiscal conservatism, technological advances, labor shortages, and shifting consumer preferences will dramatically shape the grocery landscape over the next 30 years. This essay examines these influences and proposes a strategic roadmap for the industry. According to recent data by global data science company Dunnhumby, there’s been a notable shift that will influence the rest of this report. For the last decade, speed of delivery and overall convenience were at the center of many buying decisions. Today, pricing and promotions may be eclipsing the perks of the eCommerce age. From the extensive Dunnhumby report:

2022 was all about finding the right products at the right prices and less about saving time. “Price, Promotions, and Rewards” has always been the most important need in our model, and it likely has been the most important customer need for much of the past 100+ years. The story of who has won and lost is also a story of the consumer’s insatiable appetite for a better deal.

The grocery industry, like any other, is not immune to the tides of change. I actually believe that it’s a leading indicator for what other industries may encounter. From economic concerns and the impact of generational behaviors to technological advancements, the industry is facing a multifaceted wave of transformation. Retail Dive’s recent publication of Dunnhumby’s report, “Grocery 2053: A Data-Driven Gaze into The Future,” provides insightful data, unraveling the complex layers that will impact grocery consumption over the next three decades. By analyzing these influences, we can forecast the shape of the grocery industry over the next 30 years. The Retail Dive summary provided great insights like these:

Harris Teeter, Wegmans, Publix and Sprouts Farmers Market are among the retailers whose market share is most vulnerable to fiscal conservatism over the next 30 years, according to Dunnhumby. Overall, Amazon, H-E-B, Costco, Sam’s Club and Walmart are best positioned to take advantage of the trend between now and 2053, when Dunnhumby expects the U.S. grocery retail industry to hit $1.9 trillion in sales, more than twice its size today.

At the heart of the industry’s evolution lies the pulse of fiscal conservatism, whose reemergence is driven by consumers’ worries about their economic future. Dunnhumby’s extensive survey of over 70,000 responses shows that price remains a decisive factor in grocery purchases, regardless of income. Generations Y and Z, more deeply impacted by the Great Recession and Covid-19 pandemic, express heightened concern over financial matters. While health and sustainability compete with cost as primary stressors for higher-income shoppers, cost is the primary obstacle for 60% of consumers seeking healthier food options.

This fiscal conservatism, expected to continue until 2053, signals a market shift toward value-oriented retailers. From Dunnhumby’s executive summary:

Between now and 2053, we see retailers doing much more: offering a grocery-helper budgeting AI, becoming their Customer’s trusted financial partner, and launching their very own private-brand-only, money-saving format of the future.

Amazon, H-E-B, Costco, Sam’s Club, and Walmart are poised to benefit from this trend, while the market share of Harris Teeter, Wegmans, Trader Joe’s, Publix, Sprouts Farmers Market, and other more premium stores might face challenges. This doesn’t spell doom for premium and specialty grocers, but it does necessitate strategic store locations, product differentiation, and customer experience enhancement to thrive.

Technological transformations will significantly impact how we manufacture and deliver products. I believe that it’s at times farfetched, but it’s important to recognize nonetheless. Dunnhumby’s Go-To-Consumer strategy suggests a potential revolution brought about by 3D food printing, synthetic biology, gene editing, and bioengineering. These technologies promise more sustainable and efficient value chains, valued at $72 billion. Drone deliveries, underpinned by a mobility tech market valued at $236 billion, could become the norm, eliminating the risk of disturbances like merchandise being stuck at ports.

The report also cited the promise of advanced connectivity, quantum computing, AI, machine learning, and no-code next-gen software development – collectively valued at $336 billion – powering the next phase of consumer insights. Retailers who plan to integrate these technologies into their vertical chains and customer experience strategies can tap into profound insights and emerge on top.

The digital revolution, driven by the rising importance of data privacy and the reduction of logistical waste, signifies a new frontier for customer engagement. Companies are expected to establish a presence in Web3, a space valued at $110 billion, reflecting the shift towards a more decentralized and user-empowered digital world. And generative AI, which we covered extensively here, opens opportunities for grocery retailers to actively participate in AI’s development, vetting, and regulation for AI-assisted grocery and commerce.

Virtual reality, and the advent of the metaverse, will redefine consumer engagement. With companies like Apple betting on mixed-reality headsets, it is wise for grocers to stay abreast of these technological innovations, even if they are in their early stages. I thought that this insight was pretty valuable:

Although the metaverse has diminished in importance in the new-tech hype cycle, its steady evolution over the last two decades suggests that it may reappear in a future horizon. The question is, just how soon will we get to that future? Apple’s recent announcement of a state-of-the-art mixed-reality headset is a strong indication that the technology world is still betting on the metaverse. Our position is that the metaverse is here, but still in the very early stages of adoption. It would be wise for grocers to keep track of all the innovation.

But back to physical reality. Labor shortages, another consequence of the pandemic, are a persisting challenge. Solutions lie in continued investments in AI and automation for unfilled jobs and in initiatives like the Kroger tuition program, Giant Food stores scholarships, Publix tuition reimbursement, and Walmart’s $5 billion upskilling initiative, which exemplify investments in education, skills training, credentialing, and employment frameworks. Amazon has its own upskilling program – 10 to be exact.

Career Choice—one of Amazon’s 10 upskilling programs—pays for educational opportunities, ranging from English as a second language classes to four-year college degrees for 750,000 eligible frontline workers. There’s no repayment clause should they leave the company. With 400 course options, 300 colleges, and 130,000 total participants to date, Career Choice is Amazon’s most expansive upskilling program. In September 2021, the retail giant pledged to invest $1.2 billion through 2025 in Career Choice and other upskilling efforts.

Amazon’s programs see success as illustrated through two measures: course completion and post-graduation job placement rates. The goal: retention and reinvestment. In each case, these upskilling strategies reflect the awareness that the industry is changing rapidly, wave by wave. The grocery industry, therefore, needs a comprehensive strategy to navigate these waves. In the short term, retailers can continue helping customers save money where it matters most, develop protocols with suppliers or accept price increases, and reassure customers through clear communication about mitigating impacts, such as inflation.

In the longer term, a more visionary approach is necessary. Retailers could consider developing AI-powered grocery budgeting tools, morphing into their customers’ trusted financial partners, and even launching private-brand-only formats of the future. Such strategies could allow grocery businesses to better meet customer needs while leveraging the forces shaping the industry.

The role of technology in this transformation is inescapable. Artificial intelligence and next-gen software development have the potential to revolutionize the way the grocery industry operates and interacts with its customers. The utilization of these technologies, coupled with a dedicated focus on data-driven insights, will enable retailers to provide fully integrated customer experiences and stay ahead in the fiercely competitive market. It’s imperative for grocery retailers to actively take part in the development and regulation of AI-assisted grocery commerce.

As the grocery sector steps into the metaverse, the way it engages with customers will evolve dramatically. Traditional brick-and-mortar grocery shopping could be supplemented, or in some cases replaced, by immersive virtual experiences. The successful navigation and adoption of these platforms could shape the future success of grocery retailers.

Resumo

I believe that it comes down to people first. Investments in education, skills training, and employee development will not only help retailers address this issue but also serve as powerful marketing strategies. By portraying themselves as conscientious employers committed to their staff’s welfare and development, retailers can distinguish themselves in the crowded market.

The grocery industry is set to undergo a profound transformation in the coming decades. Amidst economic concerns and technological advancements, the industry must adapt to better serve its customers. Fiscal conservatism, technological breakthroughs, labor shortages, and the digital revolution are all ingredients in the recipe for the grocery industry’s future. Retailers who can effectively blend these components while continuously innovating to meet customer needs are those who will thrive until 2053 and beyond. The evolution of the grocery industry, therefore, hinges on its ability to transform challenges into opportunities, ensuring it remains a central part of our lives for generations to come.

The goal of grocery retailers will be to combine ease of purchase with an awareness of the pricing pressures that will come to define the next 30 years. Human resources, data science, and the employment of technologies available will determine which retailers do the defining.

Por Web Smith | Editado por Hilary Milnes com arte de Alex Remy e Christina Williams

Member Brief: Walmart Connect

In 2018, I wrote a short essay called Crashing The Duopoly, explaining: “The data derived from commerce operations is undervalued and it is our belief that data around consumer conversion will become the digital advertising standard. This will be exacerbated by the reduced efficacy of pixel and cookie tracking as privacy protections increase throughout the industry.” At the time, I didn’t have the foresight to explain retail media networks or the pace of growth that would happen over the next four years. But the general idea, I felt, would threaten Meta and Google’s stranglehold on digital advertising.

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Memo: Amazon Wireless

It was a shift that changed the technological world. It’s been analyzed, written about, and even adapted into a recent film (which was pretty great, I might add).

First, the Blackberry came along and changed handheld computing forever. And then Steve Jobs gave one speech in 2007 that led to the demise of the company that once possessed 45% of the smartphone market. Founded in 1984, Blackberry released its first phone in 1999. With 85 million users, Research In Motion (Blackberry’s creator) peaked in 2013. By 2016, that number was down to 23 million.

The full reason, of course, was more than the speech. We all know that. Sure, the phone was amazing. It was coveted; back then AT&T was the aspirational carrier because only it could serve you an iPhone on a silver platter. The deal that Apple struck with then-Cingular Wireless funded its own investment into its wireless data infrastructure. I would posit that it was the reformatting of carrier economics that determined the next 15 years of computing. Jackie McNish, author of Losing The Signal: The Extraordinary Rise and Spectacular Fall of Blackberry wrote:

If the rise and fall of BlackBerry teaches us anything it is that the race for innovation has no finish line, and that winners and losers can change places in an instant.

The recent reports of Amazon exploring the possibility of offering a wireless plan for Amazon Prime subscribers have sparked significant interest and speculation. There are several reasons why Amazon would pursue such a deal, drawing parallels to Apple’s strategy with Cingular to outmaneuver the market leader in 2007. On January 10, 2007, one day after the fateful speech, the New York Times explored the deal and its merits:

They considered an Apple-branded mobile phone service that would piggyback on the Cingular network, but rejected the idea. Then, a year ago, they settled on the final concept, an Apple-made phone for subscribers of Cingular, which is owned by AT&T.

In that spirit, this essay examines the potential implications for Amazon Prime and the broader data and hardware industries.

Rationale behind Amazon’s Wireless Idea

Let’s dive right into the why. Here’s what Amazon wants to do.

Enhance Prime Membership: Amazon’s primary objective is to bolster loyalty among its Amazon Prime subscribers, who are its most valuable customers. By offering a wireless service as an additional benefit, Amazon seeks to increase the value proposition of Prime membership and reinforce customer retention. In shades of Apple’s original deal with Cingular, Bloomberg reports lead one to believe that Amazon would be welcomed with opened arms.

The carriers aren’t really in a position to say no to Amazon. Having poured billions of dollars into super-fast, high capacity 5G wireless networks, the mobile operators have

Gain a strategic competitive advantage: With the emergence of Walmart+ as a lower-cost alternative to Prime, Amazon faces intensified competition. A wireless service offering could serve as a differentiating factor, positioning Amazon ahead of its competitors and attracting new customers.

Leverage existing infrastructure: Amazon has a vast infrastructure through its AWS division, which provides cloud computing services. By collaborating with wireless carriers, Amazon can leverage this infrastructure, minimizing the need for costly network development and accelerating its entry into the wireless market.

Comparing This to Apple’s Strategy with AT&T

To draw a parallel between Amazon’s potential wireless venture and Apple’s partnership with AT&T, we need to examine Apple’s early dealings and its resulting impact on the market.

Apple’s approach was a departure from the prevailing smartphone strategy dominated by Blackberry. While Blackberry focused on providing a secure and efficient platform for email and messaging, Apple envisioned a device that could seamlessly integrate multiple functions and deliver an unparalleled user experience. Key factors that contributed to Apple’s success were four-fold.

The iPhone introduced a revolutionary touch-based interface with a large, vibrant display and intuitive gestures, replacing the physical keyboards and stylus-based systems common at the time. This simplified and enhanced the user experience. Apple also introduced the App Store, a platform that allowed third-party developers to create and distribute applications for the iPhone. This vast ecosystem of apps expanded the capabilities of the device, attracting both developers and users.

Unlike Blackberry, which primarily focused on productivity features, Apple emphasized multimedia capabilities. The iPhone offered an integrated iPod for music playback, a robust web browser, and a high-quality camera, appealing to a broader consumer base. And Apple’s iconic design, sleek form factor, and cohesive branding contributed to the iPhone’s desirability.

Apple’s innovative approach disrupted the market, capturing the attention of consumers who sought a more versatile and engaging smartphone experience, as well as a more stylish and premium device. Blackberry, caught off guard by the iPhone’s success, struggled to adapt quickly, leading to a decline in market share and eventual loss of its leadership position.

Apple’s exclusive agreement with what is now AT&T was a strategic move that enabled it to focus on a single carrier and create a seamless user experience. This approach allowed Apple to negotiate favorable terms and collaborate closely with AT&T to invest in digital data infrastructure, supporting the iPhone’s success. Remember, there were critics who suggested that this partnership was ill-advised:

Iain Gillott, analyst with IGR, speculates that users will get frustrated with the slower EDGE network particularly since some of the new smartphones operate over higher-speed networks such as HSDPA or 1xEV-DO. “It makes no sense to me,” Gillott says. While the iPhone boasts Web surfing, Yahoo email and other slick-looking applications, an EDGE network connection – with average speeds ranging from 80 kbps to 110 kbps – is not appropriate support for what is supposed to be a game-changing handset.

Apple’s subsidization strategy helped to broaden its user base and provide new revenue via the monthly payments for hardware. But more importantly, it helped AT&T raise the capital required to improve upon its Edge Network.

If Amazon were to follow a similar path, it could choose to acquire a wireless carrier or invest in its own infrastructure. This would grant Amazon greater control over the network and allow for tailored services, aligning with its customer-centric approach. Alternatively, Amazon could collaborate with existing carriers, providing them with access to its extensive customer base and leveraging their existing technologies.

Implications for Prime and the Data Plan Industry

If Amazon were to go through with this plan, there would be a ripple effect throughout the industry – as there always is when Amazon makes a bold move. Here’s what would happen.

Strengthen Prime Membership: By adding a wireless service to its Prime subscription, Amazon would further differentiate its offering from competitors, potentially increasing Prime membership growth and retention. Prime members would benefit from a seamless integration of services and an affordable wireless plan, amplifying their loyalty to Amazon.

Disrupt the data plan industry: Amazon’s entry into the wireless market has the potential to disrupt the existing data plan industry. By leveraging its immense customer base, Amazon could attract customers away from traditional carriers, leading to potential subscriber loss for established players. The introduction of lower-cost or even free plans for Prime members could significantly alter market dynamics and pricing structures.

Boost wholesale revenue for carriers: While Amazon’s entry may pose a threat to traditional carriers, it could also present an opportunity for them. Collaborating with Amazon as a wholesale partner would enable carriers to tap into Amazon’s vast customer base, potentially generating increased revenue from wholesale deals. Moreover, carriers could benefit from increased traffic to their 5G networks, providing a boost to their investments in network infrastructure.

As Amazon explores the possibility of launching a wireless cell phone plan for Prime subscribers, the strategic motivations become clear. By enhancing the value proposition of Prime membership and disrupting the data plan industry, Amazon aims to solidify its position as a leader in the e-commerce and entertainment sectors. By drawing parallels to Apple’s successful approach with AT&T, Amazon could utilize a similar strategy to forge deeper connections with customers and gain a competitive advantage.

If Amazon proceeds with its wireless initiative, it would likely capitalize on its existing infrastructure, collaborate with established carriers, and leverage its vast customer base. This would allow Amazon to offer Prime members affordable wireless plans or even free options, attracting and retaining a large user base while potentially disrupting the data plan industry.

Amazon’s potential move into the wireless market holds significant strategic implications for both Amazon Prime and the data plan industry. It could further solidify Amazon’s position as a dominant player in the digital spaces, increase customer loyalty and engagement, and potentially disrupt traditional carriers’ market share. As the negotiations and discussions continue, it will be intriguing to observe how the market reacts and how the wireless industry responds to the potential entry of one of the world’s largest retailers.

With one of the largest membership bases in all of the digital industries, this development has the potential to follow behind the advent of the Blackberry and the iPhone’s eventual disruption of the space. Amazon’s involvement in this business could further the iPhone’s lead, it could provide Android with the volume to gain on Apple, or it could even provide Amazon with the platform to re-launch its own phone (maybe a phone with physical buttons, who knows). Either way, carriers are unnerved by the news.