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The transformative power of technology, already much in evidence in mass market retailing, continues to change the rules of the game, creating new options for consumers and new opportunities for retailers smart enough to exploit them in a process the great Austrian economist Joseph Schumpeter called creative destruction.
The transformative power of technology, already much in evidence in mass market retailing, continues to change the rules of the game, creating new options for consumers and new opportunities for retailers smart enough to exploit them in a process the great Austrian economist Joseph Schumpeter called creative destruction.
The influence of Amazon, in so many ways the catalyst for the ongoing upheaval in retailing, is more pervasive than ever. The company recently expanded AmazonFresh, the e-commerce grocery business it has operated in Seattle since 2007, to parts of greater Los Angeles. Plans call for Amazon to begin offering the same service in the San Francisco Bay area later this year and, if those forays are successful, extend it to 20 additional urban areas in 2014.
The arrival of Amazon represents a serious competitive challenge for supermarkets and other retailers that sell food in Los Angeles. The company has earned a reputation for broad assortments, sharp prices and outstanding service as a seller of books, consumer electronics and a growing range of other merchandise. Amazon must now demonstrate the same capabilities in the grocery business, where meat, produce and other perishables are so important. If it can satisfy consumer expectations in those areas, the concept of what it means to go food shopping will likely take on a whole new dimension.
Amazon is not the only company that is moving beyond the old mass retailing paradigm. Growth Strategies: Unlocking the Power of the Consumer, a new study by the Grocery Manufacturers Association and PwC US, indicates that more than 40% of consumer products manufacturers intend to sell directly to individuals this year, almost double the level in 2012. And 52% of consumers report that they are already making online purchases from suppliers.
A true omnichannel retail environment is taking shape, one that will make unprecedented demands on the creativity, adaptability and performance of traditional brick-and-mortar chains as well as the advocates of new approaches. Consumers have more choices than ever before and powerful tools to evaluate them. To be successful, merchants will have to go beyond the fundamentals and find innovative ways to engage customers that are not easily replicated.
