With Amazon adding Whole Foods to its arsenal, it seems there is no industry that CEO Jeff Bezos won’t try to conquer. While online grocery shopping isn’t new, Amazon is betting big on the small but growing industry. Asserting his influence as the king of logistics, leaving everyone wondering what he’ll disrupt next. When Amazon moves into the neighborhood, it usually means a seismic shift for consumers and retailers.
BRAD STONE: Amazon coming in here, shaking things up, it’s going to be good for the consumer. I think it’s going to mean a better experience in stores and maybe over time lower prices.
LING KENT: But Amazon’s purchase of Whole Foods for $13.7 billion also has traditional retailers from big chains to mom and pop stores rethinking their own future. The convenience of ordering online is placing new burdens on smaller independent stores as Amazon delivers everything from toiletries to clothing to electronics with just a click. In fact, more than 100,000 retail workers have lost their jobs since October and 25% of malls are expected to close by 2022. As shopping migrates to your phone and laptop, Amazon is already dominating nearly half of online shopping. And its purchase of Whole Food is expected to put new pressure on the $800 billion grocery industry. To innovate or perish. Whole Foods CEO John Mackey telling his employees after the deal was announced, “I think we’re going to see a lot of technology. I think you’re going to see Whole Foods Market evolve in leaps and bounds.” Perhaps stores without checkouts or cashiers where your every move is tracked by artificial intelligence and algorithms.
STONE: It’s clear now that every super market has to start changing. You have to offer customers options, that is really what people are demanding now.
LING KENT: And this week Amazon also introducing its new prime wardrobe service that allows customers to try on clothes before they buy them, delivered to your door step. Just the latest retail disruption.
STONE: Amazon’s record of dominance really sends a shudder of concern through the super market industry. Peapod is currently the country’s leading internet grocer in 25 markets throughout the country. But they say they welcome healthy competition and that there’s plenty of shoppers to go around.
CARRIE BIENKOWSKI: I don’t think anybody saw this coming and so inevitably the question becomes do you see it as a threat or do you see it as…as an opportunity. And really we see it as both.
LING KENT: As CEO Jeff Bezos makes an aggressive move, another industry racing for what comes next.
BIENKOWSKI: You know our strategy doesn’t change. It’s making us feel a lot more bold and aggressive about making big bets.
LING KENT: By the way the Whole Foods acquisition is not exactly a done deal. The market is bracing for a possible bidding war if an Amazon rival puts in a better offer. Here’s why that’s possible. Earlier this week Whole Foods shares closed more than a $1 higher than what Amazon paid that indicated the grocery wars are far from over. Guys.
MATT LAUER, anchor:
That’s interesting, Jo thank you very much.
after reading the article answer the following question:
1) Which competitor will be harmed the most and which the least? and why?
Consider components of the macro-environment, the five force model of competition, common weapons for competing with rivals, and game changing strategies.
2) Provide a common sense approach for dealing with this situation.