Online Goliath Amazon has become the poster boy of market disruption, revolutionising everything from business models to shopping habits.
But Amazon’s pounce on grocery chain Whole Foods Market must be one of its most disruptive moves yet.
It seems to go against the grain of everything that Amazon is known for – the imaginative deployment of technology that made traditional ways of shopping, and traditional shops, look increasingly irrelevant.
So why would it buy a business with 460 stores? There are two big reasons, one particular and one general.
In particular, a deal gives Amazon a much bigger presence in grocery – a vast retail field in which, despite initiatives such as the launch of Amazon Fresh, it controls only a tiny fraction of the market. A market in which stores still take the lion’s share of sales.
“Amazon will take sales any way it can, including doing what would have previously been seen as unthinkable”
In general, however, the deal shows that Amazon is completely open-minded about how it does business.
It might have made its name online but Amazon will take sales any way it can, including doing what would have previously – clearly wrongly – been seen as unthinkable and buying a ‘traditional’ retailer.
That’s because regardless of sales channel, all retailers are competing for market share.
As Amazon extends its reach into bricks and mortar, Walmart is pushing ever more rapidly into digital commerce.
It’s the clash of the titans, and it’s channel-agnostic.
For years there has been talk about seamless retail and catering for customers through whichever touchpoints they choose.
The first of the four principles by which Amazon does business is “customer obsession rather than competitor focus”.
With the acquisition of Whole Foods, Amazon has put its money where its mouth is – $13.7bn (£10.7bn) of it.
Quiz heads for AIM
How fashion retailer Quiz’s IPO fares should provide a barometer of how investor sentiment towards retail is holding up.
Consumer confidence is under pressure, wages are not keeping pace with inflation and retailers’ costs are rising.
Revenues in general merchandise categories such as fashion are insipid – the performance of non-food in May was the worst since 2011, the BRC-KPMG Retail Sales Monitor showed.
At £200m, Quiz’s flotation is relatively modest and should get away. A statement of intention to float was unlikely ever to have been made unless there was confidence that the offer would be subscribed.
“The retailer’s ability to ‘test and repeat’ brings flexibility on products and trends, and the capacity to quickly introduce lines on its website”
Quiz looks like an interesting business that is cleverly blurring the distinctions between online and stores.
It says, for instance, that its “fast fashion model is able to quickly respond to social media’s requirement for new and fresh content”.
The retailer’s ability to ‘test and repeat’ brings flexibility on products and trends, and the capacity to quickly introduce lines on its website and in its shops and concessions.
The recruitment of Peter Cowgill as chairman also augurs well. At JD, he has presided over one of the great retail success stories of the past several years.
Quiz will hope to follow suit.