Amazon’s ability to shatter the grocery industry—following its purchase of Whole Foods earlier this month—is far from a fait accompli. The industry—with its fresh food and complex delivery system—isn’t Blockbuster or Borders. But if there was a wake-up call, this is it. Large public companies with slim margins rarely embark on radical reinventions, but that’s precisely what is needed now.
The nation’s more than 60,000 stores selling groceries are sitting on millions of square feet of real estate designed for an analog world. These incumbents should begin their shift by strategically closing locations and creating a web—not a hub-and spoke-system—of stores.
Today, about 98% of grocery sales still occur in physical stores. Grocery companies should redesign these stores to serve as automated pick warehouses, armed with robots loading baskets that shoppers can scoop up with the ease of a drive-thru. These locations can also become mini-warehouses for home delivery e-commerce as that behavior evolves.
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