Last fall, I wrote a long piece for Newsweek about big-box retailers, in which I concluded that Amazon.com had basically made their business model unsustainable; the only question was whether they could switch to a smaller, more curated business format before Amazon put them out of business. Now it’s time to ask whether grocers should be watching their backs.
Yesterday’s Heard on the Street column at the Wall Street Journal discusses Amazon’s push into groceries — currently operating only in Seattle, but expected to expand into other major cities soon. How worried should Safeway and Harris Teeter be?
To answer that question, let’s start by assessing Amazon’s immense strengths as a retailer. To my mind, those strengths are twofold: scale and relentless distribution excellence. Yes, its Web technology is excellent, it has great strategic intelligence, and it has some pretty good purchasing teams. But the things that other companies can’t replicate are its scale and its warehouse operations; you don’t have to be that much of a merchandising genius if your store carries, um, everything.
To read the rest of the story, please go to: Bloomberg
