Governments across the globe need to force manufacturers of disposable (and non-recyclable) packaging to bear the downstream environmental costs of that packaging. This will force manufacturers of non-recyclable/non-reusable packaging to increase prices, making recyclable/reusable options more appealing. Then the free market will do the rest.
BOPIS represents the single biggest advantage that brick-and-mortar retailers have over Amazon. Target says that a BOPIS order costs 90 percent less to fulfill than one from a traditional fulfillment center. Offering BOPIS is officially a no brainer for a retailer (although many still don't offer it). The next big choice that retailers have to make is whether to force consumers to come into the store to pick up their order (with the hope that she adds an item or two to the basket) or whether they give her the option of curbside pickup (which is far more convenient for parents with kids in the car). Smart retailers will offer both, but provide incentives to lure the consumer into the store.
The U.S. e-commerce market is really a set of markets that are highly diverse in terms of population density and traffic flows, with widely varied consumer profiles in each. Thus there is not a one-size-fits-all grocery delivery solution in the U.S. The Ocado model will be right in some markets, microfulfillment solutions will be right in others. And others will be able to get away with old-fashioned employee picking. And of course, this will evolve over time as online grocery penetration grows in the U.S. from today's levels, which are low by global standards.
Interesting question! An acquisition is probably the only sensible way for any of these grocers to get into meal delivery for the following reasons: 1.) Given that this is a three-sided business (consumer/delivery person/restaurant) it would be extremely difficult for anyone to enter this relatively mature market now with a brand new offering without losing tons of money. 2.) Meal delivery is certainly cannibalizing grocery sales, especially among younger shoppers. 3.) And there is the possibility that a meal delivery force could be used to deliver groceries.
It wouldn't be without risks, though, with a price point at, or above, Grubhub's current $5 billion market cap because 1.) This space is becoming more competitive across all three dimensions (consumer/delivery people/restaurants) and 2.) California's AB5 brings significant risks that delivery people ultimately have to become employees.
If I were in strategic planning at any of these companies I'd look closely, but would probably ultimately decide against it.
Those opposed to this deal are, I think, assuming that this adds significant incremental cost or effort for Old Navy. It does not. Old Navy already fulfills online orders from stores through click and collect and they are charging $8.99 for deliveries that Old Navy employees are not delivering. This is a safe, tactical move. I don't believe, though, that the upside will be significant because I suspect that people are willing to wait a few days for apparel. But none of us know for sure in this environment where consumer expectations are changing so rapidly, fueled mostly by Amazon. I'd have done this deal were I in Old Navy's shoes.
I love the dark kitchen concept. Almost no one actually eats in the restaurants that I pick up lunch from in midtown Manhattan but those restaurants are paying very expensive midtown Manhattan street level retail rents. I see this as a metaphor for the broader retail sector, which continues to carry all the costs of legacy brick-and-mortar businesses in addition to the incremental costs that e-commerce adds.
The disruption of retail that we've seen over the past quarter century has been a boon for consumers and a much needed wake-up call to a retail industry where the creative energy had been subsumed by the desire to maximize profit by replicating tired store formats again and again in mall after mall. While the past 25 years has been tough for retailers, it is making American retail better and stronger than it's ever been. Kudos to the disruptors.
The biggest obstacle to digital transformation that I've seen over the years is the misguided idea that digital investments must offer short term incremental sales. The reality is that, because consumers are demanding increasingly digital experiences, digital investments need to be looked at as defensive (protecting the franchise) as much as offense (incremental sales).
Amazon Fresh has been losing grocery market share to Walmart Grocery and Instacart for a few years now. This was partially because of the cost (which Amazon has now fixed) and partially because of the relatively limited geographic scope of Amazon Fresh. If Amazon decides to dramatically increase its geographic footprint, it could impact the growth of Instacart and Walmart Grocery significantly. That's a big IF, though. Amazon has historically been very conservative on this front and expansion into new markets would signal a whole new commitment to winning in grocery for Amazon.
Amazon is attempting to lead its competitors over a cliff and only Amazon has the financial wherewithal to sustain the landing. It is far from clear that one day makes an appreciable difference to consumers. Competitors should be careful before following Amazon's lead here.
Convenience can be defined by the equation (time spent * physical effort expended * ability to have it when you need it). Online grocery shopping today takes significantly less time and effort than a trip to the grocery store, even for a first timer. And grocers are getting better at getting my order to me when I need it. Habits take time to change, but trust the math in the long run.
After a three year period of aggressive digital acquisitive-ness, Walmart is clearly taking stock, divesting of some acquisitions and scaling back others. What we don't see is where they're doubling down, where employees have been integrated into the mothership, what lessons they've learned, and what habits they've changed. No aggressively acquiring company bats a thousand. But if Walmart had been idle, we can be fairly confident that its stock price would not be up 59 percent since its acquisition of Jet, compared with 33 percent for the S&P 500 over the same period.
The biggest challenge that big CPGs face in becoming digitally enabled is that of internal incentives for leaders: For an ambitious person that hopes to push the envelope in a big CPG company, there is too much risk for leading an effort that fails and too little upside for one that succeeds.
I had taken for granted the pain of checkout until I shopped an Amazon Go store for the first time. There is no question in my mind, after that one shopping experience, that this is the way of the future, and that it will accelerate the culling of the retail herd. This is something hard, and expensive, that all retailers will need to do well.
Amazon has not destroyed U.S. retail, quite the contrary. It has put it at the forefront of retail globally, destroying individual retailers that were over-leveraged or unable to compete for other reasons. However, that doesn't mean that Amazon's power in the market doesn't need to be checked.