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Amazon deal a game changer

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The fallout from Amazon.com Inc.’s agreement to acquire Whole Foods Market Inc. is just beginning. But the implications are already clear: This transaction, if completed, will shake up the mass retailing community as nothing has done in years, if not decades.

Parallels do not come readily to mind. Walgreen Co.’s merger with Alliance Boots GmbH changed an industry, but offered no immediate ramifications outside chain drug retailing. In Walmart’s halcyon days, that retailer’s absorption of smaller competitors helped accelerate Walmart’s climb to the pinnacle of the discount store community, but few other implications for mass retailing were immediately apparent.

In older times, grocery industry acquisitions altered that industry, but seldom impacted businesses beyond grocery retailing. Moreover, size often dictated impact — and size was seldom relevant when measuring impact.

This acquisition is different. It crosses distribution channels, impacting the way consumers go to market. It points up the divergence between brick-and-mortar retailing and its online counterpart. It brings into focus the sharp disparities between store-based shopping and shopping online. And it calls into question the advantages of each.

Closer to the ground, this acquisition will impact the consumer for a simple reason: Amazon, a seller of all manner of merchandise, already exerts a huge influence on how consumers buy. Intelligently managed, it could change buying patterns dramatically, with the result that many traditional mass retailers will no longer be able to compete in the new retailing community.

Make no mistake: Whole Foods is a powerful retailing entity. It has even now changed America’s shopping habits. Grocery products once considered acceptable are no longer adequate. Nutrition has become a key selling point. New words and phrases have entered the vocabulary, while older explanations no longer suffice. Perhaps most significant, Whole Foods has ushered in an era of healthier eating. Criticize Whole Foods if you want to; grocery retailing offers healthier eating options than it did before.

Consider all this, then reach the obvious conclusion: Amazon is a better retailer than Whole Foods.

Whole Foods has changed the way Americans shop for groceries; Amazon has changed the way Americans shop. So quickly and smoothly has this change occurred that it hasn’t even been noticed. Buying online has become a viable option. More than that, it is sometimes the preferable option. A consumer choosing Amazon rather than a brick-and-mortar option will often get her merchandise more quickly and less expensively. And the quality of that merchandise will often equal or surpass that of the brick-and-mortar alternative.

The question then becomes this one: How will this work out? Does Amazon have the ability to incorporate the Whole Foods advantages without diminishing Whole Foods’ power? At this point, the question is not difficult to answer. It is impossible to answer.

This much is certain: The retailing landscape has been changed forever. Mass retailing is already reacting to the Amazon acquisition, without yet knowing what form that reaction should take. Online retailing experiments are increasing, and those already in the works are gathering momentum. The melding of brick-and-mortar and online retailing is accelerating, even while the form of that acceleration is yet undefined.

Will online retailing become more important, more meaningful, more prevalent? Surely. Will more consumers begin investigating online retailing as a viable alternative to brick-and-mortar shopping? Without question. Will Amazon gain customers and credibility? Certainly. Will competitors across the retailing spectrum feel the impact? No doubt. Will some of them fail to survive? Very likely.

So begins a new era in mass retailing, one that has been coming for some time. It will certainly change the landscape across broad mass retailing as nothing before it has ever done. It will strengthen the strong, hurt the weak, eliminate the least powerful. And it will do what retailing change has always done: It will strengthen the customer — at least that segment of the consuming public with the knowledge, the curiosity and the patience to figure it out.


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