Inside This Issue - Opinion
Amazon is catalyst for change in retail
January 14th, 2013
Elsewhere in this issue, MMR names its Retailers of the Year for 2012 and honors other executives for their expertise in merchandising and lifetime achievement. If there were an award for the company that’s doing more than any other to drive change across mass market retailing, the winner certainly would be Amazon.
The Internet retailer is altering the rules of the game, not only for its competitors in e-commerce but for brick-and-mortar retailers as well. Amazon’s compelling offer of shopping convenience; low prices; and efficient, reliable service resonates with many consumers. The value proposition has enabled the company to achieve an average of 31% sales growth over the past decade, close to the 34% level enjoyed by Walmart during its heyday in the 1980s and early ’90s.
That performance has caused other merchants to sit up and take notice. Many mass retailers, including Walmart and Target, have adjusted their policies in such areas as shipping and price guarantees to better meet the challenge posed by Amazon.
Despite those moves, indications are that Amazon, the clear leader in the fastest-growing retail sector, continues to gain momentum. The results of a Harris Poll released two weeks before Christmas reveal that 43% of the 2,249 adults surveyed have examined products in brick-and-mortar stores and then gone home to order them online. Dubbed showrooming, the practice has been a windfall for Amazon. The Harris Poll shows that the company attracts 57% of purchases among the consumers who shopped a traditional store and bought online, a 10-to-1 ratio over the runners-up, Walmart and eBay, at 5% each.
The pressure Amazon is putting on brick-and-mortar retailers won’t abate anytime soon. Under the visionary leadership of founder and chief executive officer Jeff Bezos the company is steadily expanding the range of merchandise it sells (consumers shopping the site can find everything from clothing and accessories and grocery products and gourmet food to health care items and health and beauty aids) and driving innovation, as evidenced by its popular Kindle electronic reader.
As long as Bezos is in charge Amazon will be guided by the thought that concluded his first letter to shareholders in 1997 and has been reiterated every year since: "Our approach remains the same, and it’s still Day 1."