The New York Times reports, Amazon agreed to buy the upscale grocery chain Whole Foods for $13.4 billion, in a deal that will instantly transform the company that pioneered online shopping into a merchant with physical outposts in hundreds of neighborhoods across the country.
The acquisition, announced Friday, is a reflection of both the sheer magnitude of the grocery business — about $800 billion in annual spending in the United States — and a desire to turn Amazon into a more frequent shopping habit by becoming a bigger player in food and beverages. After almost a decade selling groceries online, Amazon has failed to make a major dent on its own as consumers have shown a stubborn urge to buy items like fruits, vegetables, and meat in person.
Walton’s strategy – Every Day Low Price (EDLP) for all customers has led Wal-Mart retail chain to the success it has earned for over 50 years. Walmart has maintained the reputation as trusted brand, with bargaining power to take into consideration individual customer low-cost needs. The strategy of putting the customer first, and displaying integrity in business, creating opportunities for employment for surrounding communities where they operate has made them financially successful. To which they could afford to expand exponentially through acquisitions both domestically and internationally. Essentially, they put a lot of “mom and pop” stores out of business, but they hired their grandchildren and saved the families plenty of money.
The best strategy to ensure that Wal-mart has a competitive advantage , the following actions must be taken. We understand that the wave of the future of purchasing will be made online, and the introduction of artificial intelligence is on a high. Research suggest that people are looking for a more convenient way of shopping, and most people are gravitating from driving to grocery and retail stores to shopping online. Not just online, but on an APP on their phones. In the future, Wal-Mart will be competing with the likes of amazon.com versus Target or Kmart to secure their position as the retail giant. Amazon is the leading online sales industry, and the basis of their business is conducted online. They have introduced drone technology for delivery, and pick and drop off lockers at a remote location inside grocery store chains such as Safeway or Lucky’s. Just like Redbox and Netflix replaced Block Busters and movie rental chain, Wal-mart could potentially start closing down stores from one location to the next as the online retail market continue to surge and offer even more competitive pricing and convenience to customers.
Time.com reports, Amazon is far from the only digital company to show interest in the grocery space with its AmazonFresh service, which is available for Prime members for $14.99 per month. Adding Whole Foods’ selection of items to its service could give the online retail giant a competitive edge against Google, whose Express delivery service now reaches 90 percent of the U.S. and other alternatives like Instacart, Peapod, and FreshDirect.
Taking into account the slogan of Every Day Low Pricing, we find, that the best strategy to remain agile, will not be through acquisition and expansion, but instead creating the convenience coupled with the interest of the customer. This can be done through data analytics that is tracking and archiving information of individuals online and their purchasing habits; this will give Wal-mart the ability to know which products to advertise to them, while they visit their favorite websites. These days time is money, and time saved is money earned. People are looking for faster smarter ways of buying common goods, and using the time obtained, to spend quality time with their friends and family. In recent news, advancement was made by Wal-mart in the acquisition of jet.com an online retailer that promises price decrease with the increase of purchases, free shipping for purchases over $35, 2-day delivery services on thousands of products, in addition to 24/7 customer service. This website sounds like the ultimate housewife and lazy Dad dream. Target and Kmart have not responded in this area, thus making them weak in the field of firm competition against the retail giant.
The best strategy looking ahead will be to reduce overhead cost and begin to close down some of Wal-mart brick and mortar locations that are underperforming and losing sales. Instead, investment will be made in developing an online presence and advertising with jet.com, while gaining minute by minute purchasing opportunities of new and existing customers. Alternatively, in the international markets, there is a chance to expand in developing countries that may be technologically behind, Wal-Mart can construct new retail store chains there, creating jobs for the community and influencing their culture with the habit of spending less on everyday products.