Doug Garnett’s Blog


Amazon’s $13.7B Endorsement of Brick and Mortar

Amazon’s $13.7B Endorsement of Brick and Mortar

For years Amazon’s guerrilla forces have been leading a small cadre of pureplay electronic retailers in a battle to overthrow (or steal profit from) the Commerce Establishment. They’ve been motivated by battle cries like “Give me electronic liberty or give me death”. Or “in your margin is my opportunity!”

This scrappy group has, in the true form of guerrilla fighters, used high profile actions to dominate the attention of their well established brick and mortar opponents. As a result, the establishment has wasted time, energy, and opportunity being “anti-Amazon” rather than being “pro consumer” or “pro growth”.

Press coverage has made it clear the field of battle is littered with casualties. And, in true war correspondent style, the number and type of casualties are often overstated for the sake of a good story.

There is real damage on both sides. There are many very large casualties on the e-commerce side (a fact often ignored). And this year we’ve seen very serious casualties among traditional retailers – but not all from this fight.  A lot of brick and mortar damage is self-inflicted or the result of warehouse and discount stores.

Then, we reach June 16, 2017 – the day that…Amazon strode across the field of battle to join the other side.

Wait… What?

Yup. Amazon just joined the establishment…well, sort of.

With all the retail casualties strewn across the field of battle, the establishment isn’t what it used to be. And with the confusion that Amazon has created, too many retailers are running around strategically lost – where theories that the future is “all digital” distract them from creating a solid strategic vision for their stores.

On Amazon’s side, it’s become clearer over the past several years that they won’t ever generate profit on retail-style sales without brick and mortar.

All this adds up to a truth that Amazon just endorsed the power of brick and mortar.

And they grabbed, I think, a great brick and mortar opportunity. With Whole Foods they bought 450 stores and a premium brand name. Some have suggested this was all about buying a customer list. Or a testbed for advanced technology. But there are far cheaper ways to achieve both.

Based on the Bezos management of the Washington Post and based on Amazon bookstores, we can expect they make Whole Foods into an even bigger, more useful set of brick and mortar. We can hope the result will reflect a unique vision of brick and mortar in a channel independent world.

After all, they have become the establishment while bringing guerrilla aggressiveness and attitude along with a healthy respect for the reality (not the hype) of technology. Pretty sweet combination

For the rest of retail  it’s a mixed message.

On the one hand, Amazon endorsed brick and mortar for its tremendous economic power. So retailers need to stop doubting bricks – they need to embrace their power.

On the other hand, retailers will only maintain power by evolving and changing. And, given what Amazon has just done, that means discovering newly nimble and savvy ability to focus on a world led by bricks with superb digital assistance. But which bricks and what digital?

This is where the battle gets fun. Retail has just shifted from a stuffy old school to the new frontier. And now we have Amazon in the mix which should stimulate a far clearer sense of the delicate balance between bricks and clicks. Who knows where that will lead? So stay tuned.

Copyright 2017 – Doug Garnett – All Rights Reserved

Categories:   Business and Strategy, Digital/On-line, Retail