From Grocer to Grocer
Let’s talk about the GIANT elephant in the room.
What qualifies me to do that as your vendor or potential vendor? My background and experience as a grocer!
I have bagged groceries, stocked shelves, checked out groceries, cut meat for 10 years, cleaned produce, hired and fired more
people than I could ever count. I’ve been responsible to every employee, customer, banker, and supplier I ever did business with
while owning grocery stores. I might add we had to deal with every regulatory body that you know and love and still managed to
If you can relate to me or any of the operations grocers deal with, then we need to address the elephant in the room.
Recently, I learned one of the most shocking facts and information we need to take seriously as grocers. We used to think that our biggest competitor was the retailer down the street. Twenty years ago, a variety store type operation called K-Mart was going strong.
Then, a company from Arkansas called Walmart decided to get into the grocery business. Walmart now controls over 50% of our retail food market. Today we see grocers and wholesalers repositioning and consolidating all over the country as Walmart continues to pick up momentum.
But wait, there is a new Sheriff in town, and his name is AMAZON!
How big is AMAZON? Big enough to eat all retailers’ lunch and dinner too! If you visit the Amazon department called PrimePantry, you will see they are offering FREE SHIPPING on all grocery orders which average over $45.00, just by adding 5 of the preferred products to your cart.
Does it make you wonder “HOW” Amazon is able to give free shipping to “OUR” customers? How about the fact the brands used to pay our wholesalers millions of dollars per week for the old print ads that no longer work? In most cases, the old slotting fees have decreased and in many cases brands have moved to a “dead net” pricing. Think about the major CPGs for a moment. By doing business with one distributor, Amazon, and making a financial commitment for shipping, why wouldn’t you do that? As grocers today, we need to understand that digital advertising to 62,500,000 households is significantly less when compared to the $8.52 cost for each redeemed multicolor coupon insert.
Are you concerned about Amazon hurting your sales and business’ future?
Grocers should be concerned. According to Greg Buzek, President of the IHL Group, “retailers need to increase IT spending by 87% to 237% to effectively compete with AMAZON’s retail store and close the technology innovation gap in retail (TIGIR for short).
Now for the exciting (terrifying?) part, AMAZON has now entered directly into the center of your store!
Here’s what is happening and how it will affect all of our businesses in a very short time. Amazon plans to enroll at least 25% of their Prime members in the grocery business via Prime Pantry over the next 24 months. What does this mean to those of us who are in the conventional grocery business? It means that 15 to 16 million households will be spending $45 dollars per week on groceries that will be automatically shipped, for free, to our customers. This equates to $2,600 per year per household. When multiplied by 16,000,000 homes in the US we will see $41,600,000,000 end up in Amazon’s bottom line. Amazon will very shortly become the 3rd largest grocery wholesaler/retailer in the U. S. And this is just the beginning.
Will you be affected? How will you proactively manage this challenge?
If you don’t think you will be affected, think again. You could very quickly feel a 5-10% decrease over the next year just from Amazon, let alone the effects of Walmart trying to keep their position in your marketplace.
Do you have the resources and advantage to combat Amazon?
We believe you do! As your partner in grocery, I want to speak with you. Please allow me and the team at Brick to offer the following to assist you in the fight:
- Implement the BRX™ digital advertising platform and be set up with a machine for learning.It’s about relevance, reach, and results.
- Get smart in your advertising! Using BRX™ and our trained media specialists help you eliminate wasteful spend.
- Have and use the information to determine which ads are successful and then immediately scale them up!
I would be happy to go into all of the details of our thinking and what we do at Brick with the most successful retailers in the country. YOU can fight with the help of our expertise. You’re in business. Today that involves being online and using all
digital tactics proficiently! We make this easy for you.
Retailers use the “Brick” advantage to create intelligent customer experiences and that have a “WOW” factor to
keep them coming back. Brick agrees with the IHL recommendation of Tier 1 retailers spending a minimum of 30% on e-commerce platforms, such as BRX™ tools and 57% for Tier 2 and Tier 3 retailers for advertising and custom communications with customers. We believe that retailers must message the customer when the time is relevant, and the message is wanted and needed. The most effective way to do this is with Brick’s tools and expertise. We know retail grocery because we are retail grocery!
The innovative Brick IT leadership team has developed products and strategies that can be customized for your business objectives and marketplace. Together, we will build your budget to plan strategies that deliver a better customer experience for
better customer retention.
Don’t just roll the dice to see if you will be successful in the very near future of grocery retail. We are here to help you with
our digital and online marketing expertise to help preserve and protect your business.
This information can be scary, we know this and understand how you feel. We welcome the opportunity to talk.
Let’s chat about the future, research your trade area, and find the information and tools to not only help you survive but to thrive!
Email or call me with your questions. And watch out for the Elephants!
AMAZON facts: *
- More than 50% U.S. households have an Amazon Prime membership. That number represents 62,500,000 household or about 180,000,000 people.
- The average family household spends approximately $500.00 per month in grocery.
- AMAZON spent more than $17 Billion on shipping in 2016.
- AMAZON’S retail business garnered 38% of all online sales during the last Holiday season.
- AMAZON shipped over 2 Billion items over the same period.
- AMAZON spent $15.1 Billion on Innovation, digital communications, direct advertising, Geo-targeting and digital branding awareness last year.
- AMAZON spend more on digital innovations than the 20 leading U. S. retailers combined.
These AMAZON facts are according to the IHL Group*