Amazon Becomes The “iOS” of Grocery as Kroger and Safeway May Become the Next Blockbuster and Kodak
Amazon’s purchase of Whole Foods has shot a nuclear warhead into the digital disruption of the grocery business. Grocery has never headed such an attack and is scrambling to find the counter strike.
Remember Webvan? Grocery stores have allowed brands to attempt digital disruption and they have allowed digital “remoras” like iBotta and Facebook into their doorsteps to steal consumer data. But, no major shift has disrupted grocery like the Amazon deal.
Amazon is now the “iOS” of the grocery business.
Amazon is a grocery “walled garden” for the middle and upper income shopper. Amazon has all the data, the pricing, the distribution, and, most importantly, the digital SHOPPER in their pocket. With Amazon’s entrance into the grocery market they have put a stake in the ground and ripped the industry into two tribes: The “Banked” and the “Unbanked”
THE BLIND LEADING THE BLIND
The grocery chains and investors still don’t see the writing on the wall. Online and mobile order and delivery was and is a “go to” tactic for out of touch investors living in high income neighborhoods (checkout Costco’s expensive and out of touch delivery program for example). To this day, many investors think the typical shopper follows THEIR same shopping habits:
- Shop at multiple grocery or big box stores for specific items (i.e. Vegetables from Whole Foods, Cheeses and Wines from Trader Joe’s and staples from Kroger or Target)
- Have products delivered to their house via Amazon.
- Don’t bother with coupons and rebates
Unfortunately, the world of the 37MM US and 2.5B global “unbanked” shoppers don’t have the same luxuries.
- Try telling the person who must take the bus or walk to the grocery store to do it 3 or 4 times a day for “specific items”
- Try telling the unbanked that even if they could get an Amazon Prime account (which they can’t) that the groceries and items will be delivered to their public housing unit (how long will the product sit on the doorway?)
- Coupons, rebates and specials are a necessity, not a nuisance
For the first time the shopper has more information, choice and selection than ever. The shopper is king and the distribution is the “dumb” pipe.
WHO ARE THE “UNBANKED”
If you inspect who the “unbanked” consumer is you will see they fall in many buckets;
- A poor family who can’t keep a bank account due to cost or poor credit
- An immigrant family who never had a bank account in their country
- An illegal immigrant family who can’t get a bank account
- A millennial family who could care less about a bank account
- A crypto family who wants nothing to do with a bank account
- An anarchist family who distrusts bank accounts (hint: Equifax, Wells Fargo and the 2008 meltdown)
These “unbanked” families can’t play in the world of Amazon and their Prime loyalty program. They can’t get products delivered to their doorsteps nor want their data sold off and exploited. These unbanked families are the future of the next grocery chain that caters to them.
These “unbanked” families are the Android of the Grocery business.
As Amazon drives a stake in hearts of the grocery chains that cater to the banked customer, Safeway, Kroger and even Walmart have the opportunity to cater to the “unbanked” Shopper and put them front and center.
The battle is about the customer. Using new fintech and blockchain technology will enable the “unbanked” to participate in loyalty programs without giving up personal data and information (see Cash Back Tokens or CBT). Brands will fund programs where customers use new payments methods suited to their “unbanked” choices. The grocery store will become a safe zone for value exchange, and for some, the grocery store becomes the bank for the “unbanked”
The “unbanked” comsumer trusts brands more than banks and whatever grocery chain figures this out will become the value exchange leader for this customer.
Kroger and Safeway, Independent grocery chains, must choose to cater to the “unbanked” and become the “Android” for the grocery business.
Or, Kroger, Safeway, and even Walmart may become the next great iconic brand bankruptcy like Blockbuster, Kodak, Circuit City, Tower Records and Borders.
About the Author:
Jonas Hudson is a co-founder of CausePlay, LLC. CausePlay provides revenue generating, mobile technology solutions, utilizing licensed patents and blockchain supported coupons & rebates for retailers and brands. CausePlay launched a utility token called the Cash Back Token, or CBT.