Independent Grocers & the Amazon Effect

July 24, 2017 | Elaine Arnold

As a technology service provider for brick-and-mortar businesses, we sometimes tread lightly when speaking to our retailers about Amazon. The giant has been disrupting traditional retail for years, with some predicting 50 – 67% of retail space to be vacant within a decade.

With that being said, we still believe that through the acquisition of Whole Foods, Amazon is certifying that brick-and-mortar is here to stay, especially for the grocery industry. The average shopper visited a grocery store 1.6x per week in 2016, and Amazon recognizes that that face time is invaluable.

Even before it dipped its toes into the $600bn US grocery market with Amazon Fresh and Amazon Go, the so-called ‘Amazon Effect’ has had a huge impact on food retail. The online retailer has been conditioning shoppers to expect a frictionless shopping experience, tailored to their personal tastes, interwoven with instant gratification. Retailers like Walmart and Target have taken on more grocery offerings as the rest of their sales have been impacted by direct competition with Amazon. Who can forget Walmart’s $3bn acquisition of last August?

“It’s important that everyone take this very seriously, thinking critically about how to build a strong business moving forward, but let’s not overreact or panic,” says Tom Hutchison, Sr. Director of Marketing, eCommerce, & Retail Services at MDI.

“While Amazon’s aim to acquire Whole Foods is huge news for a variety of reasons, most independent grocery retailers are more insulated from the threat than the large chains in the US. Many of these independent retailers are in C & D counties that don’t contain Whole Foods nor do they have Amazon Prime Now or Amazon Prime Fresh,” Hutchison continues. “The tsunami is coming, but we have slightly more time than the large retail chains.”

For some time now, wholesalers like MDI have been helping their independents combat big-box competition by offering services aimed at creating a more customer-centric shopping experience. Many grocers embrace this and execute on it very well from store design, to assortment, to technology, and beyond. Hutchison advises independent grocers to think strategically about their next move, and work with their wholesalers to leverage new technologies aimed at keeping customers happy, engaged, and coming back. “Instead of panicking, independent retailers need to start investing their time and resources into meaningful ways to engage and delight customers. This includes investing in ways to market, in a personalized manner, to their customers and providing these same customers with modern tools like online shopping.”

In January, AppCard announced our strategic partnership with MDI, a privately-owned wholesale grocery store distributor headquartered in Hickory, NC that supplies over 600 retail food stores with food and non-food items. This partnership gives MDI’s network of grocers the power to increase profitability by engaging customers with personalized offers via digital circulars, text messaging, email, and push notifications. “MDI and our retailers need solutions that work well today and set us up for great success in the future. AppCard is a partner that brings incredibly strong technology without feeling heavy. Their system is modern and well-thought-out with a bevy of marketing tactics and an interface that connects with every POS. And their reporting suite, while comprehensive, prioritizes information and insights in the perfect way for our independent retailers and MDI,” says Hutchison of AppCard and MDI’s partnership. To date, 8 MDI retailers, representing 27 stores, have already signed on to the AppCard platform, with many more evaluating our offering as we speak. (You can read the full partnership announcement here.)

The independent retailer shouldn’t necessarily fear the rise of Amazon. But rather, they should realize that the future is now and it’s time to take a smarter approach to shopper engagement. Leverage the knowledge base and experience that your technology and wholesaler partners have. Get to know your shoppers. Understand their preferences. Cater to those preferences. Deliver an exceptional customer experience.

About Elaine Arnold

Elaine is a Senior Customer Success Manager at AppCard, the personalized marketing and rewards platform. Elaine specializes in helping independent grocers to engage their customers with data-driven marketing campaigns to grow their business.