Next big thing in grocery retail is AR, says former Amazon exec
In the second part of our interview with Brittain Ladd, a supply chain consultant who has also worked at Amazon, Deloitte and Capgemini, we discuss Walmart, Amazon and augmented reality.
RTIH: Where do you stand on Amazon’s grocery strategy?
BL: In 2013, I wrote a research paper, titled A Beautiful way to Save Woolworths, where I applied game theory to the grocery industry. Game theory is the science of strategy.
My research indicated that Amazon would never be a major player in groceries without a physical retail presence, and I recommended in the paper that it should acquire Whole Foods. I also designed a retail store that contained a micro-fulfilment centre for Amazon to build.
Fast forward to 2020 and it has done everything that I recommended in my research paper. However, it’s not enough. Amazon is at a severe disadvantage when it comes to groceries as Kroger, Albertsons, Aldi and Walmart all own and operate more stores than it.
The stores Amazon is building are the most advanced in the US. However, based on research I conducted when I worked for Amazon, it must operate a minimum of 2,150 grocery stores to have any chance of selling more groceries than Kroger or Walmart.
I don’t believe Amazon can take 10 or more years to open the stores it needs, which is why I have been on the record since 2013 that even if it acquires Whole Foods, it should also acquire Target, and open Whole Foods Markets inside Target’s 1,852 stores.
If it doesn’t acquire Target, Costco or possibly even Kroger could be acquisition targets. I anticipate that Amazon will begin making acquisitions of smaller grocery retail chains that will go out of business from losses incurred by the coronavirus and increased competition.
Amazon must accelerate its store count. Period. I remain convinced that if it invests more aggressively in its grocery strategy, it has the potential to sell more groceries than Kroger or Walmart between 2027 and 2035.
RTIH: And how about Walmart? Is it well placed to take on Amazon and its various other rivals?
BL: Walmart sells more groceries in the US than any other retailer so, as of 2020, it is in a great position. However, if Amazon makes additional acquisitions and accelerates opening more stores, over a period of several years, it can severely impact Walmart.
To reduce the threat from Amazon, I have recommended to executives at Walmart that they must think big and consider doing one of the following: Merge with Home Depot; Divest Sam’s Club and acquire Costco; Acquire Shopify and FedEx.
Walmart must constantly evolve its strategy and capabilities or, most assuredly, Amazon will eventually pass it in sales.
“Amazon must accelerate its store count. Period. I remain convinced that if it invests more aggressively in its grocery strategy, it has the potential to sell more groceries than Kroger or Walmart between 2027 and 2035”
RTIH: What is the next big thing in grocery retailing that no one is talking about?
BL: In 2019, I had the pleasure of living in Moscow and conducting research on grocery retailing, autonomous vehicles, and augmented reality as a result of an article I wrote about a small business owner named Anna Petukhova who operates an AR club in Moscow. As a result of the interview with Anna, I began to research the application of AR to the grocery industry. What I discovered truly shocked me.
According to Jeff Bezos, what customers want are speed and choice. I agree with his comments. However, over the next several years, even when autonomous vehicles and possibly even drones if they’re adapted by grocery retailers, supply chains and last mile delivery will only be able to increase in speed incrementally.
If that’s the case, what’s next? What technology can be utilised by consumers to significantly increase shopping for groceries (and other retail products)? I believe the answer is AR. By 2030, I believe it’s possible that consumers will choose to shop via AR.
Why? Because of the increased speed. It will allow consumers to set foot inside a virtual store where they can shop for the same products, they physically shop for today inside their favourite physical grocery store. Consumers can pick up products, read labels, ask questions, and make a purchase all while sitting in their favourite chair wearing a VR headset or by 2030, maybe VR glasses.
RTIH: You have hands on experience of this.
BL: I have tested VR grocery shopping with a startup, and I was amazed at how real and pleasant the experience is. Because VR doesn’t require stores, grocery retailers that choose to embrace it can convert their stores to MFC-powered dark stores, significantly increasing their ability to fulfill AR orders more quickly.
Just a few years ago, many analysts laughed at the idea of online grocery retail. CEOs of apparel companies dismissed the idea that Amazon could ever sell shoes and apparel online. Amazon is the world’s largest seller of shoes and apparel.
I know the idea of AR for grocery shopping today may sound farfetched. However, I strongly advise grocery executives not to ignore me. I saw the need for Amazon to acquire Whole Foods before everyone else. I designed a store with an MFC solution for Amazon and it is in the process of building its second store with an MFC inside. I am the consultant who recommended that Kroger enter into an agreement with Ocado.
The next big thing is AR and it has the potential to decimate every grocery retailer operating today. You read it here first.