Goodbye, Kroger? Safeway? Albertsons? Costco? Even Walmart and Target?
Considering the reaction to Amazon’s announcement of its plans to buy high-end grocer Whole Foods, you might think the online shopping giant instantly won the highly competitive supermarket wars.
Yes, Amazon has helped change how we all shop. Yes, its technological genius at online shopping – and perhaps more importantly, its logistics and shipping — has sent shudders through every executive suite in almost every retailing niche.
But I don’t expect the likes of giant grocery sellers – and the non-traditional competitors, big and small – to fold easily under Amazon’s latest challenge. Especially in a region like Southern California where the home-cooked cuisine and the style of a store selling the food seem to change every few freeway exits.
Grocery buying may sound simple. Selling them is another story. It’s not easy to explain how in a retailing era dominated by national brands, global logistics and online merchandising, odd grocers like Stater Bros. and Trader Joe’s – not to mention mom-and-pop stores – thrive in Southern California.
Plus, corporate mergers are a tough way to enter any business arena. Yes, Amazon has already been playing in the grocery space — shipping packaged goods and household staples as well as experimenting with its own delivery services that handle perishables, too.
But the planned $13 billion Whole Foods acquisition strongly suggests Amazon isn’t satisfied with just taking a minor chunk of the grocery business. Yet, I don’t think that Amazon’s success in this crowded and competitive field is anywhere guaranteed.
Here are five reasons Amazon has plenty of work to do …
1. Most mergers flop
Numerous academic studies tell you most corporate mergers never reach their financial potential.
Depending on who’s counting, the success rate is as low as 1-in-3, or at best, 50 percent – meaning that on average, a buyer like Amazon has a…