Staying Competitive: Keeping Up With Amazon

As retail catapults into the future, companies can’t afford to get left behind. Leading the way in industry influence, Amazon shapes global retail standards and shopping habits. To stay competitive, more retailers and consumer packaged goods (CPG) suppliers are taking specific actions to emulate Amazon’s signature inventiveness and customer obsession.

Let’s see how retailers are keeping up with Amazon, plus the capabilities retailers are looking for, which CPG suppliers should pitch to stand out and sell more.

Retailers invest in technology for efficiency

Many retailers are scrambling to digitize their processes to keep up with the e-commerce giant. The following tech trends are helping retailers accelerate the pace of their omnichannel service.

Artificial intelligence (AI)

AI powers many retail processes, including Amazon’s personalized recommendations, assortment planning, and Just Walk Out technology for cashierless in-store service. Now retailers are doubling down on AI for faster processes that make the customer experience more convenient.

• Walmart added AI to its fulfillment processes to fill online orders faster. ¹ Redman, Russell. Walmart to build local fulfillment centers at dozens of stores. Supermarket News. January 27, 2021.
• Neiman Marcus uses AI to match product and customer data for personalized product recommendations. ² Goldberg, Jason. AI’s role in retail. NRF. September 30 2021.
• Wayfair applies AI to offer visual search for an eye-catching online experience. ³ Goldberg, Jason. AI’s role in retail. NRF. September 30 2021.
• Starbucks and Sainsbury’s partnered with Amazon to use Just Walk Out cashierless tech to maximize convenience. ⁴ Moon, Mariella. Starbucks is using Amazon’s Just Walk Out tech in a New York concept store. TechCrunch. November 18, 2021.
• Tesco and Morrisons have revealed their own versions of AI-driven, cashierless technology to serve grocery shoppers in the U.K.⁵ London Supermarket Tesco Trials Cashierless GetGo To Rival Amazon Go. PYMNTS. October 19, 2021. ^,6 Stevens, Ben. Morrisons latest to launch AI-powered checkout-free store system. Charged. July 19, 2021.
• Aldi is testing AI in a cashierless store in the Netherlands. ⁷ Berthiaume, Dan. Aldi to pilot frictionless shopping at Netherlands store. Chain Store Age. October 1, 2021.
• Carrefour launched an AI-powered cashierless store in Paris. ⁸ Carrefour’s Digital-First Expansion Brings Cashierless Tech to French Shoppers. PYMNTS. November 29, 2021.

Automated e-commerce

Amazon automates its processes to maximize retail efficiency and cost effectiveness. Now more retailers are embracing robots and autonomous vehicles to modernize fulfillment and delivery.

• Albertsons will use Waymo’s autonomous vehicles to deliver groceries curbside in San Francisco. ⁹ Catchpole, Dan. Waymo’s co-CEO on the next stop for driverless cars: curbside grocery delivery. Fortune. November 30, 2021.
• Kroger uses robots for e-commerce fulfillment, and the retailer will make deliveries in Houston using Nuro’s electric autonomous vehicles. ¹⁰ Repko, Melissa. Here’s how Kroger is using robots to get groceries to customers’ doors. CNBC. November 4, 2021. ^,11 Wells, Jeff. Kroger levels up autonomous delivery with Nuro’s commercial-grade vehicles. Grocery Dive. January 13, 2022.
• Sam’s Club is adding robotic inventory analysis equipment to its autonomous floor-cleaning machines. ¹² Silverstein, Sam. Sam’s Club rolls out inventory-checking robots chainwide. Retail Dive. February 1, 2022.
• Walmart uses robot-run facilities attached to existing stores for automated grocery picking. ¹³ Boyle, Matthew and Kevin Miller. Kroger Is Amassing a Robot Army to Battle Amazon, Walmart. Bloomberg. April 14, 2021. Also, Walmart and Gatik are testing driverless trucks for e-grocery. ¹⁴ Holland, Frank. Walmart is using fully driverless trucks to ramp up its online grocery business. CNBC. November 8, 2021.

Rapid delivery

Amazon is known for fast, free delivery for Prime members, including same-day service. Global retailers now partner with tech-driven rapid delivery brands to satisfy consumers’ desire for on-demand convenience:

• Kroger and Publix each partnered with Instacart for 30-minute delivery of grocery products. ¹⁵ Wells, Jeff and Sam Silverstein. Kroger and Instacart team up to deliver groceries in 30 minutes. Grocery Dive. September 14, 2021. ^,16 Redman, Russell. Publix debuts Instacart-powered virtual convenience store. Supermarket News. November 4, 2021. Grocery leaders Walmart and Loblaws also use Instacart for prompt same-day delivery. ¹⁷ Biscotti, Louis. Walmart Teams With Instacart In War With Amazon. Forbes. September 10, 2021.
• Albertsons teamed up with DoorDash for express grocery deliveries that arrive within 30 minutes. ¹⁸ Wells, Jeff. DoorDash rolls out 30-minute grocery delivery with Albertsons. Grocery Dive. February 17, 2022.
• Southeastern Grocers partnered with DoorDash to offer delivery in as few as 45 minutes. ¹⁹ Douglas Moran, Catherine. Southeastern Grocers links up with DoorDash on 45-minute delivery. Grocery Dive. December 22, 2021.
• German rapid grocery delivery brand Gorillas partnered with Jumbo Supermarkten in the Netherlands, Tesco in the U.K., and Casino Group in France. ²⁰ Jumbo Supermarkten and Gorillas agree rapid delivery tie up. Retail Tech Innovation Hub. January 4, 2022.

Notably, even delivery companies are teaming up: Uber partnered with GoPuff to deliver convenience and grocery products. ²¹ Hawkins, Andrew J. Uber’s grocery delivery is getting a boost from new partnership with Gopuff. The Verge. May 4, 2021.

Digital advertising

Digital ads have emerged as an unstoppable B2B growth engine for Amazon, representing more than $31 billion of its 2021 revenue, up 32 percent over 2020. ²² Goldberg, Jason. Amazon reveals its most profitable business. Forbes. February 4, 2022. Now more retail players – including Best Buy, Family Dollar, Instacart, Kroger, Target, and Walmart – are clamoring to offer digital ads to connect brand advertisers with shoppers in the exact moments they’re browsing and buying online.²³ Kelly, Chris. Best Buy launches in-house media company. Best Buy. Marketing Dive. January 4, 2022. ,²⁴ Lacy, Lisa. Family Dollar Launches Retail Media Network. Adweek. April 15, 2021. ,²⁵ Douglas Moran, Catherine. Instacart rolls out shoppable brand pages for CPGs. Marketing Dive. January 28, 2022. ,²⁶ Naidu, Richa and Sheila Dang. Walmart’s media arm to offer brands a tool to help manage digital ads. Reuters. August 25, 2021.

Suppliers nimbly adapt to consumers’ values

As conscious consumerism gains momentum, Amazon aligns its business strategy and product assortment with consumers’ values. Similarly, other retailers seek innovative products from CPG suppliers that reflect a higher purpose.

Diversity

Generation Z, closely followed by Millennials, is the most ethnically diverse generation in American history. Together, these two cohorts account for 52 percent of the U.S. consumer market and their demand for diversity profoundly influences corporate strategy. ²⁷ Meola, Andrew. Generation Z News: Latest characteristics, research, and facts. Insider Intelligence. January 5, 2022.

In the beauty category, retailers seek supplier diversity to serve consumers of all complexions. Target added 20 Black-owned or -founded beauty brands to its assortment. ²⁸ Vembar, Kaarin. Target introduces 40 new beauty brands to its lineup. Retail Dive. February 4, 2022. Ulta Beauty will invest $50 million this year on diversity initiatives, including $8.5 million in marketing for Black-owned, -founded, and -led brands. ²⁹ Repko, Melissa. Ulta Beauty CEO says it’s not enough to put Black-owned brands on shelves. CNBC. February 3, 2022. By 2025, Best Buy will invest $1.2 billion with diverse suppliers, including product sourcing and marketing. ³⁰ Unglesbee, Ben. Best Buy plans to spend $1.2B on diverse suppliers across its business. Retail Dive. June 24, 2021.

CPG opportunity: Suppliers whose products target diverse, underserved consumers face exciting opportunities to gain a competitive edge this year.

Sustainability

Protecting the planet is an urgent retail priority, as 84 percent of global consumers say sustainability is important when making purchase decisions. ³¹ Rogers, Kristina, Andrew Cosgrove and Jon Copestake. The CEO Imperative: Make sustainability accessible to the consumer. EY. June 24, 2021. In response, Walmart launched an online destination called Built for Better to make it easier for shoppers to discover brands and products that align with values like sustainability. ³² Berthiaume, Dan. Walmart in new online push for healthy, sustainable products. Chain Store Age. September 21, 2021. Tesco promised net-zero carbon emissions by 2050 across its operations, products, and supply chains. ³³ Davey, James. Britain’s Tesco extends net zero pledge. Reuters. September 23, 2021.

Since sustainability is such a complex, pervasive, and costly retail issue, even competitors collaborate to develop industry solutions. For instance, CVS Health, Target, and Walmart founded the Consortium to Reinvent the Retail Bag to replace plastic bags with sustainable alternatives. Industry partners contributing to this cause include Albertsons, Dick’s Sporting Goods, Dollar General, Hy-Vee, Kroger, Meijer, and Walgreens. ³⁴ Zboraj, Marian. Dollar General Joins Beyond the Bag Initiative. Progressive Grocer. February 4, 2021.

CPG opportunity: Suppliers that offer eco-friendly packaging, products, and business practices can differentiate their brands now that sustainability is in the spotlight.

Local & domestic

The pandemic has made consumers mindful of the smaller shops and niche brands that add variety and joy to our shopping experience. More than half (56 percent) of consumers say they spent more at small businesses in 2020 compared to 2019. ³⁵ Schmidt, Meredith. Data Says Consumers Are Eager To Support Small Businesses, Here’s How To Prepare. Salesforce. August 5, 2020. Products’ country of origin is growing in importance, as 63 percent of U.S. consumers want personal products and cosmetics to be made within the United States. ³⁶ Magel, Paul. Consumers Drive the ‘Made in America,’ Clean Beauty, & More Retail Trends. Beauty Packaging. October 4, 2021.

Retailers seek local brands to spice up their assortments, minimize environmental impact, fuel domestic job growth, and mitigate the risk of global supply chain disruption. Over the next decade, Walmart will spend an additional $350 billion on products made, assembled, or grown in the U.S. to reinvigorate American manufacturing. ³⁷ Walmart says it will support U.S. manufacturers with $350 billion of added business. CNBC. March 3, 2021. To strengthen its regional supply chain, Meijer sought local Midwestern suppliers to pitch their products to its buyers in Illinois, Indiana, Kentucky, Ohio, Michigan, and Wisconsin. ³⁸ Bradbury, Rosie. Meijer seeks out local Midwestern suppliers for summit event. Supply Chain Dive. January 21, 2021.

CPG opportunity: Suppliers can focus their efforts in 2022 by targeting retailers that seek local and domestic brands.

More supplier best practices

For efficient product discovery and sourcing, more retail buyers now expect CPG suppliers to be prepared to sell by arming themselves with:

• Online product catalogs to facilitate communications between buyers and suppliers, including high-res product images.
• Accurate product data, including up-to-date nutritional information and ingredients, and where goods are made.
• Certifications to prove product authenticity (like Certified Vegan and Certified Organic) and brand leadership (like Women-Owned and Black-Owned) to find the right fit.

Follow the leader

Although Amazon blazes a retail trail, it can’t do everything. Agile retailers and suppliers of all sizes have an abundance of opportunities to delight consumers with superior efficiency and responsive service. Acting on in-demand tech and consumer trends to keep up with Amazon helps companies boost their efficiency, agility, and competitiveness as global retail leaps forward.