3 Reasons Why 'Brick and Mortar' is in Amazon's cross-hairs

We all know of Amazon's North American e-commerce dominance, and clear path of #retail disruption. Many great articles have been written chronicling their rise to this position, but what happens next? What is the real, elusive, long-term play that will fundamentally cement their place as retail kings, and require you and other retail brands to #fasttrack counter-strategies?

In our assessment, the real long-term play and next or true industry-in-the-cross-hairs is mall ownership. Shocking, eh? Why would Amazon want to dominate this sector which is currently under-performing, notably because of eCommerce performance? Here are 3 reasons for our hunch, and also why you need to expect this, develop your counter-strategy and #fasttrack implementation:

1. Even with the explosive growth of #ecommerce, brick and mortar retailing will still represent about 70 - 75% of all #retail by 2030. Physical infrastructure and road networks/building layouts etc are not designed to handle disparate #ecommerce deliveries in significant double-digit percentages. Amazon knows this reality, and will not ignore the 70 - 75% of retail spend on the table - especially as major competitors (who already have significant brick and mortar presence) e.g. Walmart improve their eCommerce game.
2. Amazon's global competitor Alibaba has clearly signaled the future of retail with heavy investments in brick and mortar (over $1 billion) including the opening of its first mall in Hangzhou. A very similar pattern is being followed by other pureplay eCommerce entities such as Warby Parker, Wayfair - a clear suggestion even the eCommerce gurus recognize the elephant in the room (future) - brick and mortar
3. eCommerce success lies in its ability to remove friction and offer a simple alternative to many aspects of the shopping function. However, retail is more than simple transactional execution. As humans, we crave a need to congregate, socialize, to share in experiences. technology will never replace these basic human needs, and one of the ways Amazon can partake in this much bigger experience and leverage its data, assortment, and supply chain prowess, is to own the arena where it can craft its own brand stories. It will be much more than just owning four walls of real estate. The malls will be utopian experience centers where Amazon sells its own and marketplace products, shows its own Amazon prime movies, offers its groceries, dictates terms to existing brand tenants, and serves as logistics mini-hubs near urban markets. All in a step to finally close the loop on its ecosystem from supplier to #endcustomer (at scale), pulling all of the levers for explosive growth in a #brickandmortar space.

No doubt, retail will be a difficult operating space in the near future. Contact us for specifics on what you need to do today for operations success.