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.
- Neiman Marcus uses AI to match product and customer data for personalized product recommendations.
- Wayfair applies AI to offer visual search for an eye-catching online experience.
- Starbucks and Sainsbury’s partnered with Amazon to use Just Walk Out cashierless tech to maximize convenience.
- Tesco and Morrisons have revealed their own versions of AI-driven, cashierless technology to serve grocery shoppers in the U.K.,
- Aldi is testing AI in a cashierless store in the Netherlands.
- Carrefour launched an AI-powered cashierless store in Paris.
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.
- Kroger uses robots for e-commerce fulfillment, and the retailer will make deliveries in Houston using Nuro’s electric autonomous vehicles. ,
- Sam’s Club is adding robotic inventory analysis equipment to its autonomous floor-cleaning machines.
- Walmart uses robot-run facilities attached to existing stores for automated grocery picking. Also, Walmart and Gatik are testing driverless trucks for e-grocery.
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. ,Grocery leaders Walmart and Loblaws also use Instacart for prompt same-day delivery.
- Albertsons teamed up with DoorDash for express grocery deliveries that arrive within 30 minutes.
- Southeastern Grocers partnered with DoorDash to offer delivery in as few as 45 minutes.
- German rapid grocery delivery brand Gorillas partnered with Jumbo Supermarkten in the Netherlands, Tesco in the U.K., and Casino Group in France.
Notably, even delivery companies are teaming up: Uber partnered with GoPuff to deliver convenience and grocery products.
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. 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.,,,
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.
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.
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. Ulta Beauty will invest $50 million this year on diversity initiatives, including $8.5 million in marketing for Black-owned, -founded, and -led brands. By 2025, Best Buy will invest $1.2 billion with diverse suppliers, including product sourcing and marketing.
CPG opportunity: Suppliers whose products target diverse, underserved consumers face exciting opportunities to gain a competitive edge this year.
Protecting the planet is an urgent retail priority, as 84 percent of global consumers say sustainability is important when making purchase decisions. 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. Tesco promised net-zero carbon emissions by 2050 across its operations, products, and supply chains.
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.
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. 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.
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. 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.
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.