Retailers aren’t the only ones who should be worried. Products sold in grocery stores might think they are escaping the negative impacts of the change. After all, their distribution models still work, right? Wrong. Amazon is a technology company built on algorithms. The old days of test stores and sell-through models are fading. With this new concept, Amazon will be perfecting the product mix in the store that maximizes sales. Your individual brand will be seen in relationship to all the other brands and judged accordingly. Just as they do with their other massive algorithms, Amazon will use consumer behavior data to optimize the in-store experience.
For example, your brand might have a slight market share lead in your category, but what if people who buy your closest competitor are also more likely to buy in a completely unrelated category? To Amazon, the person that buys your competitor is more valuable to them overall and your brand loses shelf space. Your market share edge loses relevance due to the lack of cross-category participation—something CMOs never had to worry about before. This is only one example of how the data coming from these retail channels will bring dramatic new insights into how people shop and the relationships between products.
At the end of the day, shoppers will do what is best for them. Amazon Go opens up a whole new world of paperless transactions and convenience for one of the arguably most frustrating retail experiences we face on a regular basis. Grocery retailers have enjoyed a relatively trouble free existence as the world has become more digital. That is all about to change.
Rebecca Brooks is founder of market research consultancy Alter Agents.