There has been a lot of discussion in the media about how Walmart will compete with Amazon now that it has acquired Whole Foods. But what about all the other grocery retailers, how will they compete?
This article identifies that there are (at least) three alternative business models for competing in this market (and I identify the order winners that each model delivers)…
- The “push” model – is used by Walmart and discounters in the U.K. This is based around competing mainly on the cost order winner, specifically low selling prices. This is achieved by high economies of scale, shipping full lorry loads of products to individual stores, and highly effective supply chain management.
- The “pull” model – adopted by Amazon in the U.S.A. and Ocado in the U.K.. This ships packages of specified goods directly to customers from warehouses. The OW in this model is reliability, especially with regards schedule adherence and delivery performance.
- The “ply” model – which can be adopted and adapted by local food retailers and smaller chains. This is based around them becoming even more customer centric, especially by using digital tools. This model’s OW is quality, notably perceived quality and value for money.
In the article, this “ply” model is explained in more detail.