It would be hard to find a clearer illustration of the future of modern retailing than the latest tit-for-tat battle between store giant Walmart (which owns Asda in the UK) and the king of online shopping, Amazon.
The latest acquisitions and developments show more clearly than ever that the most successful and ambitious UK retailers will need to have a solid foundation in both online and physical outlets.
Battle highlights so far
The rivalry between these two huge names has been bubbling for some years.
Walmart has backed an ambitious growth programme for Asda in recent years, as the brand seeks to be “Britain’s best value weekly shop”.
But Walmart has also moved into online retailing globally, including the Asda home delivery service.
Amazon – which employs over 15,000 people in retail in the UK – launched grocery online shopping under the AmazonFresh banner in 2007. Since then it has begun to dabble in more traditional retailing too, having successfully launched physical shops like bookstores and the pilot Amazon Go concept.
The two latest deals signed by the pair involve considerable investment and a clear indication of the common ground appearing between them.
Amazon shocked some industry pundits by paying $13.7bn to buy out a company called Whole Foods, which provides the online giant with over 400 physical stores including ones in Southern England.
Though carving a share of the huge grocery marketplace makes massive sense, Amazon had previously seemed determined to replace, rather than own, physical outlets. However, it seems that Amazon has now accepted that where food is concerned, consumers like to make purchases in person.
The company already has one of the most active recruitment campaigns in the UK. It will be interesting to see if headhunting store executives get added to its UK recruitment list.
Around the same time, Walmart revealed that it had scooped up e-commerce clothing company Bonobos. The price tag was $310m, and it signalled the fifth online acquisition by Walmart in under a year.
Walmart currently derives approximately 60% of its revenue from food sales.
Sitting back on this stronghold is not an option and Walmart has fully grasped the need to combine digital and physical outlets to keep up with consumer demand and changing buying patterns.
The best of both worlds
It’s also clear that successful physical retailers and online technology wizards are realising the value of each other’s skill set in building profitable growth.
For businesses on this global scale, buying into each other’s domain is a far quicker and more cost-effective path than playing “catch-up” by investing internally and growing organically.
For companies with less capital to invest, an ambitious business plan to combine and grow both stores and technology is clearly vital.