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Katrijn Gielens with the Kenan-Flagler Business School is an expert in the areas of international retailing and product innovation. She studies the competition between grocery store chains in the area against the growing online options.
“One of the thing that we noticed,” Dr. Gielens says, “is that what is somewhat atypical is that on the one hand stores are closing down, but there is actually a strong increase in competition because competition online which is becoming stronger and stronger.”
Dr. Gielens says that because online competition exists, consumer mindsets have changed. Consumers are used to getting whatever they want, whenever they want thanks to online retailers like Amazon.
Because of this, store-based retailers have had to rethink themselves and change based on the current landscape.
One example of this is with grocery stores such as Harris Teeter and Whole Foods, who seek to drive prices up by offering unique products that consumers cannot find elsewhere.
“For instance, Whole Foods, their private label is 365, so it doesn’t mention Whole Foods. So you actually have all these unique labels that you will not find anywhere else that are completely owned by those retailers.”
Listen to part one of the interview with Dr. Katrijn Gielens:
Dr. Gielens often finds herself in conversations about Amazon and the future of the mega-retailer.
“So one of the things that you have to know,” Dr. Gielens says, “is that it’s extremely costly to get all these different orders, all these different packages to your doorstep.
“Shipping something to a central location near you that’s cheap, but then getting it to all these individual houses and all these different individual people that is actually taking a lot.”
According to Dr. Gielens, one advantage that groceries stores have over Amazon is that consumers still want the freedom to decide on the go. This is opposed to the current model of Amazon where a consumer has to wait for a package to be delivered one or two days after deciding to purchase a product.
Because Amazon needed a physical footprint in the grocery store market, it bought Whole Foods in 2017 for $13.3 billion. However, Dr. Gielens says this is likely not the last grocery store chain that the mega-retailer will purchase.
“They have their own grocery concepts that they’re working on, but that would sort of require them to build everything from scratch, which is very time intensive and very cost intensive, but what you can expect is that they’re going to acquire other chains.”
Listen to part two of the interview with Dr. Katrijn Gielens: