The juggernaut rolls on…

Fascinating to hear the latest speculation on Amazon’s moves into the mainstream Grocery market. The alleged move to open up a chain of mid-sized more affordable grocery stores has sent a number of retail investors running for the hills.

But is the threat really that credible and the likelihood of disruption that material?

Unlike in the digital world, building a scale business with material market share requires the roll-out of physical assets and estate which are generally highly capital intensive to build and slow to scale. Even the most aggressive of players have taken decades to create large scale and efficient store portfolios so not something to take on lightly.

It’s also interesting to see how the ‘capability conundrum’ might play out in reverse. One of the most recurring conversations we have with our clients is how they might close the digital capability gap. It seems Amazon maybe risks falling into the equivalent trap and assumes that what it takes to run a great grocery chain at scale is the same as what it takes to be a great digital business.

Of course the route may well be M&A driven which might enable Amazon to get a fast start but even so the ability to transform the performance of an existing player into something market beating requires rare skill and experience.

As ever media hyperbole surrounding Amazon may well have overstated the plans but it seems the impact almost certainly has been overstated too.