An interesting RetailWire panel discussion this week, on the topic of Amazon. The issue is whether CPG manufacturers need to adapt faster as Amazon moves to take share away from brick-and-mortar food and consumables stores. Given Amazon’s track record — first in books, then in almost every other category they sell — the answer is a clearcut “yes.” Here’s my point of view:
For some perspective, it’s worth reading an article in the new issue of The New Yorker, about the impact that Amazon has had on the book publishing business. (Obviously huge, but arguable that without Amazon it was a “dinosaur” industry.) There are really two questions here: First, can the CPG industry survive over the long haul as their sales continue to migrate from conventional bricks-and-mortar to providers like Amazon? (Clearly, the answer is no.)
The second question is more complex: Can CPG companies sustain the sort of negotiating power they may have in their current relationships with retailers, while dealing with a completely different logistics and demand model? This is much harder to forecast, but younger consumers’ decreasing loyalty to specific brands may be a complicating factor over the next several years.