The Point: When Amazon announced that they were buying Whole Foods for close to $14 billion, the stock price of Amazon rose to 2.4%. This stock price lift was reported by the news to add roughly $11 billion to Amazon’s market capitalization. At this same period, the stock price of Sprouts decreased by 6.3%, Kroger dropped by 9.2% and Super Value plummeted by 14.4%. It was obvious that one could perceive the short term plans of most traditional retailers (including mergers & acquisitions) – that is, working through some shredding machines. Amazon’s recent purchase now holds high implications towards the future of groceries, the food industry at large, including general shopping – it proved how the strategy of exponential growth could be used to disrupt any industry. This post will discuss how any Mergers & Acquisition deal can disrupt an industry using a powerful Strategic Plan that guarantees growth over competitors…Enjoy.
Hello, We’re Amazon. We’re Here to Buy You!
The purchase announcement made by Amazon made the speed and nature of future Mergers & Acquisitions far more challenging for all of us, or did it?. There have been 3 questionable premises by which most traditional retailers are now looking to build Strategic Plans on. The first was whether they can include digital capacities quicker than how Amazon is adding more stores. The second being that Amazon’s e-commerce competitive space is still constrained to retails sales in U.S. The last was how retailers who are brick-n-mortar based can transition to a digital world with any profit by cautiously growing e-commerce sales.
It is now very clear that Amazon’s Strategic Plan intends to offer almost everything for customers- this is a strong indicator that the retail arenas are vulnerable. Think of this for a moment, if Amazon was able to buy into the grocery channel, what do you think can stop it from penetrating into department stores, furniture stores, drug stores or electronic stores (Or, fill in the blank when it comes to _____ stores?) Alibaba, for example, did that in China and beyond with their Strategic Plan without regard to Mergers & Acquisitions. Another thing to also consider is that Amazon may decide to use groceries to increase customers’ delivery frequency – this could pile more profit into home delivery vehicles faster. From now on, retailers in any industry must constantly learn how to develop viable retail Strategy Plans that can help achieve exponential growth and compete worldwide in scope.
2 Tips on Using Mergers & Acquisition Disruption for Exponential Growth
Let’s use the Amazon Mergers & Acquisition as a case study to explain two tips as disruption for exponential growth:
Tip #1: Advance and Merge Physical with Digital Capabilities
Now more than ever, the Amazon Mergers & Acquisitions activity reflects that it’s more strategically reasonable to conclude only the most viable retail Strategic Plan is the one that can advance and merge physical and digital capabilities. This advance and merge will have to be better than Amazon (or your major competitor in your Industry). What this implies is that retailers need to constantly be well equipped in order to compete with Amazon in certain fundamental capabilities – For example, expense management and innovation.
Tip #2: Develop the Innovation Engine
The real truth is that it is not the e-commerce network of Amazon that gives it its greatest competitive advantage. Instead, it is really the innovation engine at its disposal that provides competitive advantage over its rivals. In order to compete with Amazon’s constant innovations; traditional retailers must relearn how to innovate like successful startups do. This will require the movement from predictive plans to adaptive and building teams of agile innovators. Agile innovation teams are small and also multidisciplinary – they are well equipped with every needed physical and digital skill required to complete with task. They are also geared towards rapid pivots, not predictable straight-aways. These teams tend to always prefer creative working environments, instead of hierarchical bureaucracies.
SUMMARY
In this post we’ve explored the topic of Mergers & Acquisition Disruption for Exponential Growth: How Amazon’s Purchase of Whole Foods Upended Retailer’s Strategic Plan along with 2 Tips! As you have seen above, the retail world has recently learned the limitations predictive Strategic Planning can result to (as compared to a Strategic Plan consisting of adaptive innovation – especially in an unpredictable market!) The right moment could be upon us for retailers to rapidly learn how to adapt to their lists of strategic initiatives, merge digital and physical capabilities and improve on the funding/speed for execution through the development of innovation engines.
Sam Palazzolo
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