As new systems and digital capability continue to evolve the way retailers run their businesses, Essential Retail is gauging the views of the sector's main figureheads, via a series of exclusive interviews. This week, it's the turn of Mark Denton, head of retail products & propositions at BT Expedite.
Amazon and Morrisons announced a supply chain partnership earlier this week, in a move that will increase grocery product choice for Amazon Prime Now and Pantry customers. Both parties are seemingly content with how it could foster growth in their businesses.
For Amazon, it provides a substantial leg-up into a UK grocery market it has been eyeing for some time by providing hundreds of ranges to sell to its customers and offering an insider view of how the British public shop for fresh food and other products outside of the e-tailer's traditional remit.
While much of the debate in the days following the announcement focused on what the deal means for Amazon entering a new market, such as the in-depth coverage by Essential eCommerce, the potential benefits of the move for Morrisons' operations have perhaps been underplayed.
A jump in share price in the immediate aftermath of the collaboration being unveiled has elevated the Yorkshire-based supermarket back into the FTSE 100, after it had slipped out just before Christmas. That is one clear benefit for shareholders, but in terms of the business itself there could be ongoing positives.
Mark Denton, head of retail products & propositions at BT Expedite, told Essential Retail: "A lot of retailers are saying that getting product to customers really quickly can be an expensive process and is difficult to achieve.
"Morrisons will leverage Amazon's delivery capabilities to get their goods to customers as quickly as possible, or as quickly as Amazon can deliver them. Products delivered within the hour will allow Morrisons to get get ahead of the likes of Tesco and Ocado just by leveraging Amazon's platform."
Denton predicts that other retailers may "jump on that bandwagon" by identifying the benefits of using an existing third-party technology infrastructure to support new distribution channels. There's already a lot of talk in the US, of course, about how Uber is looking to extend its services from digital-led taxi service to parcel carrier and wider fulfilment network.
But from a Morrisons perspective, where might this type of partnership end? Essential Retail understands that in a complicated grocery market, one key focus area for the Morrisons executive team is to play to its strengths. Judging by Amazon's decision to align itself with the supermarket, it might be argued that its core strengths are its integrated supply chain and quality fresh food.
So could Morrisons start providing its goods to other third-parties in the future? Is the Amazon deal the start of Morrisons' move towards supplying convenience stores with fresh food or setting up fresh produce counters in non-food stores.
BT's Denton does not dismiss this idea, saying: "Everyone is looking at going back to basics, you can't be everything for everybody.
"Retailers need to focus on what their strengths are [and that could mean] closing shops and opening in other stores."
He cited one of BT's clients, Pets at Home, as an example of this modern retailing phenomenon of collaboration. The pet supplies business hosts animal grooming and other pet services within its stores, effectively becoming a "hypermarket for everything you need for your pet".
"Although they don't own all the separate businesses, their presence will draw more people in store – that's good for footfall, targeting and CRM data," he explained.
"A lot of retailers are going to go into partnership with each other, whether that is at the simple level of allowing online orders to be picked up at other retailers' shops or true concessions where retailers or brands co-habit in stores where it doesn't make any sense for two rents to be paid."
Denton sees the emerging trend for click & collect pick-up points in third-party stores growing over time but also suggests that these link-ups could evolve into more sophisticated business arrangements. For example, there could be more made of attribution where relevant compensation is given to retailers or brands who drive customers to a certain store.
"What does retailer X get back from the service with retailer Y? There needs to be some kind of compromise back and I'm not sure what the answer will be but that's what we will be seeing."
Denton was talking to Essential Retail ahead of BT's sponsorship of the Innovation Trail and Awards at next week's RBTE, the end-to-end retail solutions conference and expo which takes place at London Olympia on 9-10 March.
BT's exhibition stand will also play host to pop-up shops operated by two of its retail customers, Phase 8 and Pets at Home. Visitors to the show will be able to gain an 'in-store' view of how BT's suite of solutions are being used by businesses to provide guided selling and boost engagement with shoppers.
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