Technology and Innovation: Amazon Puts Brick-and-Mortar Retailers on the Defensive

1. What PESTEL forces (seeChapter 8) have contributed to the transformation of the retail industry?
2. Amazon has entered into the brick-and-mortar store business with the acquisition of Whole Foods. Do you think this is a good move or a bad move for Amazon? Why?
3. What strategic actions do you think a store like Macy's can undertake to survive in the current retail industry?

Technology and Innovation: Amazon Puts Brick-and-Mortar Retailers on the Defensive Amazon.com has become the place everyone buys from. It wasn't always that way, though. In 1995. Jeff Bezos founded Amazon in the garage of his house as an online book-selling company. Even then, however, he had a bigger mission: he wanted Amazon to be "an everything store." In a little over two decades, Bezos has achieved his vision by growing Amazon in almost every possible way. Amazon reaches across international borders, with 14 country-specific websites, and has expanded product offerings to include almost anything a shopper might be looking for. They have developed their own products, like the Kindle reader and Echo/Alexa digital home assistant, and now, with the acquisition of Whole Foods grocery stores, Amazon operates physical "brick-and- mortar" stores. Amazon uses the expertise it has developed along the way to serve other online retailers by hosting their stores and also by offering other tech services. Amazon's online business model has transformed how people shop, which has impacted the retail industry. Malls and brick-and-mortar stores have struggled to match Amazon's prices, selection, and convenience. Exhibit shows the stock market's reaction to retail's struggles: Amazon's share price has soared even as shares of stores such as Macy's and Best Buy have lost value.How have traditional brick-and-mortar retailers adjusted their strategies and objectives in response to changing customer shopping habits? Clothing retailers like Macy's have had to adopt defensive strategies by lowering prices, reducing the number of locations, and expanding their own online sales capabilities. Big-box stores like Best Buy, in an effort to sustain their business, have fought back against "showrooming," the process that occurs when a customer visits a brick-and-mortar store to check out a product in person and then goes home to order it online. To combat this practice, big-box stores offer installation services and price match the online retailers. The transformation of the retail industry has hurt some stores, like Macy's, whose share price has declined as they shrink their operations in order to try to survive. Best Buy, on the other hand, is trying to adapt by choosing defensive actions that will maintain their operations. Best Buy has had some success in figuring out how to attract buyers in the era of online retail, and market investors have approved their actions, as shown in their share price increases. Will these retailers survive over the long term? It's hard to say. Macy's and JCPenney have announced that they are closing stores, and Sears recently filed for bankruptcy. Analysts have predicted the death of Best Buy for years and still think that over the long term, physical retail stores are going to have to become service providers to differentiate themselves from product retailers like Amazon. For example, in 2002, Best Buy acquired Geek Squad, a computer repair company, in order to provide in-home computer repair services