Alexa, how do you spell “competition”? H y p e r -M a r k e t

Michael Buffer is the boxing ring announcer who coined his trademarked catchphrase, “Let’s get ready to rumble!” I could hear Buffer’s distinct announcing style as I read about Amazon’s repositioning pricing at Whole Foods and Wal-Mart which has teamed up with Google. Can you hear him today saying; “This is a special tag- team match between Amazon & Whole Foods in the red tights, fighting Wal-Mart & Google in the blue tights……. Let’s get ready to Rumble!”

What does the paring of these four behemoths’ mean to the rest of the retail market? When these two finish fighting, will there be anything left? Or are these announcements related to something else? In this blog, I’ll explain how these announcements are related to your business and what you need to compete in this new “Hypermarket”

Amazon.com, Inc. & Alphabet Inc (GOOGLE) are two of the world’s biggest tech companies. Their partnership with traditional “Brick and Mortar” (Wal-Mart and Whole Foods) combined with the introduction of smart speakers represents a new, more aggressive, type of competition. What makes these two partnerships so dangerous is that they link world-class, leading-edge technology with major product distribution channels. If Google can get Home right, Wal-Mart’s store based distribution means I put my money on the blue tights.

The Hypermarket links the consumer to their shopping in a subliminal way by simplifying the process, and the processes, between need, order, payment and delivery. The objective is to provide a seamless, consistent shopping experience…and kill your competition. The smart speaker is an early form of Artificial Intelligence (A.I) in the home. Either “Amazon Echo” or “Google Home” links consumers to the retailer in a new way, surpassing Smart Phone apps, TV’s, Tablets’ or PC’s. The scale of these partnerships are immense! As an example, 55% of U.S. adults start their online shopping trips on Amazon and they expect to ship 10 million Amazon Echo speakers in 2017. As for Wal-Mart and Google; well, they are Wal-Mart and Google! Apple will soon announce I-Home and we don’t know yet how it will be marketed. If retailers plan on keeping or growing their market share, competing in the Hypermarket will require new tools and offer new reasons for consumers to visit their store.

To compete, retailers will need to look to new aggressive strategies, innovative solutions and technology. Stephen Covey wrote about “Sharpening the Saw”. Sharpening the Saw is to preserve and enhance your greatest assets. Partnering with others, as these four industry leaders have done, adds speed and expertise. Competing in the Hypermarket will require each retailer to identify its own unique market position and focus on building similar partner and consumer relationships, both with operations and marketing.

“Contractual conflict”; Apple Pay and MCX, the new front in the mobile payments war.

A few years ago, while at one of the major POS annual user conferences, I had the opportunity to socialize with one of the initial members to MCX. At the time, I was with PayPal and mobile payments was more of an idea than a technology. MCX had just been announced and I was learning about the “hush hush, MCX Exclusivity” requirements. I was floored. How could that be good for either the merchant or the consumer? His answer; “They really did not care if MCX ever conducted a single transaction. If allowing Visa/MC into the mobile wallet forced lower overall fees (read cards as well) then MCX would have done its job”. When asked about how profitable CurrentC would be, Lee Scott, former CEO of Walmart said, “I don’t know that it will, and I don’t care. As long as Visa suffers”. It never seemed like much of a business plan to me.

It was all such a secret. I can’t count the number of times I heard; “The first rule of MCX is; you don’t talk about MCX”. Well, judging from the news, things appear not to have worked as planned. The veil was lifted on the MCX story when Rite Aid and CVS Health pushed aside Apple Pay and in doing so revealed a new wrinkle in the mobile payment war, contractual conflict. The notion that an exclusive MCX mobile payment solution might be a lever to force card acceptance fees down seems to have reached its apex. Are retailers willing to say no to Apple Pay? The consumer is caught in the middle.

One of the ingredients in the MCX secret sauce is the idea that retailers will adhere to an exclusive arrangement thus locking out competing payments systems in the mobile channel. As Karen Webster speculates in her 10/27 blog, MCX is likely to have told both Rite Aid and CVS “You simply can’t do it. And, the fact of the matter is that you’ve been caught two-timing with Apple Pay, and that’s clearly a violation of your contract with us.” In doing so MCX is leveraging its big stick, not its economics, product features, or consumer demand, but the strength of its legal teams and the adverse contract its members have signed. “This act by CVS and Rite Aid heralds the advent of the imminent battle in the mobile payment system,” said Anindya Ghose, a marketing and information-technology professor at New York University. Now that lines have been drawn, we will learn if MCX can drive the cost of payment down, or will its own member retailers instead chose to provide their consumers with choice. Call the lawyers.