The National Retail Federation's selection of Bezos as retailer of the year may be the most surprising one yet when you consider the fierce rivalry between Amazon and the organization's brick-and-mortar base.
Amazon.com founder and Chief Executive Jeff Bezos has received his share of business awards lately. Fortune magazine named him its 2012 “Businessperson of the Year.” Harvard Business Review ranks him as the No. 1 living CEO.
Now comes the National Retail Federation and its so-called Gold Award.
The trade group’s selection of Bezos as retailer of the year may be the most surprising one yet when you consider the fierce rivalry between Amazon and the organization’s brick-and-mortar base.
Bezos, both admired and feared by Big Retail, will be honored Monday at the NRF’s 102nd annual convention in New York City, becoming the first Web-only merchant to win the award.
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Love or hate it, Seattle-based Amazon has what many retailers want: an edge with digital-savvy shoppers, cachet on Wall Street and a commanding lead in the fast-growing e-commerce market.
“It used to be you went to the Web to research a product and then to a store to buy it. Now we’re seeing the tables are being turned,” said Mike Gatti, senior vice president of member relations at the retail federation. “It’s a very competitive industry, and everyone’s dealing with it.”
No company has done more in the past decade to disrupt the traditional retail establishment than Amazon. It upended the book industry with its Kindle e-reader, then created a tablet for movies, games and other things sold on Amazon. The competitive implications of a mobile device designed to get people buying more from Amazon soon became terrifyingly clear.
“There’s always an industry bad guy, and right now it’s Amazon,” said Mary Ann Odegaard, a marketing professor who directs the retail management program at the University of Washington’s Bothell campus. “They’re taking sales other companies want, and they’re competing on a different basis.”
Amazon also seemed to alienate every brick-and-mortar retailer in late 2011 when it offered holiday shoppers a special discount if they used its smartphone app to compare prices in stores and then buy from Amazon instead. The move galvanized stores against Amazon and may have been the motivating factor behind subsequent decisions by Target and Walmart to stop selling Kindle devices.
What’s more, Target pledged last week to match prices year-round with Amazon, as well as the websites of Walmart, Best Buy and Toys R Us.
“A smart strategist”
Ironically, the NRF award is the one best suited to Bezos — shoppers regularly rate Amazon tops for customer service — but also something of a head-scratcher.
For years, Amazon’s reluctance to collect sales taxes from customers has angered stores that see it as an attempt to secure an unfair price advantage over local businesses. A 1992 U.S. Supreme Court decision forbids states from requiring Internet retailers to charge sales taxes unless they have a local physical presence.
Led by Walmart, the retail industry mobilized in 2011 to urge lawmakers to impose tax-collection requirements on online businesses. Since then, Amazon has begun charging taxes in California, Pennsylvania and Texas, bringing to eight the number of states where it must do so.
The NRF’s decision to honor Bezos was made by a leadership roster that reads like a Who’s Who of brick-and-mortar retailers, including the CEOs of Macy’s and Saks. The group says its Gold Award is meant for people who’ve shown creative genius, a national reputation for excellence and devotion to the retail craft.
Bezos easily fits those criteria, Gatti said. “He’s a smart strategist who’s really grown that company into a behemoth. I think he’s admired by all his peers.”
Gatti said the NRF’s choice also reflects the reality that online and offline shopping experiences are merging — meaning Amazon isn’t so different anymore.
“All the leading companies are at least multichannel,” Gatti said. “Brick-and-mortar companies have gone onto the Web, and now some Internet pure-plays are having discussions about opening stores.”
Indeed, Bezos entertained the idea of a first-ever Amazon store during a recent interview with Harvard Business Review.
“If we can find something we think customers would like — that would be different — it would be superfun to do that,” he said.
Grip on e-commerce
Amazon’s stock surged to a record-breaking $268.46 last Monday after Morgan Stanley predicted its sales would top $166 billion in 2016, up from $48.1 billion in 2011. The brokerage estimates that Amazon will capture nearly a quarter of the global e-commerce market in 2016, versus 14 percent last year.
Even so, Amazon in October posted its first quarterly loss since 2003 amid heavy spending on new warehouses and freebies like instant video streaming for its Prime membership program.
“Amazon is driving profits lower for everyone,” said industry consultant Joel Bines, managing director and co-leader of the retail practice at AlixPartners. “The trick for retailers is to look out five to 10 years, acknowledge that profits will be driven down and recognize where they want to make investments.”
One possible explanation for Amazon’s détente with Big Retail — if you can call Monday’s event that — is the company’s growth as a major provider of online services to other websites, including e-commerce operations.
But don’t expect Amazon to be singing “Kumbaya” this week or anytime soon.
Bezos made no apologies when Fortune asked him if Amazon’s price-check app was a gentlemanly thing to do. “I would broaden that to say we live in a world that is becoming more and more transparent,” he said.
Fortune called Bezos the ultimate disrupter, noting that Amazon changed the way people buy and read books, displaced electronics chains, and created a tablet worthy of a rivalry with Apple.
Bezos, 49, was asked by Harvard Business Review if he regretted the pain he’d caused traditional retailers.
“I’m just as sentimental as the next person,” Bezos replied. “I have lots of childhood memories of physical books and things like that.
“Our job at Amazon,” he added, “is to build the best customer experience we can, in every way possible, and then let customers choose where they shop.”
Monday, when the retail federation gives Bezos his award, traditional stores may find comfort in the expression, “If you can’t beat them, join them.”
Amy Martinez: 206-464-2923 or firstname.lastname@example.org