I think there are a lot of situations where brick and mortar will survive. Look at Autozone for example (quote from CEO):
Quote:
Also, we're helping them with a lot of the transactions. Again the return rates on DIY are pretty high. They're low double digit. Just people buy the wrong part, they don't know what they're buying, their car is making a noise, they think it's the shock and it comes out to be the control arm. They need help installing the parts. We've got 150 tools in the back of our stores that we will loan to a customer free of charge, helps them facilitate the job.
When you go to buy an alternator or a set of brakes or whatever, there is all these different things that you need to know to get the right part. Our AutoZoners walk outside and help people determine what those are. They look at the alternator and say okay, that's a 95 amp Bosch alternator or that's 110 amp Delco. We help people facilitate all those conversations, and it's very difficult to do that over the web. Will Amazon figure some of that stuff out? Sure, probably. But it's a much different interaction. We do check engine lights.
I akin Amazon to very similar to Walmart. We've been competing with Walmart in the automotive industry for 30 years. At the end of the day, Walmart sells a lot of the product that we sell in the front of our stores at a cheaper price. Go shop them, you're going to find some pretty big savings. Light bulbs are a good example. We sell a light bulb, the exact same brand; they can be substantially cheaper than we are but we offer a differentiated product. You'd be amazed at the share we have on light bulbs because we help people install them, we help them get the right one, we get them the bulb grease, we tell them how to install it. Where we don't have great share is where we don't differentiate, where it's hard to do that. A good example is windshield washer fluid. We really don't add a whole lot of value other than maybe we can help somebody pour it in. But it doesn't – there is not a whole lot of advice that's needed. We can't add anything, any value to washer fluid. The bulk of our products we do though. They got to have a core on an alternative or a starter or a CV shaft, those transactions are tough. We take back used oil. Some of these products can't be put on a plane because of aerosols and things like that. So, it's just a different customer and it's a tougher transaction.
But Healthfoods is probably not one of them.
That said I am hesitant to pull trigger on AZO since electric cars will wipe the floor with them. Would be interesting to run some models with different adoption rates and see how they are affected.
