August 24, 2017 – Today Amazon announced several initiatives it will begin to execute on when it closes on its deal to acquire Whole Foods Market this coming Monday. I blogged about this just two months ago and my vision closely matches the plans Jeff Wilke, CEO of Amazon Worldwide Consumer, outlined in a statement. The blue comments, in line with my original posting, are the plans announced today that will bring the physical and digital worlds closer together. In addition, there are plans to reduce prices immediately on “a selection of best-selling staples”.
With what seems like the click of the mouse, Amazon has made their entry into the physical retail store world with their planned acquisition of Whole Foods. The deal was announced in June and is closing in less than 3 months. This didn’t come as a big surprise to me, both companies have had their pressures. Whole Foods from investors similar to what we’ve seen in the Convenience/Petro retail vertical that has led to acquisitions. Amazon has had reported pressures on delivery costs impacting overall profitability, Whole Foods gives them 400+ new outlets for pick-up.
At the core of the Amazon / Whole Foods announcement is reinforcement of a belief I’ve long held and discussed with other retailers – the store is not dead and on-line retailing will not kill the store. “Whole Foods will continue to grow its team….as it opens new stores.” Sure, there are many examples of brick and mortar stores closing – I was at one just the other day (Eastern Mountain Sports) – but to me the core of the announcement is the continued transformation towards bringing the best of both worlds together. The so called “unified commerce or omnichannel challenge” is best seen when looking at the separate parts and can be best improved when each are brought together, not in a technical way, but more importantly in a way that will make the customer experience superb and I believe that is what Amazon, in particular, realizes and is seizing upon. John Mackey, Whole Foods co-founder who will remain CEO said, “We can’t wait to start showing customers what’s possible when Whole Foods Market and Amazon innovate together.”
For example, you can’t sell fresh any better way than with the colorful displays of produce or seeing daily delivered fish from ocean piers on a bed of ice. I saw this and more a few weeks back in Vancouver at the Granville Island Public Market; you almost couldn’t move around the ‘store’ it was so jam packed with people wanting the experience of seeing, touching, smelling, talking & listening – all that can only happen with an in-store experience.
Stores are also needed because there are flaws in the on-line delivery and return process. I had a gift ordered last week from Amazon in time to bring to someone over the weekend but found out once it was delivered that it was the wrong color. I began the return process only to find out that the replacement wouldn’t be here in time. Off to the store I went to have a gift in hand. With Amazon Lockers at Whole Foods stores customer will be able to complete returns during a visit to the store.
The deal will allow Amazon and Whole Foods many opportunities but none better than learning, refining, and executing on a great customer journey based on the experiences of the many personas that make up their shared customers. Added consumer insights is a clear outcome of the two coming together. Amazon’s Prime customer is similar to Whole Foods customer so the opportunity to grow both businesses from what makes customers tick within each “channel” will drive refining both customer experiences. Tech teams at both companies are beginning to integrate Amazon Prime into Whole Foods Point of Sale system. Whole Foods has a strong Private Label offering, Amazon learns more about that. Whole Foods private label products will be available through Amzon.com & through other Amazon services. Amazon has technology plays in motion such as with Amazon Go, and we can bet on more to follow – so they will have more places to test part of or full concepts. “The two companies will invent in additional areas over time, including in merchandising and logistics.”
Amazon clearly becomes a new brick/mortar competitor for those in the grocery and convenience store space. Retail information technology initiatives typically lag at many grocers and C-Stores are then often follow-ons. As Amazon plays out their new insights, one area grocers will need to step up their efforts is with their on-line order & pickup / delivery plans while C-Stores will need to get better positioned in this area. Amazon Lockers will be available at select Whole Foods locations.
Execution on available and innovative technologies, further retail consolidation, and turning data already in hand into actionable customer experience insights are among the contenders for the types of ‘clicks’ brick and mortar retailers will be taking to respond.
Ed Collupy, executive consultant at W. Capra Consulting Group can be reached at [email protected] and be sure to visit www.capraplus.com for more retail technology and business insights. Collupy has IT leadership and business team experience directing and supporting retail systems for store operations, merchandising, fuel and accounting teams in the C-Store industry.
