This isnt about an online behemoth acquiring a struggling high-end grocery store. Its about altering our relationship with shopping in an entirely new way.
5-Jul-17 Im not sure that in the last year or, honestly, in the last decade or two, there has been a single deal that will be regarded as a more impactful transaction across multiple industries and the entire omni-channel economy than Amazons recently announced acquisition of Whole Foods.
Apart from one of the Detroit Three auto guys or Daimler buying Tesla, its unlikely there will be another deal of this game-changing magnitude. So many of the other deals being discussed are so-what stories at best and, as I always say, two warm cups of coffee dont make a hot drink.
So, I wouldnt waste a lot of time or breath on whats next. The question today for grocery chains and independent markets across the country and, frankly, for all retailers is, what do we do now?
Believe me when I tell you this isnt just a concern for the guys who sell cantaloupes and kumquats. In case it escaped anyones attention, Amazon is well on its way to becoming the nations largest apparel merchant as well and thats even before the rollout of its just-announced Prime Wardrobe business, which provides an at-home, try-it-before-you-buy-it, clothing service. And because its Amazon, the new offering comes with a special and very appealing little twist the more of the ordered and inspected items you decide to buy, the cheaper the whole order will be for you.
I like how this bundle-before-you-buy incentive approach has you mentally accumulating and acquiring more and more things in your head before they even arrive on your doorstop.
(Left) Butchers at Whole Foods Market in Plymouth Meeting, Pennsylvania. Photo by Kate Medley.
I dont have any special sauce or secret solutions for the nations merchants, but if I were going to start trying to plan my increasingly bleak future, Id want to be sure that I at least understood all the dimensions of the deal and all the different levers this acquisition affords Amazon. My sense of the general media coverage has been that its a little long on hype and hysteria and light on helpful information and analysis.
So, I thought it would be useful to try to briefly outline the three very distinct legs of the strategic stool and how each element enhances and extends Amazons position in the marketplace...
Yes, the Whole Foods deal is an aggressive bump. More than 425 stores will remain, at least for a while, and these stores can serve as delivery depots and mini-warehouses in Amazons distribution channels as well. (Granted, Whole Foods systems are almost certainly not up to Amazons performance levels or expectations.)
They are highly concentrated in upscale areas and, as a result, provide access to an enormous number of exactly the kind of customers Amazon loves right along with their disposable income. Almost half the United States population that matters probably not a politically correct thing to say is within a hop, skip, and a jump of a Whole Foods Market.
And not merely for groceries. The much more salient point is that Whole Foods gives Amazon ready access to affluent parts of the population. Whole Foods stores arent uniformly spread across the country.
(Right) Whole Foods Market in Rockville, Maryland.
Shopping for our groceries, especially staples and commodity products, is basically a chore, and the less of it we must do, the happier well all be. Theres a reason that we now spend more on food outside of the home than inside. No one needs to go anywhere anymore to replenish the basics that they buy repeatedly.
As their systems get smarter and smarter, we wont even have to press the Dash buttons any longer. They will know when were about to run out and we wont have to run out any longer.
||We estimate that 70 percent of what you purchase each week at the grocery store is the same old stuff. So why wouldnt you have it automatically shipped, for free of course, by Amazon to your door? They spoiled us with a single click solution a long time ago and now were moving toward no clicks at all.
Even more compelling from a getting to know us standpoint is the fact that about 60 percent of current Whole Foods customers are already Amazon Prime members. The cross-selling opportunities and the data-driven incentive plays are off the charts. Prime members are already princes and princesses online and in the Amazon stores which is to say they pay less for just about everything and its only going to accelerate as they are increasingly identified and linked while theyre in the Whole Foods markets. Special pricing, coupons and rebates on your phone, deliveries that beat you back to your burrow, etc. Its going to be a whole new level of omni-channel communication and its going to make shopping elsewhere a complete time-wasting drag.
They turned the mundane into the magnificent and made it fun once more to go to the store. Costco may have figured out how to get dads back into the stores tech, tools, and TVs but Whole Foods made it fun for the whole family.
|And its not simply the productivity and efficiency savings that will make the new shopping experiences so special. Remember that it was the guys from Whole Foods who changed the entire supermarket experience for the better in the first place.
Hopefully, this is an area where the general Bezos bloodletting ethos wont overdo it. Save me money for sure, but dont turn the place into an Aldi, where you feel like youve gone colorblind because every generic package looks like the joy and the excitement were drained before the products ever hit the shelves.
The good news is that the opportunities in the stores are so additive and important from an experience, repeated trial and data standpoint to Amazons ever-increasing accumulation of behavioral information and ultimate objective of knowing everything about us that I think theyll leave things alone for a while.
Having 425+ living labs to try a little bit of everything must bring the purest joy to Jeffs little beating heart. And, if he drives the crazy Whole Paycheck prices down to some realistic level over time, Im sure none of us is going to be unhappy either.
Images obtained from Whole Foods Market and Amazon.com.