Whole Foods - Becoming Amazon'ified (5 June 2018) [2]
5 June 2018
A complimentary email on Whole Foods and Amazon from Grocery Insight, mirroring one sent to our subscribers earlier today.
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The most intriguing thing in recent times is analysts who for years, have peddled the tale about stores being over, finished and time to pack up and move online.
As we're store focused at Grocery Insight, we knew it was a shocking theory, peddled by analysts who would rather sit and surf a website rather than actually visit a shop or two.
However since Amazon bought Whole Foods, the sentiment has changed entirely and we're being told over and over about evolution of the store format and 'future' thinking.
The challenge is that many of these 'advisory' professionals don't then have the first clue on how to deliver it. They think a few click / collect points but the same dreadful store experience mean they're solving that issue.
See Mothercare as a great example of this theory.
Thanks to Amazon buying Whole Foods; the physical store is now in vogue and popular once more.
We know that stores to have to change; they have changed frequently if we consider the mere element of space allocation.
Free From is a good example, that category has grown significantly and therefore has seen a space growth to accommodate the extra lines.
Change is everywhere in retail, Amazon taking Whole Foods has been an example of change, with the concern for Amazon coming in and reducing everything to near zero in Whole Foods, thus decimating the industry.
Jesting aside, they did immediately cut a number of prices on key items (meaning other lines looked even higher in price) and also adding Amazon displays for Echo and the like.
Beyond that, it's been broadly a slow burner for Amazon as they build their plans. They have dropped numerous Lockers in to stores which immediately expands their reach in the US.
The links with Prime have been slow to arrive but the intent from Amazon now looks clear, with large savings for customers who are Prime members, shopping in Whole Foods and using their App / can give their phone number at the registers.
The interesting question is does Amazon think it will grow Prime members by adopting this strategy, or is the intention to further reward Prime members whilst enticing existing members who shop elsewhere, in to the Amazon eco system?
"Any Prime deals on at all mate?"
Just a few around the store(!)
The signage was bold, both at the doorway and on ends / specific displays to highlight savings and encourage customers to save.
The signage was well executed I felt, nice tone of voice and good personalisation, a hint on how they would progress the scheme perhaps?
More personalisation seems inevitable once they can see regular purchase history, using the data to target customers with deals on products they buy.
The use of "today's deals" is good in the foyer, a feeling that deals change, which they do, weekly.
Raspberries were strongly priced for a customer using Prime, $2.50 per pack. For a non Prime customer, a mere $6.99...
That's the issue with a structured deal like this, the challenge comes in that other retailers, such as Walmart allow everyone to save. There is no need to download an app, or provide a phone number.
It feels a bit 'hi/lo' and it's hard to see how this would encourage further purchases. It may encourage cherry picking of the Prime deals at Whole Foods, then the same trip to another retailer for the full shop.
The prices remain stubbornly high on other items, despite their price cuts and the range is still too narrow and health focused perhaps. Despite their origins and focus on health and organics, increasingly, 'conventional' lines are appearing regularly across the store.
Whilst not good for the Whole Foods evangelists; it does widen the appeal for the chain to other customers, especially when combined with the Prime deals too.
A decent deal here; however what if the customer doesn't want two packs?
It still feels hard work to shop at Whole Foods, you have to remember to take a further 10% off any 'specials' in the aisles as a prime customer.
The question could be, why not just reduce the prices by a further 5% for everyone? Who are Amazon/WFM trying to incentivise?
Changes are afoot in this Whole Foods, one store is not representative of the chain at all, but it's enough to go on...
The former Pizza area was serve over, where colleagues would serve, warm slices and create larger Pizza's if necessary.
This has changed to a self service operation now Pizza was cooling, the 2 for $6 deal was effective and pre built / labelled boxes were good too.
Availability issues were also noted, this is not a common challenge for Whole Foods either.... However there were some categories that were hard hit in terms of gaps - Cookies (Free From) were on deal and the shelves were near empty.
Alongside this fixture which had a number of 'new' lines that had not arrived in store.
It will be interesting to see what further changes are afoot for Whole Foods; it's intriguing that this location in Orlando is to get a 'self service juice' area.
Currently that's a manned operation with various Smoothies and Juices freshly made. Will that remain too?
Or will it move towards self service?
Amazon are changing elements of the Whole Foods operation, there is far more to come, I'm sure. However more 'hi/lo' promotions don't feel like they're a long term play on their own.
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From the Grocery Insight newsletter archive, first sent to subscribers on 5 June 2018. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.