The problem with Whole Foods
10 September 2018
It's well over a year since Amazon took Whole Foods in a surprising move, with the doom mongers post the news predicting that all rival shops would be closed within two years, there was no point in even keeping the doors open in competing London stores, such will be the dominance of Amazon / Whole Foods.
As ever, it hasn't really worked out like that. It's a difficult situation to adjudicate in terms of success as the rationale for Amazon buying Whole Foods was not particularly clear, given the large chasm between the two businesses.
Whole Foods are famous for health focused shopping, organics and general wellbeing, alongside being incredibly expensive versus other rivals.
Amazon sell everything, are moving in to more and more channels and have numerous successful businesses in other areas, such as AWS web hosting for example. Incredibly focused on price and delighting the customer.
Amazon online and Whole Foods predominantly offline with stores of course, therefore it did look easier to convert shopping from Whole Foods on to the Amazon platform, particularly with health.
Amazon presumably could bring some expertise to the online operations that Whole Foods have.... But again, getting to any sort of scale would be difficult and take time.
But what have Amazon brought to the party in the US since their takeover? Are there signs of a more mainstream offer coming through?
Well, there is new signage but this is unclear whether it's the Amazon effect or something Whole Foods were going to do anyway.
The problem with Prime deals is that offer 10% off the promoted items alongside these stunt deals (each week) doesn't really help the overall basket size.
Indeed, such a strategy (minus Prime granted) crippled Safeway (UK) as customers started cherry picking the big deals each week then disappeared off to do the rest of their shopping elsewhere.
If the aim is to grow Prime membership and the links with Whole Foods, then that's fair. But one would anticipate that the customers shopping in Whole Foods would have Prime membership?
If it's a driver towards Prime membership and the Amazon eco system then fair enough but the stunt deals are not enough for customers to convert more shopping across to the chain. There remains work to do in this regard.
Around the store, the activation for Prime is clear and consistent with the branding standing out well. They often target Grapes and other Produce alongside big price cuts on other items.
However the conversion rate post deal for these items would be interesting, it's easy to grow sales on promoted items, selling $10 for $5 etc.
But longer term value generation remains unclear.
The signage has changed around the store too post Amazon, whether it's due to Amazon or the Whole Foods plan is unclear. However it's a clearer message and the font/design is almost Target in its approach.
Their focus on local remains too, however there is less and less sign written signage - with the standard printed signage.
File that one under the Amazon impact(!) A display on wheels featured the various Amazon products in a rather amateur way truth be told.
There isn't a great deal of focus on the display itself which was surprising, what's the point?
It is New York City admittedly (although one would imagine these would be popular?) but further thought needs to be made over the integration of Amazon products and the wider world of Whole Foods.
Amazon lockers for the win(!) This was sat in the foyer and naturally would enable the customers to utilise the locker to obtain their parcels.
A valued footfall driver and the acquisition of Whole Foods is worthwhile for the locker locations alone (not quite!)
However the progression of the wider offer is unclear, certainly the distance of travel feels a little more positive but the integration of Whole Foods to the Amazon world is still largely hazy.
However, it's difficult to adjudicate progress when we didn't know what to expect, nor do we realistically know what the wider plan may be....
It hasn't resulted in retail armageddon just yet though.......
From the Grocery Insight newsletter archive, first sent to subscribers on 10 September 2018. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.