What will the impact be of Amazon buying Whole Foods?
The retail industry was sent into pandemonium last month after the announcement that Amazon is acquiring Wholefoods for a cool $13.7billion. Just the latest in its ongoing diversification and expansion of its plethora of services, this move will inevitably strengthen its arsenal and solidify its place in the grocery sector.
Even though Amazon is first and foremost an online first retailer, this deal is clearly a testament to the fact that shoppers still want a physical experience with retailers, and this caters perfectly to that. In fact, our recent study The Forgotten Shop Floor found that 49% of shoppers are still drawn to physical stores for browsing and purchasing products.
It is also a shrewd move from Amazon to acquire a well-respected grocer with a strong physical presence and loyalty base already, as it means they will already have a strong customer following. It will be interesting to see how they move the brand forward into the digital age. Perhaps Amazon will incorporate its Amazon Go concept into Wholefoods, creating a fluid shopping experience?
Amazon Go would have been potentially more challenging to roll out at scale as they were limited by their physical footprint. However, with this acquisition, Amazon will now have hundreds of stores across the world which they can implement the new queue-less way of shopping in.
As consumers want to be able to shop with flexibility – sometimes online, sometimes in-store – and expect the experience to be seamless regardless of the channel they choose, this new deal caters to that need, marrying Amazon’s online expertise with Wholefood’s physical presence. This is where retailers need to find ways to match it and ensure they are differentiating themselves from their competitors.
Our study also emphasised that 8-in-10 consumers would spend more with retailers that have a better technology offering, which means that whilst high street stores hold greater opportunities than ever, those unwilling to embrace technological advancements will not reap the rewards.
Retailers need to take note of this deal and ensure that they too are providing their customers with the relevant channels for their shopping needs and not run the risk of freezing out customers for failing to do so.
Want to read more about grocery? Check out my post on what retailers can learn from Sainsbury’s and Argos’ collaborative efforts