Grocers facing a united Amazon-Whole Foods must adapt

Claudine Rigal
Juin 20, 2017

Walmart, which has the largest share of the USA food market, has already been pushing harder into e-commerce to build on strength in its stores and groceries.

Bug fixes, plus nighty nighty to Apple Watch and iOS 9 support. "We suspect the AMZN-WFM combination could introduce urgency into retailers' technology investments", wrote in a new note.

Other deals could follow the Amazon-Whole Foods announcement, with Credit Suisse analysts saying that mergers represent "the path to survival". The all-cash deal will see Amazon take a major step forward in its mission to break into the world of traditional retailing, with investors hailing the deal as potentially game-changing for the industry. Food and CPG manufacturers will now need to work more closely with Amazon and leverage their assets, including product innovation, sales/marketing, loyal customers, owned media, etc., and partner with all retailers in their initiatives to drive compelling shopping experience. "I'm shopping here anyways", shopper Alina Gura said at a Whole Foods in West Hartford, Connecticut.

Much has been said about organisations looking to prepare for Amazon's retail industry shakeup, but very little is being done. And Amazon's purchase of Whole Foods underscores the value of physical locations in offering such options. Grocery store operations are among the largest in most Walmart stores. In an email to customers, the company said it planned to maintain the same standards under Amazon, including bans on artificial flavors and colors. The technology lets people pay with smartphones without seeing a cashier or going to a checkout kiosk, which would help Amazon differentiate itself in the brick-and-mortar setting and reduce labor costs at Whole Foods stores. Whole Foods gives Amazon a tremendous amount of credibility around the quality of the food and the reputation they have with their customer base.

The company opened its first physical food store in Seattle previous year, as well as a host of Amazon Books stores. In March 2017, Amazon began delivering beer and wine in Cincinnati and Columbus, Ohio through its Prime Now program with plans to expand this service to additional markets.

It is doubtful that beer distribution was the driving force behind the acquisition of Whole Foods, but it will have a material impact on the industry and the relationship between the three tiers.

Whole Foods now has 431 stores nationwide ― and it is a beloved option for organic produce and local products already.

Though the price tag of Bonobos was significantly less than that of Amazon's purchase of Whole Foods, it's a move that analysts point to as Wal-Mart's strategy to compete with the Internet giant.

The deal will be seen as a further encroachment by Amazon on the United Kingdom grocery sector's turf after its delivery service Amazon Fresh, covering postcodes across London, Surrey and parts of Hampshire, was launched a year ago in a tie-up with Morrisons.

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