There's one big question likely on your mind now that Amazon has rung up its largest purchase ever with the $13.7 billion acquisition of Whole Foods Market: How will CEO Jeff Bezos change my local Whole Foods store?
Just like Amazon.com's product offerings, the possibilities are limitless. Depending on how you shop, this deal could mean eventually you never have to set foot in a Whole Foods store again -- because you would order online, drive up to the store and have your groceries stuffed in the trunk, or have them delivered straight to your front door.
Or, you could make a Whole Foods your neighborhood hangout, where you come in, order a beer or glass of wine and sit down at a touchscreen display -- and open your Amazon or Whole Foods app. After inputting your grocery list, someone gathers all your goodies up while you dine on pizza or a sandwich. Maybe even test the latest Alexa-powered devices.
A COMPUTER BAR IN THE STORE?
"It can be more of an all-encompassing experience," said Karyl Leggio, a professor of finance at Loyola University’s Sellinger School of Business. "If you have a Whole Foods with a bar area you could have some computers, you could sit there and shop at Amazon and (see) some sample product they have there. That's a great extension for Amazon."
Things won't change overnight at the more than 460 Whole Foods stores, but some have already become destinations for more than organic foods. In addition to having prepared foods to go, many have morphed into full-blown restaurants -- nicknamed "grocerants" -- even with a bar serving wine and local and regional craft beers on tap.
GROCERY PICKUP CENTERS?
And Amazon has very publicly been experimenting with new ways to transform the grocery shopping experience -- from drive-up pickup of online orders to checkout line-free shopping. So it makes sense that some of those might make their way to Whole Foods stores with the online retailing giant now its parent company.
“Amazon brings capacities that were not in-house for Whole Foods, such as delivery,” said Darren Seifer, a retail and grocery analyst with NPD Group. “They could also add grocery pickup centers, Amazon’s ‘click and collect’ model."
Amazon would not comment on its vision for Whole Foods, but most of those stores represent prime real estate, in well-traveled urban and suburban areas with not only high-income shoppers, but also shoppers across a wide demographic swath. Remember, Amazon recently offered lower-priced Prime membership to shoppers who qualify for government assistance. "They are really trying to play the entire consumer base," Leggio said.
LOWER PRICES ON THE WAY?
Higher prices at Whole Foods has been a detractor for some shoppers -- in fact, it has a nasty nickname of "Whole Paycheck," meaning that shopping there takes a chunk of your salary. "Whole Foods is a great brand. That is its one negative," said Larry Light, co-author of Six Rules for Brand Revitalization and CEO of marketing consulting firm Arcature. "Amazon will make that go away."
Because of its massive buying power and shipping prowess, "Amazon will be able to implement their supply chain to bring down costs," Leggio said. "The price point will come down will go down and you will be able to order a broader range of product that you can come in and pick up."
A BETTER SELECTION?
This mashup of technology, organic food and lower prices will be a draw for millennial customers, too. "These type of offerings that are using technology can appeal to that demographic in particular," said Tuna Amobi, an equity analyst at investment research firm CFRA.
"My sense is there is going to be unique value proposition here," he said. "Amazon is not in this to be a me-too grocery."
Amazon's data-driven approach will literally transform Whole Foods entire ecosystem. A year from now, customers will be greeted with a better selection of products at lower prices and a more convenient shopping experience, says Light, who is also a former chief marketing officer for McDonald’s. "Those are all huge benefits, the same ones that helped McDonald's become the number one retail brand in the world."
BETTER CUSTOMER SERVICE?
And all the improvements won't take place inside the brick-and-mortar Whole Foods stores. Whole Foods has attempted local delivery in some markets, it has not been very successful, he says. Amazon will "bring its expertise in delivery" to the grocery chain.
Their synergies could allow them to offer widespread 1-2 hour grocery delivery, says Dan Wilkinson, chief commercial officer of product information network 1WorldSync. And Whole Foods stores could become fulfillment centers, he says. "This solves one of the biggest barriers to widespread adoption of online grocery, as products would be localized, fresh and still carry the Whole Foods seal of quality," he said.
You will likely also see expanded delivery of prepared meals, since about 20% of Whole Foods sales is made up of ready-to-eat food, says Brad Stone, technology reporter for Bloomberg and Businessweek and author of The Everything Store: Jeff Bezos and the Age of Amazon. "You can see Amazon using the last mile to expedite the delivery of meals to the home (to) compete with UberEats, DoorDash and GrubHub," he said.
Watch for Whole Foods stores to deploy cashier-free shopping in some stores, as it has in Amazon Go test store in Seattle, Stone says. "You go and (the stores' systems) sense when you lift things off the shelf. So you can reduce the head count at Whole Foods and use the savings to drive prices down."
That will also improve customer service as it will free employees from mundane cashiering tasks, he says.
Whatever the future holds for the Amazon-Whole Foods pairing, you can be sure any developments are thoroughly vetted, says Light. "(Amazon founder CEO) Jeff Bezos is passionately driven by an insane focus on the customer and he makes his decisions based on data and implements them through superior technology, all of which will help Whole Foods appeal to a larger audience and strengthen the loyalty with its (current) audience," he said. "If I was a competitor of Whole Foods, I would be scared. This is a brilliant marriage."
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