Loyalty Truth

7 Possible Outcomes from the Amazon, Whole Foods Deal That You Should Know

The media had a “stop-the-presses” moment this week with the news of Amazon’s purchase of Whole Foods. To be sure, this is a momentous announcement in the retail world, and we think the ripples will extend far beyond the grocery pond.
As you can imagine with an announcement of this magnitude, industry pundits are spooling up their prognostications at a frenzied pace, and they are just getting started. We’ve identified 7 things that you should know about this deal, and share them in hopes that you will more easily draw your own conclusions about what this acquisition will mean to retailers, grocers, and consumers.

Here are our “Magnificent 7″ insights into the Amazon / Whole Foods deal:

1. Amazon has nailed the “last mile” of the customer journey.
Although they’ve dominated the online space for some time now, Amazon has now found a way (purchased a way) into the last step in the customer journey. Of all Amazon’s strategic acquisitions, this one actually brings them face-to-face with their customers.

2. Amazon finally has a viable bricks & mortar outlet for some of its merchandise.
Amazon’s experiments with physical stores could come to an end. The online behemoth had opened almost 30 pop-up stores in malls across 15 states as of Q1 2017. Rather than continue that experiment, Amazon can use Whole Foods as a channel to bring other category products to market. This evolution could broaden & redefine what the Whole Foods brand represents to consumers, while stimulating more footfall across the Whole Foods chain.

3. Whole Foods will be fundamentally redefined from grocer to retailer.
Don’t believe folks who suggest that Whole Foods stores won’t look much different after the sale. Amazon’s distribution capabilities will help to shed the “Whole Paycheck” moniker that has weighed heavily over the brand, and merchandising Amazon products through their stores will spark new reasons for consumers to stop in to Whole Foods more often.

4. The siege on traditional grocers just reached DEFCON 1.
Kroger, Walmart and others are already engaged in a vicious price war to defend their respective market share. German based grocery LIDL has announced plans to open up to 100 stores in the US over the next 18 months. There are few organizations with enough financial muscle to make a move to match the Whole Foods acquisition, therefore there are no quick responses available to Amazon competitors. The battle for grocery supremacy just became more intense, with higher consequences for all.

5. Amazon just got one step closer to becoming a true daily habit.
Even if you’re not a habitual Amazon-er, the acquisition of Whole Foods gives Amazon a whole new series of consumer touch points – each with unique nuances, frequencies and attendant opportunities to leverage consumer data.

6. Could this mean the democratization of healthy eating?
Beyond the potential bottom line effects of Amazon’s purchase, if Whole Foods lowers its prices, it could bring a whole new strata of consumer into its stores. Will middle-income America be washing down a nice combo of Swiss Chard and Kale with a Kombucha tea this time next year?

7. With the immediate stock pop for Amazon, was the Whole Foods purchase ($13.7 Billion) effectively “free”?
Looking beyond the impact on grocery and retail sectors, the acquisition was a brilliant corporate finance move that seems to have already recovered its cost. While this isn’t necessarily a prediction of any sort, it bears noting nonetheless. When the uptick in corporate capitalization following the announcement is enough to cover the $13.7 Billion dollar purchase, you have to give an extra tip of the hat to Jeff Bezos and team.

We will continue to watch the progression of developments from this new union. If nothing else, as the Amazon / Whole Foods relationship matures it will be interesting to look back on the early predictions and see what actually forms up.

Most Popular

To Top

Subscribe To Our Newsletter

Join our mailing list for the latest customer loyalty news, research and updates.

You have Successfully Subscribed!