A MARKETERS OPINION OF THE AMAZON/ WHOLE FOODS ACQUISITION
Thoughts from a point of purchase display manufacturer
GOOD FOR CONSUMERS?
No doubt this is the big question as it will affect the fate of the brands, and the future of how this type of shopping will progress, and what the benefits to the consumer are.
It appears that the choice of Whole Foods as an acquisition has primarily to do with it being the smallest buy in chain grocery world, and that they have some problems. This enabled Amazon to acquire it at a mere 25% premium. Not bad for a brand that has cache. I would say a good fit.
The major grocers are having poor results, and have problems they are seeking to solve based on peoples tastes these days. Some of which are emulations of Whole Foods guiding philosophy (i.e. Organic products) and others are concerns with operating overhead and modernization.
This sounds like a broken record as Amazon is largely responsible for the slate of bankruptcies in retail this year, and the year is just past midway.
The Amazon customer is a Millennial by and large. So understanding their consumer is primary to marketing efficacy. Their consumer does not want to shop (spend their time) in the major retail stores. Look at the state of affairs for what used to be the Big Eight retailers, and the big Department stores. There is one remaining Sears store in Chicago, Macys is closing stores, etc. Sad but now an old story that we all have heard, and many of us have suffered alongside of. Mid level restaurants, and movie theatres are suffering….the world has changed and we must view the future and look at our products to see that we fit in accordingly.
We all know that online is enormously successful and it satisfies their consumer with fast deliveries and no nonsense customer service. Thus good for consumers. Their Prime Food business needs improvement. The acquisition is a multi-level approach to gaining that improvement, and satisfying the customer is what they are all about as they continue to gain market share.
WHAT IS THE NEW GROCERY….ONLINE OR BRICK AND MORTAR?
It appears to me it will be both. With this acquisition, Amazon will see an uptick in their Prime business as customers will know that their food is coming from Whole Foods. Right now they have no clue, and thus, it is questionable.
On the brick and mortar side it appears that they will thrive bringing electronic checkouts to the stores for example, as well as expanding their in house restaurant area.
They are currently working on a pilot store that utilizes a unique check out system. A customer comes into the store by swiping a credit card. They shop and as they load their cart it is electronically reading and creating their grocery checkout. It charges their card and off they go. More focus on stocking shelves and instore customer service. No more cashier staff to stand in line to wait for….nice. For Amazon its less staff to deal with and lower overhead as a result. That is a major item for grocers! Good for consumers? I think so. Does it decrease the Whole Foods concept of Take the Whole Paycheck? I think not.
So brick and mortar will stay, and the competition will need to keep up to stay or to find profitability again. They need us to help them market in a way that fits in with where the world has progressed to.
RESTAURANTS IN GROCERY STORES?
You bet! My local Whole Foods restaurant is buzzing at lunch and dinner times. Their customers have a daily selection and a full bar with excellent craft beers and liquors. No reservations and can spill out to the handy window seating if they choose or cant find a seat. Staff is young and cool, and you feel as if you could not possibly have fresher food served to you…straight off the shelves, into their kitchen, and on your table. It’s a place to be, a cool place to connect, and comfortable for an ipad or laptop with your food or drink, or watch the big screens.
Good for consumers? Sure enough.
In the world of restaurants, fast food and upscale independents are winning. The middle road is crowded with failures and soon to fail businesses. The Chilis, Fridays et al are dinosaurs. They are dull and boring in both menu and environment. Wouldn’t want to own their stock. And I doubt they can change their stripes. They are just different animals.
SO HOW ABOUT IN STORE MARKETING?
The world of electronic innovation is key to success for marketing and for cross marketing. For marketers it is evolve or die. Constant improvement and creative thought is essential to survival. Brands and retailers will continue to demand that you deliver smart products that work and are attractive to today’s consumer.
I will offer more thoughts on in store marketing on another blog I plan to send, including some specific approaches to staying in the mix, and moving forward.
In general I think marketers will have lots to do, and I don’t think any of this indicates a dire future for those who pay attention. Brands are super aware of the need for innovation, and the outlets for their products need to share in their wisdom. Many are doing so. Wish you bought Amazon stock at $90?
Good luck out there.
WILD AUGUST LLC
Wild August has 10 patents worldwide and is proficient in sensory marketing at the POP level.
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