A Branding Thought re: Amazon/Whole Foods

Scott Boyages
Aug 28, 2017 · 2 min read

The news that Amazon will cut prices as part of its official Whole Foods roll out has me wondering what lies ahead for the Whole Foods brand. Throughout its 37 year history, the grocery chain has become synonymous with healthy foods that don’t contain artificial preservatives, colors or flavors.

It has also earned the nickname ‘Whole Paycheck’ due to its higher prices (compared to other grocery chains) — not to mention its accompanying high profit margins. But the chain has been immensely successful, has earned a very loyal customer following and has owned the niche of ‘groceries for the the health conscious’ for decades.

If we look at one of Amazon’s most notable acquisitions to date — the online shoe retailer Zappos — they allowed Zappos to both maintain its identity and operate independently from the parent company. The Zappos brand not only remains intact, it’s probably stronger than ever.

Yet I wonder whether Amazon follows that same game plan with Whole Foods? Price cutting is not what Whole Foods has ever been about. Its customers pay a premium for what’s perceived as better quality food and have never seemed to mind. Judging by the success that Whole Foods has achieved, its client base seems to be fine with paying more to get more.

The move to cut prices appears to be aimed at getting more people to try out Whole Foods. But it seems to me that there could be some unintended consequences. Will Whole Foods existing clients embrace the lower costs - or could the move backfire and turn off their core client base due because the perception of purchasing a premium line of products erodes over time?

Looking at this from the outside, I question whether this move to slash prices may wind up seriously damaging — or completely destroying — the Whole Foods brand. After all there’s plenty of competition in that that space, especially from the likes of Kroger, Trader Joe’s and Sprouts Farmer’s Markets.

Grocery chain stocks plummeted the day Amazon bought Whole Foods with the fear being that once Jeff Bezos’ online behemoth sets its sights on an industry, it’s only a matter of time before they dominate it and send their competitors packing.

And that may well be Amazon’s end-game here. However, when they bought Whole Foods, Amazon acquired the dominant brand in healthy groceries.

Moving so quickly to cut prices to me dismisses a big part of what the Whole Foods brand entails and is the equivalent of tossing it aside in favor of other objectives.

It’s going to be real interesting to see how this plays out over time.

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