Amazon and Whole Foods: Two Great Tastes that Taste Great Together
With the $13.7 Billion purchase of Whole Foods, Amazon just changed the game, again. This time it is big food that should be scared.
The world’s most customer-centric company just solved a huge problem with the purchase of the struggling Whole Foods. Now these retail spaces located in the fancy parts of town can become food distribution centers for Amazon’s grocery customers. Whole Foods private labels now belong to Amazon. For the struggling conventional brands, this should be bad news.
So what are the strategies retailers and big brands should adopt to battle Amazon? First off, if they aren’t innovating on behalf of their customer, they should start.
Customer Experience Design
The basic grocery store layout hasn’t changed much in years. Milk and eggs are always at the back of the store to force shoppers past aisles and aisles of stuff that was not on their lists. That may have worked for previous generations, but milk and eggs are not the staples in every home that they once were. The big brands pay big money for placement and have monopolized the grocery aisles — so much so that smaller independent brands have a nearly impossible task of acquiring shelf space. But Whole Foods doesn’t carry conventional brands, which was one reason why they were a desirable place to shop in the first place.
Convenience
Lots of grocery chains have already adopted Click and Collect and local delivery with varying degrees of success. Amazon Whole Foods now opens the door for consumers to get locally sourced, organic whole foods to their tables in less than an hour with Amazon Prime Now. Increasing selection available for delivery is key for grocery store chains.
Agility
The big brands have difficulty with Amazon’s platform in general because the algorithm rewards products that are in stock. The big players have supply chains that are geared and optimized for grocery stores. They employ hundreds of folks to merchandise their products on the shelves. However, their marketing spend for in-store displays still dwarf that of online content marketing or any kind of eCommerce optimization. It is almost as though these brands thought that the Internet was some sort of fad that would die out eventually.
Customer Centricity
The products for these conventional brands are also not as appealing to today’s label readers. These ingredients are front and center when you look up a product on Amazon’s platform. Very few of these monster brands are innovating their products to make them more palatable to a savvier consumer. This could hurt them in the long run.
Overall, grocery stores can adapt and change with the times. However, it will be with, or without the big brands who have enjoyed a sweet ride for generations.
