Amazon announced yesterday that its shakeup of Whole Foods Market will begin this coming Monday, August 28, on its first day as the new owner. Bezos and team understand that with all eyes on them, this is their first, best, and cheapest opportunity to drive home what the new sheriff in town is all about – and as a result they announced 2 major, audacious changes to WFM. The first change confirms what everyone has suspected: Whole Foods will sell groceries via Amazon, and Amazon will deliver groceries via Whole Foods. Not merely “either”, “or”, or “both”, but something synergistically bigger than the sum of the parts. Boom. And the other audacious change is that Whole Foods’ new mission is to make healthy and organic food “affordable for everyone.” Price cuts starting Monday. Double boom. Wow, what a ride. It’s safe to say that virtually everyone in our industry is on the edge of their seat, watching this spectacle unfold. The question is, what are we watching? When I was a young lad, a mentor of mine said,
There are 3 kinds of people: Those who make things happen, those who watch things happen, and those who wonder, “What happened?”I would argue that today, it is more important than ever for us to strive to be the ones who make things happen – because in today’s hyper-competitive market the other 2 types of folks won’t be around next year. Are you one of those currently watching this happen, and wondering what you can do to be proactive (as opposed to helpless) in the face of these seismic shifts? If yes, you’re not alone. But we’ve got you covered. In our first post on the Amazon Whole Foods merger, we outlined some of its major strategic implications, gave a few proactive steps that brands could take, and advised to take action or be left behind. If you haven’t read that post, we encourage you to now, as we are already seeing many of the predictions from that post coming into existence. Today, we have a new observation and prediction to make.
Trampled Under FootWe predict that Whole Foods’ same-store performance is going to disruptively, discontinuously shift upward, at a breakneck speed. Not spike, but shift. Why? Because, as we pointed out in our last post, virtually overnight over 400 locations of Whole Foods will become Amazon distribution centers. This has implications far beyond the cost savings that Amazon will experience from being able to distribute more conveniently to their Amazon Prime customers. As quickly as the Amazon marketing juggernaut can arrange it, people will start flocking to their local WFM pickup locker… where they are likely to say, “What the heck, let’s take a walk through the store while we’re there.” This phenomenon will have 3 follow-on implications:
- Amazon (Prime) will gain customers who might not have thought they could afford WFM products, while WFM will benefit even more from Amazon Prime’s massive and growing influence with mid-to-high income households and Millennials.
- Brands who are doing great in-store marketing will have a chance to pick up mindshare and shopping cart from the increased foot traffic.
- If Amazon can articulate and “own” a new grocery “buy-style” (perhaps, “Order your non-perishables online, and pick them up when you come to touch-shop for your fresh items!”), they will also probably be able to secure a larger market share longer term.