Amazon’s Whole Foods acquisition shows brick-and-mortar and online retailing can help strengthen each other when brought together.
By Ed Collupy
With what seems like the click of the mouse, Amazon has made its entry into the physical retail store world with its planned acquisition of Whole Foods. This didn’t come as a big surprise to me, as both companies have had their pressures.
For Whole Foods, those pressures have come from investors, similar to what we’ve seen in the Convenience/Petro retail vertical that has led to acquisitions. Amazon has had reported pressures on delivery costs impacting overall profitability, and Whole Foods gives them 400+ new outlets for pick-up.
At the core of the Amazon / Whole Foods announcement is reinforcement of a belief I’ve long held and discussed with other retailers—the store is not dead and online retailing will not kill the store. Sure, there are many examples of brick and mortar stores closing—I was at one just the other day (Eastern Mountain Sports)—but to me the core of the announcement is the continued transformation towards bringing the best of both worlds together. The so called “unified commerce or omnichannel challenge” is best seen when looking at the separate parts and can be best improved when each are brought together, not in a technical way, but more importantly in a way that will make the customer experience superb, and I believe that is what Amazon, in particular, realizes and is seizing upon.
For example, you can’t sell fresh any better way than with the colorful displays of produce or seeing daily delivered fish from ocean piers on a bed of ice. I saw this and more a few weeks back in Vancouver at the Granville Island Public Market; you almost couldn’t move around the ‘store’ it was so jam packed with people wanting the experience of seeing, touching, smelling, talking & listening – all that can only happen with an in-store experience.
Stores are also needed because there are flaws in the online delivery and return process. I had a gift ordered last week from Amazon in time to bring to someone over the weekend but found out once it was delivered that it was the wrong color. I began the return process only to find out that the replacement wouldn’t be here in time. Off to the store I went to have a gift in hand.
The deal will allow Amazon and Whole Foods many opportunities but none better than learning, refining, and executing on a great customer journey based on the experiences of the many personas that make up their shared customers. Added consumer insights is a clear outcome of the two coming together. Amazon’s Prime customer is similar to the Whole Foods customer, so the opportunity to grow both businesses from what makes customers tick within each “channel” will drive refining both customer experiences. Whole Foods has a strong private-label offering, and Amazon will learn more about that. Amazon has technology plays in motion such as with Amazon Go, and we can bet on more to follow—so they will have more places to test part of or full concepts.
Amazon is clearly becoming a new brick/mortar competitor for those in the grocery and convenience store space. Retail information technology initiatives typically lag at many grocers and c-stores are then often follow-ons. As Amazon plays out its new insights, one area grocers will need to step up their efforts is with their online order & pickup / delivery plans while c-stores will need to get better positioned in this area.
Execution on available and innovative technologies, further retail consolidation, and turning data already in hand into actionable customer experience insights are among the contenders for the types of ‘clicks’ brick and mortar retailers will be taking to respond.
Ed Collupy, executive consultant at W. Capra Consulting Group can be reached at email@example.com. Collupy has IT leadership and business team experience directing and supporting retail systems for store operations, merchandising, fuel and accounting teams in the C-Store industry.