There has been a lot written in the United States, Europe and Australia about Amazon’s purchase of US high end grocer Whole Foods.
There’s been speculation that it’s a “bridge too far”, with Amazon getting sucked into old fashioned, high fixed cost, bricks-and-mortar grocery retailing. Or is it “inspired and visionary” as it gives Amazon a 431-store US, UK and Canadian network of large and medium format high-end grocery stores to improve Amazon Prime’s delivery footprint and access to the giant US grocery sector for real?
Well I have a slightly different view. When the world’s fastest growing internet company buys a 37-year-old grocery retailer, it’s doing it to support where that acquired company is going, not where it’s been. And in the case of Amazon’s purchase of Whole Foods, it’s all about the new “Whole Foods 365” store formats and their shoppers. And for the sake of clarity, Whole Foods and Amazon talk about “shoppers”, not customers. There is no “customary” element to their business. They win and retain promiscuous and time poor shoppers one shopping experience at a time.
When I was building my “Retail Trifecta Model” of stores, staff and technology (appetising stores formats; knowledgeable and passionate store staff; and seamless technology to ease the transaction for the shopper), I walked, photographed and videoed stores and interviewed staff within the Whole Foods network in the US. I was struck by how these three areas were so consistently and excellently achieved. That excellence is even more obvious in the new Whole Foods 365 stores.
In Whole Foods 365 stores, the feel is homely, natural, and more akin to a farmer’s market, with handwritten and pseudo handwritten signage offering tastings and trials for almost everything on sale in the store. There’s lots of raw metal, stone and wood, and natural materials displaying organic produce and micro-brewery beers. It’s a place that people go to hang out while shopping. In retail parlance, it engenders a high “dwell time”. And if shoppers linger longer, they buy more.
I spoke with a passionate lady on the health and wellbeing aisle. She only worked on that aisle. She didn’t work in the wine and beer section or the fresh produce section. She was passionate and knowledgeable about vitamins, supplements and all things good for the body. She greeted me in the aisle and walked with me along the aisle — an immaculate aisle that she tended and stocked. She had time to do that as she didn’t do things like change paper price tickets, as there aren’t any. All pricing in a Whole Foods store is digital and changes automatically, aligned to their online pricing. She didn’t fill stock on any other aisle, just her own, so she spent three minutes with me talking about my lifestyle, exercise and what may suit me best. All of this in a grocery store.
I asked her how long she’d been with Whole Foods — “Three years on this aisle”. In her mind, that aisle was her own health and wellbeing shop. Sure, it was owned by Whole Foods but they’d given it to her to run as her own. Pride, knowledge and passion. If you look at the hiring page on the Whole Foods 365 site you’ll see an employee value proposition all around passion, fun and being yourself. The staff look like they could work for Amazon, Google, Apple or Facebook — the millennial nirvana companies.
Self-checkout (just like online shopping), digital real-time shelf prices (just like online shopping), Instacart delivery within one hour (just like Amazon Prime) — it all makes shopping at Whole Foods the natural progression of physical and digital shopper experience that Amazon wants to deliver across its newly blended omnichannel assets. And very quickly. Because Whole Foods has centralised price ticketing software and digital in-store pricing, it can change prices in real time to align with Amazon from day one and can merge Instacart and Amazon Prime on day one. Amazon lives “day one”.
Whole Foods’ new 365 format takes all of those areas of expertise and amps it up into a 2017 technology driven, millennial friendly, shopping experience. It’s what Amazon always wanted to be when it grew up. It has moved on from its market stall and bought its first shop.
Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on Twitter, Facebook, LinkedIn and Instagram.
Kevin Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings and Now Comms Group. He is also an independent director of Australian fintech company InvestSMART.
