As soon as Amazon announced their plan to acquire Whole Foods for $13.7 billion a few weeks ago, the hot takes came pouring in as to what this means for the future of the grocery and retail industries. The general consensus? There is bound to be some serious impact.
A Win-Win (And Then Some)
Overall, most people seem to agree that the acquisition was a smart move for both sides. Amazon not only gained a physical presence with brick-and-mortar locations in hundreds of key affluent, urban markets that could become a testing ground for innovative experiments in physical retailing, but they also acquired “built-in advertising of storefronts” and “an established perishable supply chain and sourcing operation” according to Ad Age.
On the other side of the coin, Whole Foods accomplished both short and long-term goals. In the short term, the acquisition meant major relief from the pressures of activist shareholders who were growing restless due to recent declining sales and store closures. In the long term, their locations will likely get coveted access to Amazon’s digital technology and innovations, putting them ahead of the game compared to their competitors.
But the key to why the deal is stirring up so much discussion is because of where the two companies overlap: their upscale demographics. Sharing a common audience could mean an “omnichannel combination of online and in-store goods,” making people wonder if this would make Amazon a monopoly.
Impact On All Sides
There’s been a lot of hullabaloo as to what will happen next. Many speculate this could seriously hurt the grocery store industry. After all, as CNBC points out, Amazon has “a history of disrupting markets” from bookstores to electronics to even retail due to their low-margin business tactics.
The one party that may likely benefit? Consumers. For one, if Whole Foods incorporates Amazon’s tactics, there’s a pretty high expectation that prices will fall in order to increase their customer base. So that artisanal peanut butter you love may not be so expensive in the near future.
Another point of benefit is how the combined power of Amazon (specifically their Prime service) and Whole Foods could mean new levels of “consumer convenience.” Though we’ve always used technology to make our lives easier, The Atlantic claims the trend of “human sloth” is now the most important value in American retail today. And if the acquisition means innovations in grocery delivery, fewer wait times or anything of the like, consumers are sure to be pleased.
As for competitor brands, their response will likely be to go on the defensive and do the same. With disruption comes innovation and considering the grocery industry has been somewhat slow to adopt technology, especially with respect to the customer experience, it only makes sense that Amazon and Whole Foods’ competitors will look to improve the end-to-end consumer experience both digitally and in-store.
One Major Caveat
However, there is one stipulation that will affect not just the success of Amazon and Whole Foods, but also the deal’s overall impact on the grocery industry and consumers. These brands need to remember that they’re marketing in the age of the empowered consumer so the benefits of whatever services or technologies they create need to significantly outweigh any disturbances to consumers’ daily lives. If there is too much change too fast and consumers aren’t swayed to learn new processes, it could be a dangerous dead end.
The truth is change is inevitable in any industry, but how you convince consumers to change their habits is what will tip the scales in your favor (or not). So it will be interesting to watch how Amazon and Whole Foods move forward. After all, the whole world is watching.