What People Are Saying About Amazon’s Purchase of Whole Foods

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What People Are Saying About Amazon’s Purchase of Whole Foods

By Don Longo, Convenience Store News - 06/19/2017

SEATTLE — Amazon Inc.’s $13.7-billion acquisition of Whole Foods Market is a bombshell with potentially massive reverberations for both food brands and the world of brick-and-mortar retailing, said branding and retail experts throughout the industry.

Here’s a smattering of some of the more insightful commentary:

“For starters, this acquisition promises to shake up pricing, the ecommerce space, the trajectory of retail automation in the United States, and the already considerable competitive pressures faced by existing food retailers. When it comes to making bold moves aimed at disruption, Amazon never disappoints.”

— Todd Maute, Partner, CBX

“Amazon now has a grocery infrastructure of more than 400 stores to leverage, finally solving the fresh component of its service equation. Whole Foods will benefit from Amazon's ecommerce dominance, while Amazon can tap anyone in Whole Foods' largely affluent clientele who isn't already a Prime member.”

— Jim Dudlicek, Editor-in-Chief, Progressive Grocer (sister brand to Convenience Store News)

“This is a war to be the preferred ‘last mile’ supplier, the point where online meets, and possibly exceeds, brick-and-mortar. Don’t think Amazon and Walmart aren’t going to take the gloves off in an all-out slug fest — including pricing at zero margins — to win the coveted majority scale.”

— Joacim Jeppesen & JC Hermann, Executives with Valtech

"Considering Amazon's reputation for price reduction, I guess this spells the end of 'Whole Paycheck,' the label that many consumers hung on Whole Foods for its high prices. It's also a good bet that Amazon will sell its private-branded groceries at Whole Foods outlets. It will be interesting to see the direction that Amazon takes in doing that. And then, there's ecommerce and grocery delivery and the impact this deal will have on those segments. Disruption, indeed."

— Lawrence Aylward, Editor-in-Chief, Store Brands (sister brand to Convenience Store News)

“In reaction to the news, shares of largely brick-and-mortar retailers already threatened by Amazon's dominance in e-commerce opened significantly lower in trading Friday. Target opened 12 percent lower, Walmart was down 5 percent, Costco was down 6 percent, while SuperValu had fallen 19.95 percent on the news. Kroger also fell 15 percent, making it the worst performing stock on the S&P 500 and extending its losses from a day earlier when the company reported declines in first-quarter profits. In total, those five grocery chains shed about $26.7 billion in market capitalization between the market's close Thursday and Friday morning, as investors worried that Amazon’s deeper push into the industry could be a death knell for some.”

Fortune Magazine

“The Whole Foods acquisition certainly enables Amazon to service a growing sector of consumers that are taking well-being and health very seriously. At a deeper level, this acquisition also fuels Amazon’s never-ending thirst for hyperlocal data about markets and unique customers. I would be hard-pressed to believe that the grocery industry has been as thorough and precise in using the deep pools of consumer data they have to drive higher customer profitability. Amazon, on the other hand, has continued to invest in AI [artificial intelligence] and machine learning to constantly service their customers with high levels of service, more products and at prices consumers feel are low and fair.”

— John Squire, CEO, DynamicAction

“We know Amazon has been investing in the grocery space for some time, starting with Prime Now and then moving into AmazonFresh, but they’ve had two roadblocks standing in their way before this move; quality and the cost of organic expansion. In terms of quality, consumers like to touch and feel their produce or know they are buying from a source with the same level of quality standards they have. This deal gives Amazon the seal of approval for the quality products that Whole Foods has earned over decades. In terms of organic expansion, Amazon realizes fresh food warehouse needs do not fall under the warehouse network that Amazon has built. To effectively play in the organic expansion space, Amazon needs a net new build out of a cold chain in Amazon’s distribution network and with this acquisition, they just bought themselves a distribution network. Additionally, this acquisition will make Amazon a huge omnichannel juggernaut in one swift move, taking them from 15 physical stores to well over 400 overnight.”

— Jennifer Sherman, Senior Vice President of Product & Strategy, Kibo

“Amazon’s acquisition of Whole Foods goes way beyond just grocery. This is a major wake-up call for all of retail. Amazon now has the last mile licked. The next step will be to use Whole Foods locations as in-store pickup spots. Since 58 percent of shoppers purchase more goods when they do a pickup, this will be a huge business enhancer. What this means for retailers in general is that they need to get their omnichannel strategies in play — fast. A retailer’s best option is to invest in order management, highlight that they offer click-and-collect services, and provide the best service possible on that in-store drop in. According to a soon-to-be released report from OrderDynamics, 26 percent of North American retailers offer click-and-collect services online. This means that 74 percent of retailers need to move fast, or plan to be in another business in a few years.”

— Charles Dimov, Director of Marketing, OrderDynamics

“One of the most obvious obstacles for Amazon going after the brick-and-mortar grocery market in 2016 was the lack of physical store shelves, which is so critical in grocery. This has changed overnight for Amazon. The purchase of Whole Foods will make the online grocery space even more competitive, which is why it will be so important for grocery retailers to have consistent online and in-store pricing. For grocery retailers to even think about competing with this new juggernaut, the industry must have the ability to control and drive in-store pricing and promotions with speed, agility and consistency.”

— Paul Milner, Marketing Director, DisplayData

“Amazon’s acquisition of Whole Foods addresses its two greatest weaknesses — a lack of physical stores and a strong grocery play — while potentially creating even greater advantages for its greatest strengths — endless aisles and customer data. Bringing hundreds of physical locations under its control will allow Amazon to understand consumers at a much deeper level, enabling them to personalize the experience, both online and in-store, to an unprecedented degree. Accenture claims that Amazon already generates 35 percent of its sales via its recommendation engine, and it will be fascinating to see how they will connect digital and physical data points to create a single customer view to drive more personal and engaging experiences across all channels.”

— David Buckingham, CEO, Ecrebo

"Whole Foods has over 430 stores globally, meaning Amazon has acquired more than 430 new properties to use as distribution centers. Retailers already concerned about Amazon's strength in digital commerce now need to contend with the reality: Amazon is coming after brick-and-mortar, too. I talk with retailers every day who are in denial of Amazon’s impact on their business. But Amazon understands that retail and distribution have changed forever. It's no longer about buying and reselling products, but about creating incredibly valuable ecosystems.” 

— Adrien Nussenbaum, U.S. CEO and Co-Founder, Mirakl

“As the likes of Amazon and ecommerce upstarts continue to alter the way people consume in response to a fundamental shift not only in technology, but also in habits, the future of brick-and-mortar chains becomes cloudier. The ever-growing popularity of mobile shopping, the ‘experience’ economy, and direct-to-consumer e-retail has rendered this especially true for companies slow to embrace such changes. Even behemoth retailers such as Walmart and Target have begun to adopt aggressive ecommerce strategies — which maybe spurred on some of Amazon’s desire to purchase Whole Foods — while also offering groceries alongside their usual personal and home products in their own efforts to survive. Amazon and Walmart’s increased competition following the latter’s purchase of Jet.com last year was just the beginning of the fight for market share. As consumers strive for convenience, the added competition only intensifies the pressure already on the supermarket industry.”

— The MergerMarket Group