What Can We Learn from Amazon’s Acquisition of Whole Foods?
The changes are subtle, but they are there.
Right inside the entrance at the Whole Foods in Dedham, MA, stood a table completely filled with Amazon Echos and Amazon Dots, a sign next to it showing price cuts to both products. Those signs are peppered throughout the store, calling attention to a plethora of sales for various grocery items. Avocados, bananas, apples, salmon, some of these price drops were modest, but some were deep, with up to 43% of the price cut down.
Aside from that, aesthetic changes were minimal. Amazon has made the choice to retain Whole Foods’ branding, and for good reason. People know the Whole Foods brand. They’ve developed personal connections to it. People can buy tomatoes and cheese at any grocery store, but people go to Whole Foods for the experience, for the prestige of shopping at a Whole Foods. They want to go to the store.
The Importance of the In-Store Experience
Brick and mortar retailers should keep the in-store experience front and center when they revolutionize their own store operations and attempt to propel themselves into the era of smartphones and e-commerce. When e-commerce took off, many retailers, while trying to compete with peers that were primarily online, funneled resources to their online platforms, building websites they thought would be able to compete with data-driven goliaths like Amazon. But typical brick and mortar retailers don’t have the data collection and data analysis capabilities of a large online retailer, and they often lose in-store customers while they divert valuable resources away from their physical stores. They also end up struggling when they aren’t able to seamlessly connect their online platforms to their physical stores, effectively running two independent operations.
Does this mean that brick and mortar retailers shouldn’t expand their online platforms? Absolutely not. It simply means that, when retailers put forth a plan for expansion, they need to focus on one central question: How do I improve the in-store experience and drive customers to stores?
Physical stores aren’t going anywhere. 77% of Generation Z consumers prefer brick and mortar stores to online channels. Omnichannel shoppers, or people that use multiple channels (online, physical, etc.) while they shop, spend 13% more in the store when they use the retailer’s own site for product research. Competing with Amazon, which now has 460 stores and distribution centers to add to its arsenal, doesn’t mean trying to develop a better online platform. It means smartly integrating online capabilities with the physical store, enabling and simplifying omnichannel shopping, making the customer experience easier.
Retailers need tools to integrate those channels. They need to generate better analytics to help them better anticipate changes in customer volume, and then plan for in-store labor accordingly. They need real-time store operations solutions that they can use to streamline omnichannel processes like BOPIS (buy online, pick up in store) and endless aisles. The goal should be to give customers the ability to seamlessly move between online and physical platforms, and to revolutionize store operations so that both platforms are flawlessly integrated.
If Amazon’s acquisition of Whole Foods can teach us anything, it’s that neither online nor physical retailers can survive on their own. Omnichannel is the future of retail, and it is essential to find the right tools to make omnichannel retail work.