13 Sep, 2017

What Changes Has Amazon Made In The Supermarket Industry So Far?

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Amazon made headlines after announcing its acquisition of the supermarket giant, Whole Foods.

Since then, there has been panic in the air from brick and mortar stores, and all eyes have been watching Amazon closely, to see what changes it will bring to the supermarket chain.

How It All Started…

While traditional supermarket stores like Kroger and Wal-Mart are known for selling food at affordable prices, Whole Foods has done the exact opposite, by gaining a reputation of selling high-end brands, at an expensive rate.

Whole Foods has been known for offering organic and natural food products on its shelves as well as a private label, that has been held up to high standards by customers.

These standards came crashing down after allegations of Whole Foods overpricing its food started to spread.

“Whole Foods Market was listed as one of the most valuable global retail brands in 2016. Despite this fact, the company has become subject of a controversial debate during the last couple of months. In its early years, the food retailer was especially known for its high food standards and even the brand name was used synonymously with ‘health’ and ‘organic’. Lately, Whole Foods Market was mostly accused of high prices and overcharging.” Statista reports. 

So, what were Whole Foods to do? 96 dollars spent on advertising later, and it wasn’t enough. Whole Foods needed a change. But what, you ask?

Amazon!

Amazon came to Whole Food’s rescue and acquired the retail giant for 13.7 billion dollars. That’s a whole lot of organic produce!

Needless to say, this buy sent retailers, business professionals, consumers (especially Whole Foods fanatics) into a fury. What will become of Whole Foods? Is Amazon taking over the world? Can Whole Foods deliver food to our door now? Are drones involved?!

Although some questions still don’t have answers, Amazon has made a few changes.

For starters, Amazon has brought over its cultural influence on Whole Foods, which includes a large fan base through the rise and development of e-commerce, as well as a forward-thinking approach to supermarket shopping that we have never seen before.

“The democratization of healthier foods is poised to spread exponentially with Amazon running things. Although Whole Foods currently operates only 460 stores, Amazon’s reach is massive, multidimensional, and includes the intangible space it holds in the consumer psyche.” Forbes reports. 

So, how is Amazon planning on conquering the supermarket sector?

Lowering Prices

First, Amazon’s goal is to make food affordable and healthy for everyone, no matter your pay grade. CEO of Amazon Worldwide Consumer, Jeff Wilke, reported this in a statement not too long after the acquisition.

“We’re determined to make healthy and organic food affordable for everyone,” Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a statement. “Everyone should be able to eat Whole Foods market quality.” Forbes reports.

Amazon has been testing prices since it has taken over Whole Foods, by making price cuts by 40% on items like avocados, apples, and chicken. These moves may even turn out to make Whole Foods a more affordable brand.

Amazon has also started to sell Whole Food’s private label “365” on Amazon.com, which increases the number of available products, a move that has led to 500,000 dollars in sales so far.

The most recent progress that Amazon has made is offering a 45% discount on Amazon Prime membership for anyone who receives Supplemental Nutritional Assistance Program (SNAP) benefits. EBT cards will also soon be accepted in stores.

What Does This Mean?

In order to carry out these operations successfully, experts say that Amazon will have to deploy tools like big data and analytics, to get an accurate portrayal of important information such as Whole Food’s customer database, something Amazon relies heavily on when it comes to their own online shoppers.

New data-driven models will need to be carried out, to understand the core of the Whole Food’s customer. It takes a lot more than a cheap avocado to get people to switch grocery stores. It will take an entire rebranding makeover, in order to relate to the shopper who prefers affordable stores like Walmart.

We will continue to keep an eye on Amazon / Whole Foods and report back with any new updates.

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