Hamish Renton, managing director of food and drink industry consultancy HRA, looks at Amazon’s move to acquire Whole Foods Market
It’s been a busy few weeks for Amazon, then. Just days after announcing it is extending its fresh delivery service to 42 more postcodes in Hertfordshire and Bedfordshire came the news it is to acquire the health food icon Whole Foods Market in a $13.7bn deal.
At first glance this marriage looks odd, the low-cost online retailer and big data exponent acquiring a bricks-and-mortar retailer known for premium prices, instore experience and ethics.
What unites both the health foods market and online grocery shopping is their growth rates. Whole Foods also injects a sense of mission into the Amazon brand narrative – giving some character to the proposition and humanising the brand, which can suffer from a perception of being clinical, almost cold.
Since its birth in Austin, Texas, in 1978, Whole Foods’ mission has been to “nourish the health and wellbeing of people and planet”. The atmosphere within Whole Foods Market stores is similar to that of the traditional British bakery – rustic and with a focus on the experience and ‘goodness’ of the food itself.
The Amazon Fresh service, launched over a year ago in the UK, enables Amazon Prime members to get a range of fresh goods delivered to their homes. Amazon wants customers to establish a weekly shop online as a way to drive it’s frequency and weight of purchase – the end game would be a daily Amazon food delivery, with bakery a key part of this.
Amazon specialises in software that records, tracks and predicts purchase patterns but struggles to deliver an exciting or sensory retail experience.
And here is where Whole Foods comes in – it is an involving shopping experience, full of colour, people, sights and smells. Whole Foods can put the ‘sizzle’ into the Amazon sausage.
The village bakery was traditionally a location of cultural importance, with the smell of fresh bread part of the ritual. Supermarket bakery counters continue this thread with their traditional feel and merchandising nods to the traditional baker. For Amazon shoppers, ordering fresh bread online removes this element of ritual.
However, if you can shop Whole Foods online then potentially you can bring a little of this ‘retailtainment’ to the online shopper. This could be priceless for Amazon.
Given the size of the worldwide health food market and the ongoing premiumisation of food, perhaps the union isn’t too strange after all.