Whole Foods Is Now Part of Amazon, Should Retailers Freak Out?

According to the Bureau of Labor Statistics, roughly 16 million people in the US work in retail in one capacity or another. As retailers close more stores a growing number of these jobs are at risk.

And while the second quarter brought good news to some retailers in the beleaguered sector, the closing of Amazon’s acquisition of Whole Foods should add more urgency to their “turnaround” efforts and the overall imperative to improve the customer experience.

Amazon has lowered prices significantly at Whole Foods, which will bring more shoppers into the store. The competitive advantage most traditional grocery retailers had over Whole Foods was price but almost nothing else. Prime members will get extra perks at Whole Foods, which will cause more Prime signups. Those people will then be more engaged with Amazon. In turn they will probably shop more often at Whole Foods . . . and so on.

If you’re Safeway or Kroger this is scary stuff. If it’s not scary, you’re complacent.

If you’re in another retail category, the prospect of Amazon turning the 400+ Whole Foods stores into “return centers” should scare you, eliminating one of the few advantages you had vs. the e-commerce giant.

Here’s a thought experiment: pretend you’re a consultant for traditional retailers, what do you advise now? Beyond the cliches surrounding “omni-channel,” what strategic and tactical moves would you make post Amazon-Whole Foods?

I’ve been thinking about a version of this question for many years. Here’s my topline thinking, in no particular order; these are the things I believe you’ve got to do as a retailer to survive:

  • Put key (or all) local inventory online (e.g., Google Local Product Inventory Ads, Last Mile).
  • Do local product and store locator SEO
  • Make the best/fastest/most usable mobile site you can
  • Embrace new channels quickly (e.g., voice assistants)
  • Use Apple and Android Pay or other expedited payment tools for mobile and Touch ID (soon facial recognition) or other methods to expedite sign in
  • Invest in high-quality US-based phone and online support (which is expensive).
  • Upgrade the physical store experience (expensive)
  • Invest in employees with product knowledge (expensive) and deliver superior service in stores
  • Make returns incredibly easy
  • Streamline the in-store checkout process so people don’t wait in line
  • Create a meaningful loyalty program with real value/rewards/incentives
  • Offer “personalization” to the extent possible. It’s an overused buzzword but there are things that can be done.

Most of these things are hard and cost money. In many ways they fly in the face of the direction most retailers have been going for years, which is to dumb-down their workforce and compete on price. But that will no longer work in most cases.

Amazon-Whole Foods truly is a game changer.

The question of what retailers should do now is the subject of the Place Conference session: “Rx for Retail: New Perspectives.” Executives from Euclid, Pitney Bowes and Empyr will offer insights and recommendations in what should be a very provocative session.

Place Conference

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