Amazon recently bought Whole Foods, and this transaction left a lot of people in shock at how big this change is and how it may revolutionize the entire industry in terms of online retail and grocery stores. Amazon is a retail giant; their products span from basically everything including baseball cards, computers, and food. However, Whole Foods provides Amazon with something more valuable: consumer data and grocery buying habits. The transaction gives Amazon more data in terms of patterns, demographics, and product values among customers. Why would Amazon choose Whole Foods then? For one, the customer at Whole Foods is typically highly affluent and rich, and Whole Foods has an extremely exclusive and elite product label. As Amazon becomes more and more “high end,” it needs more high end products, and Whole Foods fits into their desired description. By purchasing Whole Foods, Amazon is able to provide fresher products as well, and this means that they are able to diversify and brand themselves as a pioneer in “fresh” foods. Whole Foods is another winner, as Amazon’s popularity and technological expansion will allow shopping at Whole Foods to be so much simpler than it is now. Payments will be faster and everything will be more incentivized such as deals and coupons that customers can use to buy products cheaper.
Whole Foods will of course change, but their identity as a fresh, upscale grocery store will stay intact and they will benefit from the change. As the world becomes more technologically advanced, it was only a matter of time before some grocery store adapted, and it just so happens that Whole Foods is the first one to do so. The Whole Foods business model will change to a more technologically based model that is more efficient and reliable than the old way of recording transactions and sending out specials and deals.
The losers in this are the other grocery stores, as they were already struggling from deflation, and now they’re at a huge technological disadvantage. Prices will also lower for Whole Foods, so more customers will substitute their own grocers with Whole Foods. Amazon seems to define their competition as the firms and businesses that sell things they are selling. In other words, everyone. Amazon has been accused of monopolization and many have demanded they be broken up as they are hurting other businesses. But should we really be punishing firms for innovating and making themselves run efficiently? While there are laws against monopolization, perhaps we should wait and see if other companies catch up. Southeastern Asian countries quickly caught up to the West because they had the technology founded by the West at their fingertips. Perhaps these other companies will be able to do this as well and adapt themselves to use the new technology and methods that Amazon uses. However, this will be tough and daunting, as Amazon is already the king at retail.
Competitors will try and match the prices of Whole Foods, which will drop and have dropped thanks to the deal. This will be tough though, as these stores may not be able to compete if they drop their prices. They should be using a marketing strategy geared towards specialty in food, something that Amazon is not specialized in. They should also try to attempt dealing out new promotionals and specials that allow customers to become attracted because of lower prices. If they do this, customers may be more inclined to go to their store because they feel like it’s more local and more close to home. All in all, the future looks grim for these alternative stores.