Amazon customer service is legendary. Buy something if you're a Prime member and return it for free, immediate credit in many instances, enviable reviews. This post is about their brand Whole Foods.
In case you’ve been living under a rock, you know that Amazon acquired Whole Foods in 2017 for the market-resetting sticker price of $13.7B. Translation: for the price of a bunch of bananas at Whole Foods, Amazon actually bought the whole grocery cart, as it were.
At the time of acquisition, investor sentiment and even shopper sentiment believed Amazon would take the Whole Foods brand and scale it with greater efficiency to meet supply-and-demand measures.
Now, three years later, the pipe dream of better organic selection, higher-quality presentation, and greater distribution slowly drained into disappointment. Did Amazon make a mistake buying Whole Foods or is this all part of a bigger play?
There’s no question Amazon will continue growing its market share as the #1 online retailer, but don’t think for a second that they are failing with the Whole Foods shopping experience. In fact, it’s far more likely that everything is going according to plan. (Except maybe the turkey fiasco this year!).
3 key principles grocery retailers have to keep in mind and respond to in light of what Amazon is doing through Whole Foods.
1. Shoppers vote with their feet.
A recent article on Bloomberg documents how foot traffic at Whole Foods fell an estimated 25% over this past year. With COVID-19 responses causing lockdowns across the U.S., consumers are eating more than normal (anyone else craving some Ben & Jerry’s ice cream right now?). While foot traffic is down for U.S. grocery stores, the traffic is still noticeably different: many of the shoppers in Whole Foods aren’t even shopping for themselves.
This experience hit home for me a few days ago from a post by Alex Reimer, a radio host based in the Boston area. Alex made this observation while standing in the dairy aisle at Whole Foods…
I appreciate Alex’s perspective, specifically this section:
While many of us are still electing to do our own shopping with masks and social distancing in place, Amazon is further pushing consumers to let trained professional shoppers take their place in store. Was this always Amazon’s plan: remove the in-store grocery shopping experience at Whole Foods so they can further realign shopper attention toward online shopping?
Losing 25% in foot traffic in a single year is a significant loss. If you’re unaware of what this means, if it’s not clear to you yet, that is where brands fall victim to seismic shifts in the marketplace. Amazon offers its Prime members grocery delivery, causing store shoppers to balk at the chaos and completely unpredictable shopping process. The effects are already felt far and wide by Whole Foods shoppers. Imagine if your store’s shopping experience was a club and people enjoyed it because it’s fun and unique. But then, people stopped enjoying your club because of clear, unpopular changes in how your club operates. In fact, people are actually being moved to say how much they now dislike your club. How long will your club (your brand) be around? Not long. Shoppers vote with their feet.
2. Innovation is still king.
Whole Foods needs to come up with a better solution -- easier said than done, of course. Does Amazon reset the entire Whole Foods experience? Amazon has an unfathomable amount of cash flow from AWS and other divisions of Amazon that are now being pumped into the grocery division of Amazon. The result? Amazon Fresh. One of the first new Amazon Fresh stores opened in Los Angeles County not long ago and it’s already a remarkable testament to innovation.
Innovation is still the king and few brands test-drive new ideas quite like Amazon does with drone delivery, dash buttons, Amazon Gold stores, and on and on. Amazon wants to create a shopping experience where you can walk in, get what you need, and walk out without needing to reach for your wallet or carry cash.
With a sophisticated camera system in place, shoppers are easily monitored as they place groceries in the shopping cart and complete the self-checkout process. Waiting in line? It doesn’t exist now. Having to carry a specific form of payment? Outdated and unnecessary.
This is the spirit of innovation: allowing the experience to break and stay broken for at least a short season if it means creating space to discover a better way. Grocery stores who fail to innovate will continue falling further behind Amazon and other online-focused grocery competitors.
3. The more heads are down, the less of a need to go into the store.
Shoppers visit brick-and-mortar stores for one reason. They want to know, “What’s new, different, and interesting?” As consumers, we’re really just rats looking for cheese, so our heads are down, searching for what will pique our interest. Retailers who fail to engage with the downward look will not survive in the post-pandemic marketplace.
It’s understandable to wonder if Whole Foods will survive in the coming months or if Amazon will simply gobble up Whole Foods into a new Amazon Fresh experience. Innovation isn’t happening in Whole Foods nearly as much as Amazon Fresh, a priority of change that is difficult for any retailer to overcome.
All retailers need to recognize that online shopping does not have to be the inevitable end of brick-and-mortar shopping. There’s still plenty of fight for retailers who want to create a remarkable experience for their shoppers. It starts with refusing to surrender on quality. Your customer service needs to be sensational. Your store needs to convey warmth and friendliness for shoppers to connect with real humans.
We largely don’t know what long-term effects this COVID-19 pandemic is causing in the marketplace. What we cannot ignore is that foot traffic is going down, whatever the reason, and your shoppers are letting you know online what they believe to be true about your in-person experience.
You need to win their attention with remarkable customer service and an easy shopping experience. You need to champion innovative ideas and changes to talk with your customers in new, exciting ways. You need to remember the short-term technology-driven choices you’re making have a dynamic impact on your customers.
No matter the size of your store or location in the world, there is one indisputable truth for any grocery store to keep in mind: people who feel they matter buy more. That doesn’t happen by accident -- it takes intentional, industry-leading training to convey that value.
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Visit Salesrx.com to see how your team can get the direction and support they need to compete with Amazon and other online retailers.